{{ __('Skip to content', 'foundations') }}

Differences Between Virtual Office, Coworking, Serviced Office And Traditional Office

Whether you are a start-up or you are a freelancer looking for a workspace, the options on the market are vast (in real estate terms: “it is a buyers market!”) – giving you many options to choose from.

  • But how can you decide what to pick?
  • What are the criteria that ensure you make the right decision?
  • What requirements do you and your business have that would impact the options?

The 4 most common options that you can choose from are :

  1. Coworking
  2. Traditional Office
  3. Serviced Office
  4. Virtual Office

Let’s learn a bit about what they, the features each one offers, and the advantages and disadvantages of them.

What is Coworking?

Coworking Space Comparison

Coworking is a shared office space where entrepreneurs, freelancers, remote workers, and anyone else who wants access to a fully-equipped space can get a membership and work together.

According to Coworking Resources, the story of coworking began in 2005, and it has evolved dramatically ever since. Software engineer Brad Neuberg is credited with starting the coworking phenomenon from a San Francisco collective space.

Neuberg first envisioned a coworking space in 2005, when he was going through tough financial times. He was working at a startup but felt conflicted—he wanted to find a way to combine the feeling of independence and freedom of working by himself with the community feel and structure of working with others.

According to Neuberg, the very first coworking space to exist was San Francisco Coworking Space, located in the walls of Spiral Muse, a feminist collective. Neuberg had friends at Spiral Muse and mentioned his coworking idea to one of them, Elana Auerbach.

She agreed to let him use the space at Spiral Muse twice a week for a total of $300 a month, earning any profits past that for himself. With Neuberg’s dad providing the first few months’ rent for space, the San Francisco Coworking Space officially opened.

Soon after Neuberg sparked the trend, the rest of the country took notice and at present, there are hundreds of co-working space companies around the world, including franchises with branches in multiple cities.

What are the co-working benefits and disadvantages?

Among the most common advantages of co-working, a few that are good to mention are:

  • Flexibility in working – come and go as you please
  • Prospects of networking – do note that this is facilitated typically yourself through events at the space
  • Fewer office expenses – as it is all bundled into one monthly fee
  • Enjoy personal space with professional engagements – as long as by ‘personal space’ you are working in a large open room with others around you

On the other hand, co-working also comes with a number of limitations, which can not be ignored:

  • Lack of Privacy – it is not your own separate office but a desk in a room of tens or hundreds
  • Lack of Customisation – accept the layout, furniture, etc as it comes
  • Distractions from work – this is the one that many business owners face, especially when trying to do calls in a big room filled with others
  • Clients who visit you get overwhelmed – as they see a lot of unfamiliar people
  • Low-to-Medium overhead costs – the flexibility and shared spaces help bring the price down
  • Typically 12-month contracts – some might be 6 months, so just be sure to search around

What is the Traditional Office?

Traditional Office Comparison

Built for productivity and focus, traditional office spaces are a private headquarters for a company – usually a team of people, instead of just one entrepreneur.

The latest trends with layouts are “open working spaces”, which is similar to coworking spaces, but there is also the option to divide it up into cubicles or offices for individuals.

From dedicated desks which give employees a physical sense of belonging, to ease of communication with colleagues, there are characteristics of the traditional office that cannot be replicated through remote working.

According to Workinmind, for many, having a physical sense of place in the working environment is critical. A dedicated desk or workspace can promote a feeling of employee autonomy and workplace satisfaction. A recent report by Savills found that 52% of workers would prefer to spend the majority of their time at their own dedicated desks, enjoying the familiarity of a personalized workspace. People who operate from home can find it difficult to switch off from work.

A physical office provides a structured environment, making it easier for employees to plan their hours and maintain separation between their professional and personal lives, whilst retaining a sense of ‘belonging’.

Remote workers, with multiple clients operating from a number of locations, may need to use a range of different security applications and are more at risk of inadvertently compromising a client’s or employer’s network.

A recent iPass survey 2018 Mobile Security Report found that the majority of CIOs (52 percent in the US) suspected their mobile workers had been hacked in the last 12 months. Working from a dedicated office, with established firewalls and security systems can significantly reduce this risk.

The Pro’s and Con’s of the Traditional Office

Some of the Advantages of the Traditional Office might be:

  • Control over the office environment – build the office to the same culture you have built
  • Control of the design – put graffiti of your business name on the wall, hand plants… do whatever you want
  • Better control of your employee’s activity – install biometric monitoring, enforce attendance as certain times, etc
  • The employees can have a physical place to meet and collaborate on ideas – create small or large meetings to facilitate the type of work you need
  • Ensures you always have a professional place to bring clients, have meetings and work with employees – as long as you create the space for it

The Traditional Office brings some weak points as well:

  • They are extremely expensive – think of interior design, fit-out, etc
  • You need to pay a 3-month deposit – sometimes this can be larger and when you are paying by the square meeting, it can get extremely expensive
  • You sign a lock-in 3 to 5-year lease – yes, years, so be sure that the size factors in any growth of your team for the next few years
  • To see the value, you and your team should commute to work there every day – having a large overhead for an office that you never use is just wasteful
  • At the end of the lease, you will need to demolish all enhancements made – this is the scary one, as you can spend hundreds of thousands on fit-out and then forced to spend tens of thousands to demolish it
  • High expense – when compared to the other options available, a traditional office is the most expensive
  • There is little to no flexibility in getting the office – your choice is limited to the space sizes and locations that fit your budget and are available at that time

What is a Serviced Office?

Serviced Office Comparison

According to Instant Offices, a serviced office is a furnished and fully-equipped pay-as-you-use office space, located in a building managed by an operator. Operators will rent out single serviced offices or whole floors to their clients, giving them access to private, ready-to-use office space on flexible terms.

Serviced offices are also called executive offices, managed offices, or business centers. Companies that manage serviced offices are responsible for maintaining the facilities and accommodating businesses that occupy them. This type of flexible workspace is part of a growing global shift as businesses look for more agile ways of procuring office space.

As opposed to conventional-leased office spaces, which incur a lot of hidden costs such as facility costs, maintenance, equipment installation, and furnishing, serviced offices are readily fitted out outrightly and offer transparent monthly fees.

Serviced Offices can be used by:

  • Start-ups and entrepreneurs
  • Businesses expanding into new markets
  • Project-based teams
  • Businesses experiencing growth

Also, Serviced Offices promote that they include:

  • Security
  • Cleaning and maintenance
  • Reception
  • Parking
  • Internet connectivity, IT infrastructure and telecommunication
  • Administrative support

Serviced Office Benefits and Drawbacks

For those who have not yet realized the benefits of the Serviced Office, below are a few reasons to check:

  • Cost-Effective: allows you to pay only for the space you need, is furnished and equipped with state-of-the-art appliances and the rates are affordable in the long run
  • Location: are readily available in almost every key place of your town, as well as flexibility/mobile and eliminates the requirement to subscribe for long term agreement by allowing you to rent as long as you want.
  • Networking Opportunities: you will have many opportunities to connect with people and share ideas, access to Pay-As-You Use Facilities and services that are available on-demand. And services such as meeting rooms, copiers and staff are available and payable as and when required.
  • Multiple Marketing Opportunities: In case you intend to test multiple markets and strategies, a serviced office allows you to segment the market into different locations without incurring costly long-term investments.

No matter how good it sounds, at first glance, the Serviced Office has some drawbacks too:

  • More expensive in the long-term – if you end up staying in a serviced office for a few years, it could actually be cheaper to get your own space and if you have a team, it could become very expensive.
  • Lack of personalization – like most of these ‘rented’ spaces, you get the design, layout, and furniture you are given (which, most of the time is better than what you might have got if you were to fit it out yourself)
  • 12-month Contracts and agreements – Very rarely do they ever offer a month-to-month or 6-month contract, so be prepared.
  • Medium-to-High expense – as you have your own dedicated and lockable office, it comes with a bit of a price tag
  • Unanticipated extra fees – everything from coffee machine use, printing, meeting room use, etc comes at a price that is just added to your bill at the end of the month (a lot of business owners do not realize this and can be stung very badly)
  • Sharing facilities with others – it is still not your own office, so you will need to book meeting rooms as they become available

Is a Virtual Office the midway between a Coworking, Serviced Office and Traditional Office?

Virtual Office the Midway Solution

If you are looking for a place that brings you the advantages of co-working like flexibility in working, fewer office expenses, to promote business growth, also the perception and exclusivity that a Serviced Office brings and the combination of the Traditional Office, like to benefit from better control of your workplace environment, to have a professional place to bring clients, to have meetings with them – it means that Virtual Office might be the right answer for you.

According to Investopedia, a virtual office gives businesses a physical address and office-related services without the overhead of a long lease and administrative staff. With a virtual office, employees can work from anywhere but still have things like a mailing address, phone answering services, meeting rooms, and videoconferencing.

A virtual office can also lead to greater productivity, as its services alleviate workers from administrative tasks, as well as commuting. Each employee can work from the location that is most convenient, and the business is not restricted to hiring employees who live locally.

Let’s take a look at what a Virtual Office has to Offer (using B2B HQ as an example):

Ensures security with a 24/7 locked office and mailbox with CCTV – keeping you and your mail safe:

  • You can change your living arrangements and never need to change your business address – significantly reduces the stress between your personal life and the business
  • Able to keep your business and family details separate – yes, this is a benefit that you get across all other options we discussed
  • Improves your business perception and credibility – this is achieved by appearing larger than you are, without large overheads that come with other options
  • Generates leads with a premium office address located at a fraction of the cost – essentially, you get to have your cake and eat it too without paying a hefty price
  • Never misses out on a potential lead with call forwarding – unlike other options where you need to install your own telephone system, virtual offices include the option to have it set up for you

The Virtual Office can give your business the stability and the professionalism it lacks when working remoting and using a residential address, while you also experience the freedom and the opportunity to get all of this at a very affordable price.

Its popularity is increasing significantly, as it is the perfect option both for those who like to work freely and do not want to sink large sums of money into a large office space, as well as for those who care a lot about their professional appearance and need a place to represent them properly.

Even if you are at the beginning of your business or have been established for decades – there are various options that you have to weigh up depending on the outcomes you are looking for, the costs you can cover, and what will support your business.

If you are the traditional kind of person, Brick & Mortar type it is for you. If you are open to the new and especially you know how to correctly evaluate your expenses and profit, the Virtual Office is the right answer (or even if you are torn between what to choose and need to make a quick, first decision). If you are wanting to work within your own small office with done-for-you amenities and short contract lengths, I would recommend the Serviced Office. And if you belong to the free spirits for whom socialization matters a lot, Coworking will be the ideal place.

Whatever your choice is, it’s important to know in the end that you’ve chosen the right path to ensure your business’s success.

The Advantages Of A Virtual Office
5 Reasons Your Business Should Transition To A Virtual Office