Business Model Study Group

[Jeff Gunther]

Hello,

I've been watching all of the Loosecubes news traffic today and reflecting on my own experiences over the past few years. 

Although I own a profitable space in Virginia, my ultimate conclusion is that coworking's business model is at best immature, at worst still unproven. We all know of spaces that have financially failed, but we still haven't done much as a community to change the outcome.

Are any space owners interested in creating a private group of peers to study each other's financials? To join the group, each participating space would be required to openly share their income statement and balance sheet.

If your interested, please email me offline.

Best regards,

Jeff Gunther
OpenSpace
455 Second Street SE, Suite 100
Charlottesville, VA 22902

[Jerome Chang]

While June 2013 is still months away, I did announce a few weeks ago that there'll be a weekend gathering in June in SF @NextSpace for any coworking owners/operators who'll have been in current operation for 12 months.  I anticipate a session on the below topic, as we did the same last year October in LA @BLANKSPACES.

Jerome
______________
BLANKSPACES
"work FOR yourself, not BY yourself"

www.blankspaces.com
5405 Wilshire Blvd (2 blocks west of La Brea) Los Angeles, CA 90036
323.330.9505 (office)

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Visit this forum on the web at http://discuss.coworking.com
 
 

[Mojo]

Hi Jeff,

I own a space in Asheville, NC and recently expanded which has created a bit of additional financial pressure - so I am always in the process of noodling my coworking model as well.  Fortunately I am founder and creative director of Native Marketing (my day job) which helps balance out the dollars.  Now that I've been a coworking space owner for nearly 2 years it's a lot easier to see the larger financial picture and learn from mistakes.  I agree that it would be a good idea to get together and share with each other, but I believe having each member simply provide their pricing models and operating expenses (vs. full open accounting) is all that's really necessary.  I'm also a fan of identifying and developing new revenue streams that (1) benefit coworking members, (2) add to the coworking space bottom line and (3) help build the coworking community.  I'm moving fast forward on one such idea now and hope to present at GCUC in March.

Jerome - please keep me posted on the timing specifics of the June SF get together. 

- Craig

[Jacob Sayles]

I love geeking out about this stuff and noodling on business plans.  Count me in.  We tend to lean on the simple side of things and only have one revenue stream: memberships.  I think there are a lot of projects that fit the three points you bring up Craig that, if done right, bring in more members, and keep the members you have happy.  Personally I find this approach easier to manage because there is only one source of revenue to track and individual initiatives don't have to live or die by the numbers.  That's my take and I also have five years of numbers to play with.  

Jacob

---
Office Nomads - Individuality without Isolation
http://www.officenomads.com -  (206) 323-6500

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[Craig Baute - Creative Density Coworking]

I do think the coworking business model is immature but proven to work. The coworking world has many successful stories and many failures, but we are within the failure and success rates of any other business and in many cases doing better. What I think the coworking business model does need to explore is additional revenue sources beyond just memberships that benefit the members. There have been several previous discussions in this groups about alternative sources - sponsorships, classes, add ons like mail or printing - but these models and the process of launching them have not fully developed. I think these need to explored more in the open because I don't think a lot of us share these stories. 

I also think keeping new spaces expectations in check and doing a proper cost and revenue analysis combined with proper runway funding would be the biggest benefit to discuss. My gut instinct is that a coworking space is many space owners first time taking on a large sum of fixed expenses versus having a service based company and can have new challenges.

I'm finishing up a book right now and Alex is working on one as well that discusses the business aspect of coworking to address some of these problems. I would be happy to contribute some of the spreadsheets and pricing models and insights that will be in the book to the conversation.

Craig

Creative Density

[Jerome Chang]

FYI, the serviced office industry, aka, Regus et al, have provided other revenue streams for decades, including said mail/phone, printing...even internet access (which they sometimes call, "data plans" for combo laptops and VoIP phones).  They're all add-ons in their minds, even "kitchen access" ($150/person!!!).

Assuming some of these add'l revenue streams are ones we'd even consider, note that have indeed been "fully developed" by them, just not by us...yet?

Jerome
______________
BLANKSPACES
"work FOR yourself, not BY yourself"

www.blankspaces.com
5405 Wilshire Blvd (2 blocks west of La Brea) Los Angeles, CA 90036
323.330.9505 (office)

[Randall G. Arnold]

Hello all,

 

I'm still just a fly on the wall with big dreams about building a coworking space, but I'll go ahead and share my thoughts on this.

 

My goal would be a space 100% free of charge for members.  Granted that could be difficult, but that's where I would aim.

 

My thoughts on accomplishing that are as follows:

 

1. Promotions/Partnerships.  I would work with companies willing to put up funds in return for promotion.  For instance, companies could propose projects, contests, etc for my members.  I in turn would extend their advertising reach, especially with grassroots efforts.  Some funds from participating entities would go toward operations.

2. Sponsors.  I would not charge individual freelance, student, retired or unemployed members, but any companies needing temporary or permanent space would be charged.

3. Services.  My dream coworking space would include a cafe (possibly with a drive through to increase traffic), magazine rack, small store, and packing/shipping/binding/etc services.  Maybe even partner with Fed Ex, Staples etc to house a satellite operation for them.

4. Whatever else comes to mind!

 

Granted these require some effort and may not work for everyone if at all, but the idea is to create a self-sustaining environment for coworkers.  I do think it's possible.

 

Randy

Randall (Randy) Arnold
Developer and Enthusiast Advocate
http://texrat.net
+18177396806

[Alex Hillman]

I agree, and I think that our edge can be staying aligned with what makes coworking unique. The first thing I think if looking for ways to implement add-ons in a way that doesn't feel transactional 

t think we're on a different path with add-ons, given a bend away from "utility" and toward a "participation". 

Example: Many spaces are defining models for hosting events. On one end of the spectrum, you can provided space to host an event. But taking the participation angle, we can provide the space for a fee to members and partners who want to do things that contribute to the community: classes, workshops, brainstorms, presentations, lectures, etc. 

The former is consumptive. They utilize the space for a period of time, we get money in return. If we do a good job, they get value from having been hosted, and we get money for providing the opportunity.

The latter is additive. In our case, we have members who have gained knowledge to share (+1 for the organizer for learning by teaching), other members within and outside of the community who want to gain that knowledge (+1 for the attendee for the professional/personal development), and we help communicate the experience in the context of our goals as a community (+1 for expression of common goals).

Individually these three components would add value. Combining them, though, can be done so that the sum is greater than the parts. When that happens, the value can attract more value that doesn't consume the finite resources that we have to offer.

-Alex 

--

/ah

indyhall.org

coworking in philadelphia

pre-order the new eBook, "the business of community"

[Randall G. Arnold]

Alex you jogged my memory-- I forgot another revenue source I had n mind.

 

While brainstorming my Dream Coworking Space I realized that after hours use could be profitable.  If the space was designed right and had enough room, it could host after hours parties, training, meetups, etc.  I've been involved in open source software communities for several years and at every event we were looking for interesting places to hold evening mixers.  The right kind of coworking space could be ideal.

 

Randy

[John Wilker]

At Uncubed we've used a mix of the models Alex talks about RE: space usage. Our current set up is that members can host meet ups if nothing else is on the calendar. If a meetup needs a space, it has to have a key having member to take responsibility for it.

The above applies to free events. Meetups, mixers, etc.

If the event is for pay, we charge a fee, based on amount of time, what we'll need to do cleaning and prep-wise, etc. Our thinking is if the event is charging and intended to make money, it should pay for the space.

John Wilker
Founder, 360|Conferences | Partner, Uncubed
(720) 381-2370
twitter: jwilker
johnwilker.com | 360|MacDev | 360|Stack | 360|iDev

[Jacob Sayles]

Keeping expectations in check is key!  It's hard to know how many spaces that have closed are because they expected huge returns or blew their budget building infrastructure that didn't pan out.  These are not examples of how coworking isn't profitable but it's hard to sort that kind of thing out from only headlines.

Jacob

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Office Nomads - Individuality without Isolation
http://www.officenomads.com -  (206) 323-6500

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[Alex Hillman]

Brilliant observation Jacob, 100% agreed. 

-- 

/ah

indyhall.org

coworking in philadelphia

Got Community? http://masterclass.indyhall.org

[Pete Sloan]

Alex…how do I get off the coworking discussion train?

[Alex Hillman]

Pete, you can visit https://groups.google.com/groups/opt_out?hl=en-US, provide your email address, and it'll let you remove yourself from this list (and any other lists).

-Alex

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/ah

indyhall.org

coworking in philadelphia

pre-order the new eBook, "the business of community"

[Matija Raos]

Coworking Croatia is also aiming for this...

We want to open the cost free or minimal cost  Zagreb based coworking space setup NGO  style and get the city owned space from the the city and funds from the state / donators / sponsors based on activities/programs  + with regional partnership projects (Slovenia + Bosnia and Hercegovina + Serbia) funding from EU funds for all sort of otehr activities.

We just started with our coworking promotion and community building activities via Coworking sessions / workshops and similar ...  and we know we have a long way in front of us ...  but coworking in this region is a fresh concept and media+public has received it AMAZINGLY ... everybody is excited and wanna jump on the wagon :D

;)

-----------------------------------------------------------------

Matija Raos

Aleja pomoraca 25

10 020 Zagreb

matij...@gmail.com

+385 (0)97 7932853

[Derek Neighbors]

Matija/Randall,

We do this model with Gangplank. Collaborative Space that integrates
into civic community. We have recently put together some things to
help others do the same in their local area. If you want help let me
know and I will get you plugged in.

--
Derek Neighbors
http://derekneighbors.com
Mobile: 480-335-9746
Skype: derek0108

Co-Founder of Gangplank : http://gangplankhq.com
Partner at Integrum Technologies : http://integrumtech.com
President of Downtown Chandler Community Partnership :
http://downtownchandler.org

Connect With Me
Linked In : http://linkedin.com/in/dneighbors
Twitter : http://twitter.com/dneighbors

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[Matija Raos]

It would be really great if you can send us all the materials that you think we could find useful. BIG TNX! 

I will browse your links and do a little research.  I'm so happy we have somebody to consult with ;)

M.

-----------------------------------------------------------------

Matija Raos

Aleja pomoraca 25

10 020 Zagreb

matij...@gmail.com

+385 (0)97 7932853

[Mojo]

Craig and others, there seems to be little question that the primary revenue stream for coworking communities is work space memberships.  After that there has been a hodge podge of experiments within each community to see what works best, most efficiently and for the greatest benefit to the space and its members.  At Mojo, our second biggest stream is meeting space - mostly conference room rentals for non-members.  We also do printing for local business and believe that this can become a significant profit source.  (we lease a printer and pay 1¢ for black prints and 10¢ for color ... we charge 5¢ for black and 35¢ for color to non-members.  We just did a 3,500 page print job ... the math is pretty simple there.

The trick I find is to keep it simple.  Do what is best within the limits of your current system resources and then look for "plug ins" that don't over tax your time/energy ... but can deliver benefits to you and your membership.

A few of you mentioned local sponsorships as a revenue stream.  The trick is finding the right sponsors (who fit your member audience) and also having the resources to deliver what they expect in a professional/meaningful way.  It can be done, surely, but it'll be important to look at the cost/benefits of each.

I'm beginning work on an idea that I think offers a better solution to tapping sponsorship as a revenue stream for the coworking movement. I consider it a "plug in" for sponsorship.  Instead of each coworking space identifying and negotiating with local sponsors, We've started to build a network of coworking spaces and will facilitate the relationships with national level sponsors on a larger scale.  By creating a more complete national footprint we can attract bigger companies with brands that have an authentic fit with the coworking movement and will inject energy and value into the membership at each space.  Think Intel, Apple, Cartoon Network/Adult Swim, Converse, Acer, REI, Prius, Cannondale, Canon, Belkin, Clif Bar, 5 Hour Energy Drink, etc.  Having larger/national sponsors should also provide higher "sponsorship fees" to coworking owners - and demand less time/energy to activate.

I guess I should mention that my "day job" is running an advertising agency with multiple Fortune 500 clients who are looking for this sort of experiential connection to the smart, young, entrepreneurial audience.

Our network concept is just getting started, and I plan to have more details to present at GCUC, so I'd love to hear any feedback on this idea as well as talk with anyone interested in possibly joining our "network" of spaces.

[Jacob Sayles]

This fits with ideas I've had regarding the future of Open Coworking, the non-profit we started this year to handle the financial end of the Coworking Wiki Project we've been working on.  The benefit I see is that an organization like this can not only have a large scale, scope, and reach, but also provide a buffer between sponsors and the individual spaces and be the broker that ensures every element of any deal is in line with the coworking core values.  If you are interested in discussing how we might combine efforts, that could work out well.  

Jacob

---
Office Nomads - Individuality without Isolation
http://www.officenomads.com -  (206) 323-6500

--

Visit this forum on the web at http://discuss.coworking.com

[Craig Baute - Creative Density Coworking]

Alex,

That's a good way to describe the selection of events. When I was talking to Jacob he made a similar point in that events that have community participation are not only a higher value to the community but is also an outlet for members to get involved. It also doesn't put the burden of managing the space during all events allowing the owners to have some free time. This is an articulate way of describing how John and I manage our events at Uncubed and CD in Denver.

Craig

[Craig Baute - Creative Density Coworking]

Jacob and Mojo,

I have always loved this idea of getting sponsorships on a more national level for services that are truly beneficial to our communities. I was approached about six months ago by an ad agency in California that had a client that was trying to enter new markets and sponsor coworking spaces. It seemed like a good match of company and community because many of the members would be interested in interested as it was based on a problem we recently brainstormed. I thought of it as a win-win, but ultimately we were not selected. As the coworking's awareness grows in the next few years I could see more services wanting to reach our members. We just need to remember to be proper gatekeepers with clear approval guidelines so we aren't promoting services to our members that are obtrusive or worthless just so an extra dollar can be made.

I could see LeXC eventually adding this as a revenue stream for their members but opening it up to a broader group would help more coworking spaces with Open Coworking. Most importantly, it would be a benefit to our members if it involved tools that many of community members already used at a discount and helped them run their businesses more efficiently. 

[Jerome Chang]

I don't mean to drudge up any old debates, but one of the major initiatives I had pushed for in last year's Coworking Owners' weekend was to have some national association/alliance/etc. so that we could

harness these national-level services

accelerate or even fund projects like Open Coworking

"study groups" for reviewing business models

etc.

Unfortunately, no such national org came to fruition from the 30 of us who had met.

Perhaps we can readdress this @GCUC or the next Coworking Owners Weekend in June in SF @Nextspace.

or like Craig mentioned, LExC could perhaps take on some of these initiatives.

Jerome
______________
BLANKSPACES
"work FOR yourself, not BY yourself"

www.blankspaces.com
5405 Wilshire Blvd (2 blocks west of La Brea) Los Angeles, CA 90036
323.330.9505 (office)

[Jacob Sayles]

Actually TWO organizations came out of that meeting.  Both LExC and Open Coworking were manifestations of the conversations we had that weekend.  

Jacob

---
Office Nomads - Individuality without Isolation
http://www.officenomads.com -  (206) 323-6500

[Craig Baute - Creative Density Coworking]

Thanks for the clarification. 

[Jerome Chang]

Sort of and yes.  LExC came about because a few months later after that weekend, just a few of us decided to just forge ahead despite not getting collective buy-in from the relatively small 30 people.  Remember, the point of just 30-ish people at that weekend was to be productive, vs. the entire national coworking community of 600+ coworking space owners.  Anyway, so sort of yes - thanks for the reminder Jacob.  :-D

Jerome
______________
BLANKSPACES
"work FOR yourself, not BY yourself"

www.blankspaces.com
5405 Wilshire Blvd (2 blocks west of La Brea) Los Angeles, CA 90036
323.330.9505 (office)

[Alex Hillman]

Agreed on both counts. 

Key takeaway I see: 

Don't underestimate how hard real collective buy in from a seemingly small group of people is to get. 

Start small & focused, get enough buy-in to start something, and then continually execute to grow. 

This is a good lesson for within our own spaces as well as the larger communities (and, there's never only one community http://alexhillman.com/theres-never-only-one-community). 

-Alex

--

/ah

indyhall.org

coworking in philadelphia

pre-order my new eBook, "the business of community"

[lars hasselblad torres]

Hi all,

I like this idea of a study group. Three of my questions are:
- What exploratory activities have coworking spaces undertaken to inform business plan development
- In what ways have coworking spaces built community around coworking before opening (a sense of timeline would be helpful)
- What did your startup financing package look like ie what was the share of friends, fools, and family cash relative to debt or investment?

thank you!

lars

---

Lars Hasselblad Torres

local64.com | create + play + share

@local64vt  |  802-595-0605

[julianne]

Hey there all,

I would love to keep in the conversation - just catching up with my fellow Groupies :-)

I am sure that you guys have also kept up with the latest survey that came out here from Kelly Brown - actually, can anyone send me those results - I am having trouble retrieving them from Survey Monkey.

Cheers everyone!

Julianne
Julianne(at)Deskwanted.com