Being a solopreneur comes with unique challenges. Here's how a virtual office can help your business succeed
For small business owners and freelancers who have just started out, staying on top of your business finances and documents can be daunting. Here’s where our article comes in, so you can quickly get a grip on the basics.
A balance sheet provides a snapshot of the financial condition of a company, showing how much it owns (assets), owes (liabilities) and the amount that is left over for its owners (owners’ equity) at a specific point in time.
The balance sheet is typically completed at the end of a month or a financial year. It is comprised of three main elements:
The balance sheet is divided into two sections: the left side shows the assets of the company, while the right side shows the liabilities and shareholders’ equity.
Assets are listed in order of liquidity. For example, cash or inventory are listed above less liquid assets like property or equipment.
Liabilities are listed in order of maturity; current liabilities, which will come due within a year are listed above long-term liabilities. The latter refers to liabilities that will remain outstanding for longer than one year.
The total sum of all assets, less a business’ total liabilities is equivalent to the owners’ equity. This represents the amount that would be available for a business owner to draw out.
The balance sheet lets a business owner and investors see what the company owns and owes, and to understand its net worth. It also indicates the financial health of a business.
For example, a balance sheet that shows a negative balance in owners’ equity indicates that liabilities exceed assets. This can be a warning sign that the company is in a bad financial situation, and should prompt business owners to dive deeper, and uncover the causes for the negative balance.
A balance sheet can also be used to calculate important financial ratios. One example would be the working capital ratio, which is obtained by dividing the current assets by current liabilities. This ratio measures a business’ efficiency, and shows how well it is able to meet its short-term obligations.
And for small business owners seeking external financing, the balance sheet —along with financial statements like your cash flow and P&L—are required documents when you apply for a bank loan.
The profit and loss account (P&L) is a financial report that shows the revenue, expenses and profit or loss of your company over a specific accounting period.
This period can be a month, a quarter or a year. A P&L is also commonly referred to by other terms, such as the income statement, statement of operations, financial results statement and earnings statement.
A P&L is comprised of the following key elements:
The P&L is a key financial statement in a business plan, as it quickly shows how much money your business has made or lost.
What’s important is to compare your P&L across different accounting periods. In doing so, you’ll be able to identify business cycles and trends—such as the peak and trough periods that occur across the year, or aspects of your business that generate the most profit or costs.
You may also identify changes that are not immediately apparent, such as periods where your expenses are growing at a faster rate compared to your revenue. With these insights, you’ll be better-positioned to make improved business and financial decisions.
And lastly, information from your P&L can also be used to calculate metrics that are important indicators of your company’s financial health. These include the operating ratio, gross profit margin and net profit margin.
Renting permanent physical office space is an expense many self-employed entrepreneurs simply cannot justify.
In fact, as Forbes recently observed, some of the biggest challenges of being a solopreneur are a direct result of this lack of personal space. And yet, overcoming these challenges is more straightforward than you might think.
In nearly every case, a virtual office will meet all of your needs at a fraction of the expense.
Let’s look at those needs in detail so we can tick them off the list.
As a solopreneur, you don't yet have brand equity.
You might have built up an existing client base who know the quality of your work. Unfortunately though, that credibility among current customers does not automatically translate to new business.
Trust and perception are crucial to building that reputation. You usually don't have time to build up your case by showing the quality of your work for someone who is researching 10 different companies just like yours.
We know that first impressions online are formed within one tenth of a second. A virtual office can help you make sure it will be a positive one.
A physical office location plays a major role in that effort. Rather than having to list your home address, you can show a central London address on your website and any professional and promotional materials.
When someone calls your telephone line, a receptionist will answer professionally and reliably. The credibility you gain through these simple steps can be significant.
Solopreneurs face a significant problem compared to their larger counterparts: You're only one person. When you're in a meeting, or working on a deadline, you might not have time to answer that ringing phone. But what if, on the other end of that phone, you left a client waiting that could be your next big opportunity?
The right virtual office can significantly improve your availability. Because your phone number will be managed by a receptionist, you don't have to worry about missing a call. You can even screen your calls to make sure you answer only those beneficial to your business, screening out irrelevant conversations as a result.
That improved availability also extends to your mail. For instance, our virtual office services don't just accept mail, but also scan in that mail and email it to you for instant access.
Thanks to the virtual office, you never have to worry about missing out just because you have work to do or are in the middle of a meeting.
Even if you work from home, in many cases you will have to meet clients on a regular basis.
You might be a lawyer helping with tax-related questions, or a freelance graphic designer looking to help companies promote themselves.
Either way, any time the project goes beyond basic advice or small scope, meeting with your clients will be crucial to building long-term revenue relationships.
To make that happen, of course, you need a reliable meeting location. Your home may not be your best alternative in most cases. Meeting in your home can also be problematic if you have limited space or a growing family.
Many solopreneurs tend to co-working spaces as an alternative. In reality, there's a much better option in the form of the virtual office.
Renting a co-working space depends on the chance that space is actually available. A virtual office, on the other hand, is both flexible and reliable. Importantly, it also gives the impression of being an actual office, rather than just a meeting room in a co-working space.
You can rent meeting space by the hour, and familiarize yourself with the space enough to make sure you can hold effective and efficient client meetings.
Solopreneurs and any self-employed professionals rely on cost-effective ways to get the word out about their services. You probably don't have the resources for expensive advertising campaigns. Instead, you rely on tactics that help your business gain awareness without eating into your budget.
That's not a simple task. Fortunately, a virtual office can help. It allows you to leverage search engine optimization (SEO); according to some studies, it's one of the most cost-effective digital marketing tactics available.
A physical office location and local number mean you can leverage local SEO, ranking highly for searches within an area like London.
It doesn't end there. SEO might be cost-effective, but it's also complex for solopreneurs who might not be familiar with the ins and outs of digital marketing. Our virtual office support team can help you in the process of listing your company on online business directories, taking the first important step in building business awareness online.
Find the right virtual office location, and you can gain much more than just a physical address and phone answering service.
Ideally, the provider you work with is committed to helping entrepreneurs like you grow their business. That's mutually beneficial: the more your business grows, the more you will need the services of a virtual office. In other words, it's a win-win for all parties involved.
We embrace that concept at Forma. As a result, you can receive unlimited advice from a team of accountants and tax experts that specialize in growing businesses and know all the nuances involved in running a limited liability company.
In other words, with a virtual office package from Forma, you get the office support staff included when you need them.
You won’t feel left alone in trying to grow your business while keeping your numbers and records above board.
Building that business knowledge is vital for any entrepreneur. You're a subject matter expert in your field, which is why you're looking to expand. But that expansion likely requires you to go beyond your comfort zone of knowledge.
A partner who can supply you with the information and advice you need can be invaluable in that situation.
Don't underestimate the importance of separating home and work life. In fact, going back to the challenges of solopreneurs linked above, that separation (or lack thereof) is one of the major problems that can undo small business owners.
You need to make sure that your private life and business don't intertwine if at all possible.
A virtual office can allow you to accomplish just that.
The separate address allows you to keep your own address private and away from any public records or sensitive information. The business phone number means that you won't have to contend with business calls at all hours of the day.
Finally, the mailing address also ensures that when you're off the clock and a package arrives, you don't feel the immediate need to open it.
Some of these benefits might seem trite. Add them up, and the benefit becomes significant. It allows you to completely separate your business and home life, working hard as a solopreneur but being able to enjoy the private life with your family or yourself to its fullest.
Finally, and most importantly for the majority of solo entrepreneurs nowadays, the cost savings of a virtual office can be significant.
It is important to remember that all of the benefits and features outlined above come at little to no cost. Our plans start at £19 per month. For a few hundred pounds per year, you get tax advice, a reliable phone number to use, a local address, and more for your business.
Put that in perspective, and the benefit becomes obvious. Imagine the office space you'd have to rent in central London to get similar benefits. The costs alone could be enough to cause your business to fold.
With the solution that we offer by contrast, the cost is just a minor budget expense that will more than pay for itself through convenience, credibility, and increased awareness.
However, some add-ons may raise the price a bit. For instance, our premium option (which includes premium email support, a professional receptionist, and a local number) raises the price to £39 per month. But even at that price, it goes without saying that the costs are significantly lower than contracting all of these services individually or renting your own space in a London office building.
Running your own business is not easy. You don't have the support that your larger competitors can likely rely on.
But that doesn't mean you have to be entirely on your own. In fact, a number of services can help you optimise your productivity, minimise your challenges, and grow your business opportunities over time.
A virtual office should be chief among these opportunities. Its ability to build credibility, awareness, and even business knowledge bundles a number of services that every business owner can benefit from. Find the right partner, and you begin to level the playing field with your competition.
Of course, you still have to find that right partner. That's where we come in. Our virtual office services are tailor-made for solopreneurs who just need that extra bit of help to let their talent and skill shine. Browse our website to learn more about our services and begin to maximise your opportunities as a solopreneur.