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What is a Virtual Company? The Definite Guide

Izzy Turner
September 17, 2020

What comes to mind when you think of a company?

A bustling office with cubicles, the senior managerial team’s offices, and a boardroom, right?

Now, imagine all that is happening in the digital world. That is what we call today a virtual company! But what exactly is a virtual company? How does it function? And how can you create one?

This definitive guide digs deeper into the new concept of virtual businesses. By the end of this piece, you will know how a virtual company operates — its traits, advantages, types, and more.

Ready to learn?

Keep reading.

Understanding the Concept of Virtual Companies

A virtual company, also called a virtual business, operates entirely online. All the employees know their duties and work fully or partially remotely.

These virtual companies leverage online operations for managerial, administrative, marketing, and other businesses. The remote teams communicate and collaborate using these digital workplace tools.

Characteristics of Virtual Companies

What makes a virtual business one?

Unlike traditional settings, a virtual company entirely relies on the internet space.  Because of this, it has to meet specific criteria to thrive in this highly competitive environment. The following are some of those characteristics that define a virtual business.

  • Remote Staff: This is the group of staff members that the company employs. These geographically spread remote teams work from home and in co-working spaces. The only requirement is a stable and robust internet connection.
  • A digital workspace: A digital workspace is equivalent to an office space. The cubicle is wherever the employee is. The operations rely on online tools and platforms for task management, resource allocation, communication, and collaboration.
  • Result-oriented: Traditional offices uphold physical presence, which isn’t true with virtual businesses. These companies measure results by output, not office attendance.
  • Flexibility: Some virtual companies allow staff to work within timelines to maximize productivity. This allows the remote team members to manage their workloads around their personal lives.

Advantages of Virtual Companies

Picture this:

You are working from home for a virtual company. No commuting or dealing with the morning traffic rush! This highlights perhaps the most evident advantage of working for a virtual corporation convenience.

But that is not all, there’s more!

Virtual companies are advantageous for both employees and the company itself. This section highlights what these benefits are, starting with the benefits the company enjoys.

For Companies

Here is what a virtual company gains from being one:

  • Reduced overall costs: Virtual businesses can save on rent, equipment, and furniture costs. They also save on utility payments like electricity, water, heat, internet, and security.
  • A diverse global reach: Traditional offices only hire employees from the same region. Accessing a global talent pool allows virtual enterprises to overcome this limitation. This ensures that every position in the company structure contains the best person for the job. The communications manager could be from France, and the social media manager could be from South Africa.
  • Boosted productivity: The remote working model has significantly improved productivity. 35% of remote employees attest that they feel more productive while working remotely. This translates to the virtual company becoming more successful because the remote teams work at their best.
  • Better scalability: A virtual business can scale its operations up or down without major operational disruptions. They can attribute this to the remote teams working worldwide, the flexible working hours, and a digital workspace.

For Employees

Besides the convenience of working from home or your chosen location, here are the additional benefits of working for a virtual company:

  • Better work-life balance: 73% of remote employees appreciate the work-life balance advantage this company structure has brought. As a freelancer or a remote full-time professional, you now have more time to spend with your family and even partake in hobbies. This reduces burnout, improving productivity.
  • Reduced expenses: The commute to the office had its fair share of costs — fuel, lunch, and office attire. By working remotely, you can now put your salary to better use, such as savings and investments.
  • Greater autonomy: Working for a virtual company accords you the independence to become accountable. As a result, job satisfaction improves.

Types of Virtual Company Models

There's a spectrum of virtual companies, just like traditional businesses. You'll find multinational giants and local players thriving in the digital space. Interestingly, the size of these virtual companies often aligns with their customer reach – larger companies cater to broader audiences, while local players focus on specific markets.

The following are some standard virtual business models thriving in the digital world.

Fully Remote

This is a company structure where all employees work remotely without physical office space. Every employee, independent contractor and full-time staff member interacts and works together from any location.

Hybrid Model

The hybrid company structure blends remote and central office space for collaboration meetings. Some company operations may require specific teams to meet up for brainstorming, implementation, and performance review sessions.

Microworkspace

A microspace model is a virtual company outsourcing freelancers and independent contractors for specific jobs. Some of the services virtual businesses can outsource are as follows:

  • Administrative aid from freelance virtual assistants and bookkeepers.
  • Content creation from influencers, content writers, and copywriters.
  • Website and software development from web and app developers.
  • Financial management from freelance accountants and finance agencies.
  • Hiring, recruiting, and training services from human resource agencies.
  • Social media management from social media managers.
  • Website management from SEO experts.
  • Creative services from videographers, photographers, animators, and UX experts.

Virtual Franchises

This company structure has a franchisor, typically an established brand, licensing its business model to geographically dispersed enterprises. They share their name, operational know-how, and these businesses’ logo.

Examples of virtual businesses that operate using this model are:

  • Online tutoring services.
  • Content creation agencies.
  • Virtual fitness brands.

Virtual Company Culture

Despite the virtual nature of business, virtual companies are still run by specific company cultures. So, what makes a vibrant virtual company’s culture, and how does one accomplish it?

Here are three strategies:

  • Clear, regular communication: Clear and regular communication ensures a virtual company’s online operations run smoothly. Scheduling team meetings and building chat rooms helps keep the information flowing. This promotes cohesiveness, trust, and reliability.
  • Shared values and goals: A remote team with similar values and goals works efficiently. This similarity promotes a sense of direction and purpose for everyone involved in the business.
  • Virtual recognition programs: Programs, like Curated Online Chocolate Tasting and Virtual Happy Hour, can help virtual companies reward their team members with an easy, fun time and sweet incentives. This maintains the culture of rewarding good work maintaining morale and motivation.

Virtual Company Communication

In the virtual world, clear and consistent communication bridges the physical distance. Virtual companies can cultivate a robust communication culture using the following strategies:

  1. Choose the right tools: This step entails looking into various communication tools and picking the ones that facilitate collaboration best. Video conferencing is the best for meetings. Chat rooms and online instant messaging platforms facilitate quick updating among remote teams. Project and customer management platforms are ideal for collaboration, client management, and project progress tracking.
  2. Set communication guidelines: A virtual company has to set clear guidelines regarding its chosen communication channels. The guidelines might encompass the people authorized to post, the response times, and the communication frequency. No matter the guidelines, there should be mutual respect.
  3. Encourage open communication: Virtual companies that limit team members from openly communicating cause friction within the digital workspace. The communication moderators should create a space where each team member openly communicates their issue, which is amicably addressed, not shunned or rebuked.

Building and Managing Remote Teams

Let’s be honest: managing remote teams of freelancers on varying timelines, with different attitudes and cultures, can be challenging. However, you can hack it if you do it correctly!

Thus, this is how you easily create and oversee a remote team:

  • Set and share goals for everyone on the team. Communicate directly with the task handler and follow up. Here, performance management systems tracking project progress can help streamline this process. After task completion, give feedback.
  • Conduct regular performance reviews. Performance reviews help virtual companies first acknowledge achievements and reward them. Second, they help them identify areas for improvement and offer a space for business growth.
  • Build employee trust. Virtual businesses can encourage team-building activities and knowledge-sharing sessions beyond online business operations. This ensures every team member knows who they are working with, building trust, reliability, and collaboration.
  • Provide support and resources. Virtual firms must provide all employees with the necessary tools for smooth online operations. For instance, they should give the hired freelance copywriters all the required writing, research, and editing tools for efficiency and consistency.
  • Compensate accordingly: A virtual company structure should ensure proper compensation through timely salary and other payments. Using modern-age platforms like Ruul helps virtual companies and individuals to share invoices and receive payments seamlessly.
  • Provide incentive: Working remotely sometimes causes burnout and strain. So much so that a virtual company should strive to offer support beyond technical support; for example, offering incentives like medical insurance could help keep employees healthy and happy. Day-to-day events like virtual social events, online communities, and occasional in-person team gatherings also suffice.

The Future of Virtual Companies

Virtual enterprises are quickly revolutionizing the workplace by leveraging the power of remote teams. Virtual firms can attain global reach by combining cutting-edge internet tools with excellent communication techniques. This promotes inclusion and scalability on previously inconceivable scales, allowing organizations to tap into a diverse talent pool and adapt to ever-changing market demands.

The only way from here is up!

However, a virtual company requires meticulous planning to reach its peak. Clear communication strategies, an inclusive work culture, and a commitment to building a solid company culture reinforce this upward trajectory.

Starting a virtual business doesn’t sound as complicated, right?

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