Working From Home

When I started my investment firm, Gramercy Capital Management Corp. in 1986 the thought of working at home was not something I ever considered.   In the 20 years I had worked on Wall Street I had worked in large companies and small but never at home. My children were young and I wanted to get out of the house to work. But the internet has changed everything and opened new options for service businesses that must be seriously considered. 

My son-in-law worked for General Electric selling medical equipment for a number of years. GE was an early adopter of the idea that office space was expensive and unnecessary if your salesman had a computer with an internet connection. So mostly he worked from home.  Our corporate attorney worked for a large law firm for 18 years. A few years ago she observed that to cover the overhead of their fancy offices, her firm was billing her out at $800 per hour. She was pressured to bill for every minute she could. Her practice was mostly smaller firms, not huge corporate American companies, and she felt that price was just outrageous and unfair. She retired from her partnership and decided to work from home. All that’s missing is the camaraderie around the water cooler but the telephone can be used to compensate for that. To avoid isolation, it is very important to network, to make a point of attending meetings and conferences, to be out and about at night if not during the day.
The huge advantage of a home office is the degree to which you can lower your operating costs. Gramercy Capital had lovely space on Madison Avenue that we occupied for more than 20 years. It was expensive and far beyond our needs. In April 2009 when the landlord offered only small relief on the rent we chose to leave. Not only did we drop the very high rent on the space, we also ditched other costs: cleaning, an alarm system, fire department fees, office insurance, A/C maintenance, very high electric charges, and other expenses.  We had a slow fraction of a T1 line for our internet and voice which was very expensive and we couldn’t get TV service at all.
We explored a shared space in mid-town Manhattan but found we would spend a lot for an unpleasant room with no window and pay added rent to use a conference room when we needed it. Instead, we pared tens of thousands in expenses out of our operating budget by moving the business into its own room in my apartment. It has many advantages. Verizon’s Super high speed FIOS (fiber optic)  has allowed us to take thousands per year out of our communications bills. Insurance is a fraction of what it used to be. I save over an hour a day in commuting that can be put to better use like going to a gym in the building. If you haven’t ever considered a home office, you might want to rethink your position. There is a lot to commend it, including the deduction for a home office you can take on your tax return. With internet and phone access, you can literally be anywhere and work efficiently these days. It’s a growing trend because it makes so much sense.