Record numbers of small businesses quitting offices to cut costs.

 Fears over the stability of the economy and the need to cut costs is forcing over 50,000 small businesses a month to close down their offices according to a study conducted by O2.

O2 questioned over 500 small businesses and identified that in the last eight months over 13% have chosen not to renew a lease on an office or business premises and are now working remotely or from home.

It is estimated that over 400,000 small businesses have quit their offices since the onset of the credit crunch in November. The research also found that 60% of those still working from a dedicated business premises are considering giving it up within the year.

Cost savings is main motivator

The need to reduce costs was cited by 62 per cent per cent of the businesses questioned as the greatest reason behind the move. Credit crunch fears and the threat of possible recession were also revealed as making small businesses reluctant to commit to new fixed term rental contracts.

In addition to saving on overheads, flexible working and advances in mobile technology have also been identified as key reasons behind the growing numbers of small businesses choosing to give up fixed business premises. 24 % of those questioned revealed they now spend up to 50 per cent of their time away from the office and 57% said that new technologies like wireless internet and mobile broadband had influenced their decision not to have a fixed business premises.

A recent report from NB Real Estate revealed that vacant office space in some cities across the UK has nearly doubled compared to this time last year.

In a further indication of the declining need for office space, over half (53 per cent) of small businesses revealed they now have a virtual network allowing them to work completely remotely. 39 per cent expected to have a network installed in the next 12 months and revealed that faster remote access to email and business servers will see them spending significantly more time away from the desk.

Simon Devonshire, head of O2 SME marketing, comments: “Developments in technology and mobile communications are enabling businesses to be flexible and respond very quickly to changes in the market place. Getting rid of the office relieves many small businesses of a major overhead very quickly and shows a rapid response to current economic pressures.”

The lack of a fixed office premises was also identified as having little impact on the customer relationship as increasing numbers of customers grow receptive to the benefits of new technologies. Eight out of ten small businesses operating from home admitted that their customers were not concerned about their lack of an official office premises.

Ben Reid, a partner in creative design agency, Cascade, says that they recently took the decision to give up their office in London.

"To our clients nothing changed – we still had the same email addresses and our landline phone number even remained the same - however we had in fact completely relinquished the office and my business partner and I were now working from our respective homes," says Reid

A problem highlighted previously in SME Web is that of the payment terms larger companies are placing on smaller bussinesses. Reid says, "we had recently started doing design work for a couple of large corporate companies and their payment terms where really affecting our cash flow. By giving up the office we were able to cut our overheads by over £4,000 a month and when times are tough, its savings like this that can really help.”

In response to the increasing numbers of small businesses operating from home, O2 has launched an enhanced support service for Small Office broadband customers. The service provides technical support for small businesses operating from home, enabling them to book an IT engineer to visit their premises the next working day in the event of a technical problem.

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