Finding the Extra 10% – Boosting Revenue in Regional Coworking Spaces
Being part of FWA’s Founding Board, facilitating our Independent operators network and 8 years of running WorkLife- my own regional network- has given me an incredible insight into the hustle & innovation required to make coworking on a small scale work.
And working with the awesome programming team for this Conference where we threw around a raft of ideas for talks on new revenue streams was a rare moment where, instead of feeling the imposter syndrome of being a small player in a room full of big fish- I instead felt like I was winning at a game of Coworking Bingo.
Virtual offices? Yep! All over it. Landlord agreements- ooh- we are trying! Side hustles- absolutely! Events- all the time! How about- Fractional memberships- oh you mean desk and office sharing. Had to since we opened. What about hospitality- since covid, our space becomes a bar on the weekends.
My point is, if you want to have an insight into experimentation in our sector- don’t look to the big guys first- Indie operators HAVE to throw everything at smaller spaces to make them work. Let them test, teach and inspire you. Without the advantage of scale – we have to work HARD to survive.
Because WorkLife is the model I know best- most of the imagery here is from our spaces- but the ideas are a mash-up from things I have learned, copied and tried from our generous FWA network of Independent operators – their creativity and willingness to share the challenges are what keep me stubbornly experimenting with this regional model.
After rent, staff is the biggest cost. And when it takes the same number to run a 2,000 sqm space as a 100sqm one, you need to be creative. We keep our wages @ 20% of OPEX with a combo of 9-3pm shifts for our community managers who are supported on some dats by Space hosts- who get paid a fee to host and tidy while they grow their own businesses.
I act as the multi-site manager looking after a centralised back-office, marketing and programming – plugging gaps wherever I can. We do our own cleaning. Oh and I still pick up the occasional consulting gig to top up the coffers when needed. So many of those in our network have side hustles or service businesses that complement. We are an agile bunch!
When you leave the vacancy rates and offices of the city for the suburbs and regions you can kiss goodbye leasing incentives and the negotiating power that comes with ubiquitous space. Ground-floor shopfronts cost more than Grade A offices. Many operators have 50% of their overheads committed in rent. WorkLife sits at 30%, keeping us chasing the extra 10% HARD.
So if your landlord isn’t going to help with your fit out, rent free periods or much really- and scarcity means minimal negotiating power- what can you do? WorkLife pays less than market rate for our Picton site thanks to an economic development partnership with the Council. But lots in our network buy their sites with their super funds, or repurpose community spaces- check out Koworks who convert surf clubs into coworking for the most creative!
Once the rent is as low as you can go- then you need to get creative with maximising your revenue- 24/7 if you can, 7 days a week is a must. At WorkLife Berry come 5pm Friday, the screens get packed away, the playlist shifts a gear, the lighting scheme changes, the doors are thrown open until 5pm Sunday we are SocialLife- a local cocktail and grazing bar adding a new revenue stream- but also delivering on community engagement.
The rise of the digital nomad has seen an influx of stay/play/work visitors. Promoting your space as a haven from holiday chaos brings in extra revenue at quieter times. Just make sure to price them so they are worth it! At WorkLife a Holiday day Pass sets you back a shocking $90 for the day.
Another growing area is Team Offsite’s or Planning Days which, with holiday day passes is now 10% of our revenue. We go to town on premium event planning, using our local knowledge to package accommodation and local experiences. Our multi talented team also moonlight as inhouse catering, workshop facilitators and photographers for an additional fee.
To squeeze the last drops from your spaces potential- many operators are hosting workshops, yoga classes or social events. Our regular local makers markets attract foot traffic, showcase our space and cheekily allow us to market ourselves on the local community facebook pages. This love-line of our P&L brings in around 2% of our revenue but saves us a fortune on marketing.
Now if that all sounds like hard work- it is- the ONLY money for jam is in virtual memberships. And in suburban markets where people like to keep home business locations private, be able to qualify for Local-only tenders or affordably test new geographic markets – the value prop for virtual is much more than mail handling and with ever tightening Google rules now requiring physical street signage – virtual value is on the up.
If you want to test an idea for finding the extra 10% – find one of the independent small space operators here today. The agility, creativity, flexibility, grit and determination required to make these small but mighty spaces work will be an inspiration I promise.
And to my colleagues out there- jeezus it’s been a hard few years- if you’re here – you’re already better off than the 70% of our peers who didn’t survive COVID. We are battle hardened and ready for the good times to roll. Hang in there- all we need to do is “survive till ‘25” and keep chasing the margin plays.
