What Is a Satellite Operation?

A satellite operation is a small office or branch office in a different location from a company or government agency's main office. Reasons for opening a satellite operation may include reaching an underserved area, expanding market share, and the lifestyle/quality of life factors for employees.

Satellite operations can be used in all kinds of businesses, such as financial advisors and brokers, doctor's offices, Department of Motor Vehicles offices, political offices, and corporate offices.

Key Takeaways

  • A satellite operation is typically a smaller office space in a different location from a company or government agency's main office.
  • An organization may want to open a satellite operation in order to reach an underserved area, expand the business, or address lifestyle and quality of life factors for employees.
  • Satellite operations can be used for a wide variety of business types.
  • Most satellite operations are led by a branch manager who will report directly to and take orders from a management member of the main office.
  • Companies should be aware of the numerous costs associated with opening a satellite operation.

Understanding Satellite Operations

Satellite operations are valuable because they can facilitate client interactions, foster more efficient sales, and ease the burden of customer service. Many customers may prefer having a local representative they can call on.

A satellite operation may operate with some degree of autonomy but is not a separate legal entity or subsidiary of the parent company. This structure could open up a foreign parent company to tax liability based on the location of the satellite operation, as well as legal liability.

Most satellite operations will typically be led by a branch manager who will report directly to and take orders from a management member of the main office. A satellite operation may constitute a large office space housing several workers or a home office with a single worker and no sign displayed.

Satellite offices may be used by agents of a broker-dealer working out of their home, but they cannot be marketed to the public as the same as an actual office of the broker-dealer. Registered representatives of a broker-dealer working out of a satellite office must fall under the supervision of a branch office, have the branch office address on their business card, and all emails must go through the branch's email server.

Satellite operations are common in a variety of industries, such as banking (branches), sales, and retail operations. The thousands of Starbucks stores could be considered satellite operations of their Seattle-based parent.

The COVID-19 pandemic has put companies in a precarious position when it comes to purchasing expensive, permanent office spaces in major cities such as New York and Los Angeles. Because of this, companies such as REI have elected to trade their larger properties for a handful of smaller satellite offices.

Benefits of a Satellite Operation

Erecting a satellite office comes with many benefits. Most obviously, it offers flexibility to the companies' employees, clients, and business partners. By providing these people with multiple options on where to have a face-to-face meeting, the company expands its potential for growth.

Establishing a satellite operation also ensures employees will have access to an environment that is conducive to productivity. As some may already know, while working from one's kitchen table may be convenient, it doesn't always provide the atmosphere necessary to complete one's work. A satellite office not only gives employees a place to get their work done, but it also provides a quiet, professional place to host business meetings. With a satellite office, companies don't have to purchase costly conference rooms and hotel rooms.

Another benefit of satellite operations is that they can help companies both attract a more diverse group of talent as well as retain their current employees by providing multiple locations for them to work,

How to Choose a Satellite Operation

In deciding whether to establish a satellite operation, companies must consider many factors such as the cost of renting and furnishing another office, the cost of hiring additional staff to work in that office, whether existing employees will be burdened by the need to travel, and if opening a satellite location is in line with the company's larger goals.

Let's look at some of the key factors companies should consider when determining whether or not to establish a satellite operation.

Costs

While opening a satellite office may increase profit in the long run, companies should be aware of the numerous costs associated with such an action. Will you purchase or rent your new commercial space? Does it make sense to purchase new or used furniture? Can your company afford to spend the necessary time to figure out these decisions? These are all questions that businesses must reflect on before committing to establishing a satellite office.

Location

Perhaps the most important factor to consider is where, exactly, would be best to open your satellite operation? Do you wish to be close to your industry's hub? Is there office space available in a location that will be easily accessible by local and traveling employees and clients? Are there local tax liabilities or other ordinances that will hinder your profits?

Furthermore, businesses should operate a satellite operation from a location that won't make inter-office travel and communication difficult. For example, do you have the necessary infrastructure in place to facilitate communication across timezones?

Amenities

Besides choosing an appropriate location for a satellite operation in terms of geography, you should also select an office building that has the capacity for technology, space, and amenities your company needs.

To avoid space crunches and subsequent moves, keep in mind your growth projections. How much square footage will your employees need? If the type of business you do will require employees to travel frequently, you may not need as much space as you think.

However, you may require a secure and powerful network system to house your company's data. Make sure the space you're moving into can handle whatever specific tech infrastructure needs your company has.

Finally, it's important to house your office space in a building that is managed efficiently. If there isn't proper security or parking at the facility, you don't want to end up paying additional costs to provide this service to your employees.

Companies Best Suited for a Satellite Operation

Satellite operations are popular with growing businesses. For example, instead of transferring an entire operation to a new site, a satellite operation allows you to avoid the potential logistical nightmare of a mass migration while giving you additional, flexible space in a new location that can serve a variety of needs. In addition to fewer logistical hurdles, a satellite operation can act as a buffer in case of a drawn-out move.

Growing businesses seeking to collaborate with other companies in their industry are also a good fit for satellite offices. Integrating your top talent with those from other companies, in a shared workspace, can benefit and grow your business.

Finally, another clear candidate for opening a satellite office is a business seeking to expand into its new location's market. Setting up satellite offices in different locations will help you gauge if your business will thrive in different locations.

Satellite Office FAQs

How Much Does a Satellite Office Cost?

Naturally, the cost of establishing a satellite office will vary widely depending on the needs of the company. However, some key factors related to the cost of the satellite office will be found in the rent or purchase of the commercial property, taxes, furniture, as well as staffing.

What Is a Cellular Office?

A cellular office is one of the most common types of office layouts. In a cellular office, each employee sits in an individual room or cubicle. Other office plans are open and activity-based layouts.

How Do I Open a Branch in Another State?

The first step to establish an office in another state is alerting and registering with the appropriate local government authorities such as the Secretary of State. After that, you should select a location within that state that considers the following factors: accessibility, infrastructure, and cost-efficiency.