Number Sanity Check

[Justin Dowling]

Hey fellow coworkers!

Like so many others, I too am looking to try and get things started down here in Atlanta.  There are a few cowork locations up and running - The Hub, Ignition Alley, 151 Locust, to name a few - however none of these is very close by, so I figured - I will build my own!

Anyway, I have been working numbers for a couple of weeks - relying heavily on the budget template from the friendly folks up at the Centre for Social Innovation - and while I have been using 'real numbers' for things like my real estate - meaning the actual numbers for the lease of the building in which I would be opening, actual quotations for things like cabling and the like - I am concerned, because, quite frankly, my numbers seem to be almost too good!!!!  While I hope that they are correct and certainly they are working correctly based on the way I have engineered my calculations, I am wondering if anyone out there can answer this question:

What is a reasonable revenue per sq.ft to expect?  I ask this because this would seem to be a normalized number that filters out the noise of a particular city/location. Is it reasonable to expect, for example, RPSF to equal 115%? Where 115 = 115% of the COST per sqft??

If the above is not making sense, and someone has a better expression for what I am looking for, let me know.

The shortest version of my question is that I am looking for a sanity check of my numbers.

Thoughts?

Ideas?

[Alex Hillman]

Get used to decoupling revenue from square footage. Revenue in a coworking space isn't tied to square footage, its tied to membership. 

While we have been fast approaching "full" at Indy Hall, we recently made some tweaks to our membership and found a huge opportunity to grow the active membership without increasing our square footage. Our revenue bump was enough to make my book keeper ask what the hell we'd done.

Because the focus of coworking isn't desks, but instead active members, you've got much bluer skies in terms of revenue projections.

To keep things simple for now, though, I recommend the following:

1) Figure out the membership levels that you think you'll be able to sell, and at what levels of usage of the office

2) Figure out how much desk space that many members will need, add some room for growth (1.5x-2.5x depending on your appetite for risk)

3) Figure out your bootstrap monthly costs for a space that size

4) Make sure that your membership projections get your space sustainable. So long as you can do that, growing revenue past sustainability is limited only by your creativity.

-Alex

 
/ah
indyhall.org
coworking in philadelphia

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[Jerome Chang]

Alex is right.  We base our revenue on memberships, although since our model allows for a # of dedicated spaces, we do establish a conservative reference point based on standard real estate occupancies (in other words, 1 person per desk or office).  Therefore, our community-driven portion of revenue could probably learn some tips from others.

Alex, care to elaborate how to bump up memberships yet another level?  From what I've heard about The Hub in Berkeley when it opened, the memberships sold very quickly because they promised tons of events; meanwhile, their space probably only had about 30 seats.

Jerome

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[Alex Hillman]

I'm planning on some more thorough documentation of our changes and adjustments, as well as the results over time and things we had to do to get things to work. This wasn't as simple as a "flip of the switch", required a bunch of iteration and some patience. 

/ah
indyhall.org
coworking in philadelphia