Temporary Offices Offer
The Best of Two Worlds

By KORTNEY STRINGER
Staff Reporter of The Wall Street Journal.
From The Wall Street Journal Online

DALLAS -- Clients visiting Frank Ramirez, president of Premier Marketing Group International, are greeted by a cheerful receptionist named Margaret, who offers them doughnuts and fresh coffee. The office, in a swanky building in this city's popular Uptown neighborhood, is well-appointed and welcoming.

Just don't come calling without an appointment.

As it happens, 56-year-old Mr. Ramirez has neither a receptionist nor an office of his own. He pays $175 a month for use of both -- temporary space and support that he uses only when necessary.

Why a temporary office? For the most part, Mr. Ramirez runs his operation as a broker for international retailers from home. But that can present an image problem.

"When I'd have dinner with clients, a couple would say, 'Why don't we get together at your office in the morning?' " he says. And that, he says, forced him to "come up with some really lame excuse about why we can't."
He adds: "It's not always a good idea to say, 'Why don't you come to my house and have coffee?' when we're talking about negotiating big deals," he says.

Little companies have long looked to various tactics to try to appear larger, such as the contractor who gets an 800-number or the ad executive who works from home but drives a Jaguar to meet with clients. Some even pay for multiple phone numbers in different area codes to give clients the impression of far-flung operations.

But these days, some entrepreneurs are taking the idea a step further when business meetings at the kitchen table just won't do. They are using "flex space" -- temporary quarters they rent for a few months, weeks or even days, generally to appear bigger and more established than they actually are.

The offices may include receptionists, who present a smiling front for whichever client has rented the office. Today's receptionist for United Widget Co. may well be tomorrow's receptionist for XYZ Partners -- same smile, same space.

Small businesses have long had the option of sharing executive suites full time with other businesses. But flex space can be cheaper because it is temporary, helping out the bottom line of a small operation in a challenging economy.

Two companies dominate the flex-space office concept in the U.S.: Regus PLC, based in Chertsey, United Kingdom, and HQ Global Workplaces Inc., an Addison, Texas, temporary-office provider, both of which have had financial trouble.

HQ Global Workplaces emerged from bankruptcy-law proceedings last month, and a bankruptcy court recently approved Regus's reorganization plan.

HQ Global Workplaces has more than 200 business centers and office buildings, mostly throughout the U.S., that have furnished private offices, meeting and conference rooms, as well as administrative and phone support to small business owners.

The company says about half of the 25,000 people who work out of its offices are small-business owners trying to distinguish themselves in the marketplace.

While appearing to be large enough for a nice office can help make a good impression, some business experts warn that small companies risk misleading and angering important clients or customers.

"There's a fine line between fraud and puffery," says Stephen Bainbridge, an ethics professor at University of California in Los Angeles.

He adds: "Where you cross the line is when you have a client with a big project and a lot of money at stake and they're fooled into thinking you're much larger and more capable than you really are."

Shawn Stevens an Addison, Texas, lawyer, admits he was fooled by flex space. He attended a legal seminar at what he thought were the offices of a big law firm and was wowed by the eloquent lecturer. Only later did he learn that the speaker was working from temporary space.

"I hate to admit I've been fooled," Mr. Stevens says. "But I thought we were in a large law firm because everything from the art on the wall to the people sitting at the desks conducting business said it was a big law firm."

Peter Harris, HQ's chief operating officer, says, "Some very small businesses just want a prestigious business address to receive their mail, a day office to meet clients a couple of times a month or the use of a conference room periodically. But they don't want to pay for these things all the time."

HQ Global Workplaces' flex-space offices, which can cost from $50 for services such as telephone answering up to $2,000 a month or more depending on the market and other services used, are equipped with the trappings of a traditional office, including computers, fax machines and even video-conferencing equipment.

To complete the appearance, the temporary offices frequently include framed art, potted plants, water coolers, magazines in waiting areas and receptionists.

What the flex-space offices don't have are visible company logos or other identifying trademarks. But the receptionist tries to greet visitors as soon as they get off the elevator, so a customer doesn't have time to look for signs.

Matt Sanders, a partner in an information technology-consulting firm that uses flex space in a building near the Capitol in Austin, Texas, says the secretary adds a level of professionalism to his image.

In the business world, Mr. Sanders says, a company needs a solid address and phone number.

"At this point," Mr. Sanders says, "it's possible not to have an office consistently, but it's questionable if you don't have some kind of presentation of stability."

Mr. Sanders and his employees use the space anytime they need to meet with clients.

Courtney Jones, owner of Mariner Group, a Kansas City, Kan., company that provides financial and tax planning for high-income clients, uses flex space in a 50,000-square-foot HQ building in Kansas City. Mr. Jones also occasionally uses flex space in Washington, D.C., and Las Vegas when he meets with clients in those cities.

The Kansas City building is filled with flex-space clients, but some visitors to Mariner don't know this.

"I've had a couple of clients in the office say 'Gee, you've really filled up the space quickly,' " Mr. Jones says.

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