yeah, I guess I could explain that in a bit more depth
 

someone want to post logs? I don't keep any.


so yeah, I was interested in the project a bit, sadly the pub meets so far have clashed with other stuff and I am not really a mailing list person most of the time, I like IRC. I did post a bit of an outline of what I thought was a useful direction the other day and we chatted on IRC about the finances of the hackspace. A spreadsheet had been put together of outline costs for the Wydnam road hackspace showing what looked like a rough break even position. Here it is: https://docs.google.com/spreadsheet/ccc?key=0AlKLZQD6xflKdGZwZ0xXcjNQY3laZWplSzR5bFNfREE The principal problem with the spreadsheet was that all the costs were exclusive of VAT and all the revenues were inclusive of VAT. This is a *bad* thing. These kind of spreadsheets are just educated guesses full of notional figures, however the point is that if you get the VAT muddled up like this then your guess is 20% more optimistic than you think. If the plan worked and the guesses were spot on and all targets were met then this was planning to achieve a 20% shortfall on the rent at the end of the year. OK so this is fine, this is a standard cockup, easily done. This is failing to plan correctly and it is OK, everyone does it, and it is fixable.

So I helped fix it. We put together a costed spreadsheet modeling a rising membership over the first year with and without VAT, with some members contributing £150 per month and others £30 per month (and that really is now 3 ten pound notes leaving your wallet, not £36 inc VAT) and all these numbers are in the spreadsheet and you can mess with the model by changing the numbers in bold. You can have a play with it here, look at the £500 hackspace tab, maybe download a copy and mess with the numbers in bold (the rest calculate off those, but do check the formulas too)
https://docs.google.com/spreadsheet/ccc?key=0Ankl5FhsdSiZdGNYRDFOS2ZyRTgxNUZVWVFlNVU2QVE

This showed some problems in the finances, in addition to the cashflow problem which I didn't attempt to model. I also created a similar plan for the makerspace that I discussed on the list. I found a reasonable looking location for it which is £2000/month including rates and some other stuff. I put in some educated guesses for costs including 5k for equipment, 10k to do the place up (well 6k to do it up and 4k for rent on two unproductive months before the start of year 1 trading) plus some staffing costs and other things that sounded reasonable. As this would be a limited company it can raise capital and I put in a 30k initial capitalisation. the plan makes an operating loss in the first year and a profit in year 2 with the loss carried forward and offset against the profit in year 2 there isn't much corporation tax and it can pay a 10% dividend to shareholders in the second year. This means if you invested 3k in the space for a 10% stake in the business you might get a £300 dividend and your stake is probably worth quite a bit more than it was. This model includes a marketing budget which is needed to get to 300 members, all paying £12 a month, it is unashamedly a maker space rather than an industrial hackspace, but it will allow us to inspire hundreds of people across the area to get excited and make things. The space would be used during the day as a bit of a business incubator/hub area with the focus moving to classes/individual projects in evenings and weekends.

There are incremental revenue opportunities by doing central purchasing, so members could decide they want to build something, plan it all out in the space, put together a bill of materials and we price it up and procure the bits from wholesalers and get it delivered to the space, taking a retail margin on the materials.
You could do theme months, "so this month we are all going to make kites and then go out at the end of the month and see who's can go the highest" or "this month is circuit board planning, because next month we are renting a bunch of etching baths". Evening classes could be stuff from simple kit assembly to more self-directed projects. In the same way the Farnham Rock Choir has inspired a heap of people to go singing we could inspire a heap of people to do creative stuff making things.
That is all costed up in some detail in the spreadsheet, on the £2000 makerspace tab. I believe it would be possible to raise the required capital from people interested in investing in a cool project that would enhance the future of the area - I don't think you could get it gifted to the project.

So this is fine, we have a couple of plans modeled up, one cheap with low numbers of members and one at the high end inspiring large numbers of people to get involved. The ambitious one looks viable, the cheap one doesn't yet, but perhaps it could do, or perhaps there is a happy medium somewhere.

Today there appeared to be more of a decision that the cheap industrial space was what the project was all about, which is fine, that was the consensus on the mailing list too, I just did the finances spreadsheets for the expensive one for my own amusement to see if it would work. I lost interest in the whole project when the plan for the cheap place started to rely on £5,500 in "donations" (and there was another scenario for a smaller place which broke even based on 3.5k in donations). This isn't realistic and is working back from the bottom line. You should put in what you think you can get in donations (I would put in zero, but I wouldn't challenge a figure of up to £500 or so) and then see what the bottom line is. You can't decide that you can go for a cheap option that you can definitely afford on the basis that it only relies on a £3.5k handout from the donation fairy.

This is not failing to plan (a forgiveable thing) this is planning to fail. So we have a plan that results in a 3.5k deficit at the end of year 1. What happens then? It was suggested that it wouldn't be the directors picking this up, that would be unreasonable, but any deficit should be shared across all the members. There was some discussion about it being a community project rather than a business so everyone should pick it up - but this is bogus. Everyone might chip in for an unplanned problem, but this is a planned and scheduled deficit that is designed to sting the members at the end of the first year (well actually it won't get that far because the cashflow won't work, but lets imagine the cashflow is plausible). This isn't a community chipping in for a problem, it is planning to sting people.

What we know from Reading hackspace is that it is making a loss. They have someone who is currently picking up the slack, but it sounds like that is unsustainable. Cloning a model that you know is failing without making any effort to do things differently is unwise.

I think the fundamental problem is that there are not people here who want to run a hackspace and are looking at the best way to run a viable and sustainable hackspace that will inspire people to hack on cool projects with an ambition to make a difference to Surrey and Hampshire. There are people here who want a hackspace to exist so they can do their stuff in it. If other people happen to also use it then that is considered acceptable and more members is an unavoidable compromise to make the thing viable, much like having office space was an undesireable compromise. (and no, I was never after a cheap office, and it is not a lack of commitment to the concept of a hackspace on my part, I was talking about committing to the project to the extent of investigating relocating my business to provide £600/month revenue plus an investment of £3000 for a 10% stake in a viable proposition and probably sponsorship as well)

so yeah, I am out. Hope you get it to work somehow, good luck!

On Mon, Jul 9, 2012 at 10:14 AM, Christopher Roberts <chri...@gmail.com> wrote:

The fact that hackspaces are not profit-making isn't a big worry -
we're not in it for the profit.  The fact that some are loss-making is
more of a concern and we need to watch for this. So far the finances
have been something of a side issue, and we need to move this centre
stage, to ensure we don't prove Alan (Bell) right.

The level of interest that we have seen already is just amazing, and I
believe this will enable us to be one of the sustainable hackspaces.
We already have a number of people who are willing to pay exceptional
amounts of money to get this off the ground and with such strong
support, I feel we can surely get to where we want to be.

Sounds like a worthwhile line of enquiry.

Paul