7 Trade-offs Between Physical Addresses & Virtual Addresses

b2bhq.com.auDeciding whether a physical address or a virtual address is more suitable for a business is not always easy. Every business owner should make some considerations and analyse the pros and the cons of each one of them. However, the choice should depend primarily on the business model. Nobody should say that a physical address is better than a virtual address and vice versa because no business strategy is applicable to all business models. 

 

First of all, business owners and entrepreneurs who are seeking the best address for their companies should have a complete understanding of the main difference between a physical address and a virtual address. 

 

A physical address is an address of a physical office that a company uses as a registered business address and where the business operates. For example, if a company uses a traditional office (or another type of office, such as a serviced office or co-working space) the physical address where the building is located and the company operates is a physical business address. 

 

A virtual address is an address where a company has the registered business address but without operating physically in that space. A virtual address is actually the physical address of an office building (it is not a fake address, despite the term “virtual), but the company that rents the virtual address does not use that building as an office space. In other words, a business owner can run a company remotely from anywhere but customers and suppliers will believe that the business operates from that specific location indicated by the virtual address. 

 

Below there is a list of the main aspects that should be considered when choosing between a business physical address and a business virtual address. 

 

Top 7 Trade-offs Between A Physical Address And A Virtual Address

 

 

• 1. Price

 

There is an enormous difference between the price for renting a virtual address and the price for renting a physical office (because, of course, getting a physical business address means getting a physical office). While the price for a virtual address can start from $2 a day in Australia, renting a traditional office can involve an extremely high overhead (building rent and insurance, variable costs, such as maintenance, etc) and potentially start from $100 a day. Other types of offices, such as serviced offices and co-working spaces, are cheaper than traditional offices but yet they cost more than a virtual address.

 

 

• 2. Employees 

 

Having a physical business address means having a physical office and, as a result, employees must live within commuting distance. A virtual address allows a business to run remotely from anywhere, meaning that managers can have unlimited access to the talent pool and hire the finest talents no matter where they are located in the world.   

 

 

• 3. Social interaction

 

When a company uses a virtual address, employees must be proficient in technology as they must use communication tools in order to work together. Sometimes, they never have the chance to meet in-person. Even if communication tools can be extremely efficient, face to face meetings can strengthen the relationship between the managers and the employees of a company. And, of course, a physical address means having a physical space where a company’s staff can meet daily.  

 

 

• 4. Business reputation

 

As far as the business reputation is concerned, both physical addresses and virtual addresses can give businesses a professional appearance. A business can use any type of business address to get a more professional image and increase its reputation as long as it is not using a home address as a registered business address. Using a home address to register a business is risky not only for the business reputation but also for the personal safety of the business owner (because registered business addresses are public in Australia).

 

 

• 5. Location

 

As a general rule, a business owner can get a business address (no matter if it is a physical or a virtual address) in the most prestigious location of a city. Nevertheless, getting a prestigious business virtual address can be easier and more affordable than finding the perfect physical office space located in the heart of the city or a reputable location. Firstly, because it may be difficult to find available space due to high demand. Secondly, because rental prices in these locations can be exorbitant. 

 

 

• 6. Scalability

 

A virtual address provides support for scalability. With a virtual address, a company can easily access other services as it grows (for example, a business can pass instantly from a simple business virtual address to a virtual office package that can include a wide range of services, such as a virtual receptionist or a personalised mail handling). With physical office space, a company must invest more time and money to get more office space or relocate. 

 

 

• 7. Time

 

Running a company that uses a virtual address means no commuting. As a result, employees and managers save time, and the productivity of the business increases (thanks to the stress-free work environment). With a physical office, a company’s staff must travel or commute every day in order to reach the office which can increase the level of stress (especially if they get stuck in traffic jams) and make them waste precious time daily.  

 

 

To sum up, both physical business addresses and virtual business addresses have pros and cons. As a general rule, even if the choice between them should depend only on the business model, virtual addresses are more suitable for start-ups, online businesses, and small and mid-companies, for the cost-saving benefits that they bring. Once a company starts to grow, business owners can choose if they want to keep the virtual address (or the virtual office, in case they need additional services) or switch to a physical office. 

 

Images source: unsplash.com