Market Watch: Launch a Company With Virtually No Overhead

In the mid-1990s, I joined a San Francisco Bay area technology startup. In those days—before smartphones, let alone widespread laptop usage—most budding businesses proceeded down a pretty predictable path. They’d rent office space; buy Aeron chairs and other office equipment; install a phone system; hire office staff, marketing, and technical people; and install a network of PCs. Employees were paid actual salaries and were often promised a percentage of the company in the form of stock options and other incentives.

Given the ubiquity of wireless, broadband Internet access, smartphones, tablets and truly portable computers, and cloud computing services, that startup mentality seems almost quaint today—and it’s possible to start a company now with virtually none of that overhead. You’re no more likely to be successful now than you were in that earlier era, but at least you can funnel whatever little capital you do have toward your actual business, toward the processes and products that you should be focusing on, instead of infrastructure.

You can probably see where I’m going with this: Whether you’re a fledgling startup with the next killer idea, a small business serving local customers, a growing entity with a multi-locale or international footprint, or even one of the world’s largest enterprises, your critical business resources are being stretched in multiple directions. But with the advent of so many new technologies, the time has come to focus on what’s truly important to your business. It’s time to focus on your business and offload as much of the unnecessary bric-a-brac to other services, web or otherwise.

We’ve been talking about such things for years, of course. But unlike the paperless office of decades ago, this time it’s not just talk: It’s possible today to safely, securely, and seamlessly offload a lot of your non-core business processes—and even some core, mission-critical needs. So, whereas many Market Watch columns focus on buying recommendations, I’m taking the opposite tack and discussing what not to buy. Let’s start with some obvious technological targets.

On-Premises Servers

Ah, the good old days: Flying out to San Jose so I could reach a stick into a server cage and reboot our single errant web server. Jealous? Well, you could implement a modern version of this silliness by buying, deploying, and then managing your own servers and server software. But why would you? Servers are expensive, loud, and complex, and they require a certain level of expertise, either from your own employees or via a support contract of some kind.

Modern new businesses should seek to minimize or eliminate their exposure to in-house server hardware. With the possible exception of centralized, local storage and, for large organizations, user management, there’s little need for this complexity and cost. Small businesses should look at the recently released Microsoft Windows Small Business Server (SBS) 2011 Essentials, which can integrate with various online services while providing just the basics in-house. And with various cloud storage services, as well as PC management services such as Windows Intune, even the remaining excuses for on-premises servers are starting to fade.

PCs

If you thought the elimination of local server hardware was shocking, you’re going to want to sit down. For a growing generation of startups, even corporate-funded PCs are going by the wayside, replaced by employees’ own PCs. This isn’t as radical as it sounds, and if you sign up for a PC management service such as Intune—starting at $11 per PC per month—you can easily manage these employee-owned PCs too, ensuring that they’re up-to-date with software updates and security fixes. And in Intune 2.0, coming this year, you’ll even be able to remotely deploy software to those PCs.

Another related issue to consider is whether everyone even needs a PC. Depending on the business and the individual employees, a smartphone might be enough, especially for sales people or other frequent travelers. Even an iPad or other tablet device can work in the right situations.

Email, Contacts, Calendar, and Tasks

If you’re not an email service provider but you still host your own email servers, you’re either constrained by regulatory or legal reasons, or you’re just wasting your time and money. This is especially true now that there are inexpensive (even free) and high-quality choices for email and personal information management (PIM; i.e., contacts, calendar, and tasks).

For young, new, and very small businesses, Google Apps is a good choice for email, contacts, calendar, and task management—and it’s free for businesses with five or fewer employees. Google Apps provides email with a customized domain, and its services are broadly compatible across different devices. The primary interface is via the web, but users can also use popular email clients such as Microsoft Outlook, although support for other Google Apps services in native apps is mixed.

Microsoft, suddenly, has a very viable alternative for cloud-based email, contacts, calendar, and task management: Office 365. Even though there’s no free option, it’s cheap—starting at $6 per user per month—and it’s much more powerful and full-featured than the Google offering. Office 365 also includes integrated Microsoft Office SharePoint Server (for document collaboration and sharing) and Microsoft Lync (for presence and online communication). It’s Google Apps for grownups.

If you’re really cash-strapped and not a fan of Google, Microsoft does have you covered, although you’ll give up the power of Microsoft Exchange Server, SharePoint, and Lync: The company offers businesses a custom domain through its Windows Live Admin Center, providing Hotmail-based email, contacts, calendar, and task management through the web, native Windows apps, and many mobile clients. (Hotmail is Exchange ActiveSync–compliant for device use.) You’ll have to pay for your domain, but everything else is free.

Office Productivity Software

Speaking of Office, it’s worth pointing out that although Microsoft Office 2010 is a mature, highly capable Office productivity suite, it might be overkill for some people. Fortunately, there are free alternatives, and there’s no reason you can’t mix and match between free and paid offerings, depending on your needs.

The best and most obvious of the free Office alternatives is actually another version of Microsoft Office called Office Web Apps. As its name suggests, this service offers web-based versions of Microsoft Word, Excel, OneNote, and PowerPoint, and although they’re not as powerful as the native apps, and they can’t work while you’re offline, they look and work just like the real thing and could offer enough horsepower for many users. The Office Web Apps are free and come with Windows Live SkyDrive (Microsoft’s cloud storage solution, with 25GB of free storage), Office 365, and SharePoint 2010.

Those who travel down the Google path will want to check out Google Docs, which provides web-based word processing, spreadsheet, and presentation solutions. That said, I find these web apps to be fairly lackluster compared with the Microsoft offerings, and you’ll experience some fidelity issues if you try to share documents between Office and Google Docs, which isn’t an issue for Office Web Apps users.

Office Space

Let’s not stop with Office software: For new and very small businesses, an actual office with a physical presence often isn’t required at all. But thanks to new services, even the smallest business can appear to be big and successful. The key here is to do what bigger companies already do for satellite locations, and rent space where you can drop in at set times for meetings with potential and current clients and perform other face-to-face duties.

Many of these occasional office space services provide a permanent address for your business, where mail and packages can be routed and collected, a permanent receptionist crew, a phone that rings and calls that are directed to the correct employees, no matter where they are and what kind of phones they use. An entry-level package that grants companies 5 days of office space per month, along with the mailing address, receptionist, and phone services, should cost about $200 a month—a far cry from the rental fees on a permanent address.

These services are available in various locations. One that I’m familiar with in Seattle is called ThinkSpace. It offers lobby company name boards—many with the same suite numbers, of course—and environmentally friendly “green” messaging.

The rest of the time, employees can perform their duties remotely, as usual, and use services such as GoToMeeting or Microsoft Lync (part of Office 365) for virtual meetings.

Customer Support

While we’re talking about virtualizing your physical infrastructure, you should consider virtualizing your customer support as well, eliminating yet another round of costs and overhead. Zendesk presents an inexpensive option: The company logs customer support cases, ties into your email system, generates support tickets, and so on. It’s a grab-and-go solution.

Phones

Another way to appear bigger and more professional than you are is to implement a virtual phone system, such as that offered by Grasshopper. This service is completely web-based and provides 800 numbers for customer support and sales, local numbers for geo-diversity, hold music, and call routing to any phones—starting at just $10 per month. Google goers should of course look into Google Voice as well, although this service is geared toward both individuals and small businesses.

Send Me Your Tips!

There are so many excellent ways for up-and-coming companies to save money, and I’m sure I’ve only scratched the surface here. If you have some tips of your own, please email me ([email protected]), and I’ll look at compiling them for a follow-up article.