[Coworking] Running Coworking During a Recession....

[Carl Sullivan]

Hey Guys,

I have seen with increasing regularity, news articles are not being written
daily about the "impending market crash/correction" both in Australia, in
Asia, across Europe and in the US.

I founded Your Desk in 2011, three years after the GFC hit the world, but
unlike almost every other country, Australia never saw any real negative
effects from that time in history. So it would be fair to say that while I
started coworking in the aftermath of one of the (only) market crashes I
have experienced in my adult life I know there were many others that
successfully navigated that market correction.

So when the next negative cycle hits the world's economies (and with
Australia poised to be hit harder than almost any other country) I am
curious about how others successfully navigated or pivoted to keep the
business going and support their members?

The areas I am currently looking at being stronger in are:

*Community:*
Our community is great, but not well supported right now, with our approach
to date to simply leave them be to do their work. I am looking at rolling
out an internal referral program as both a cheap way to source new members
and as a jump start on those members already having at least one meaningful
connection with another member in our space.

*Message:*
As we grow and as other coworking spaces set up (weekly) we are going back
to the basics of "what do we stand for". As a suggestion from Alex from
Indy Hall, I will start to do Town Hall meetings with the members to allow
them additional opportunities to voice concerns, observations and
suggestions on how we can improve our ecosystem to best suit them

*Operations: *
We already have a lean team, and while I will be hiring some (sorely
needed) additions from February 2019, we will purposefully keep our team
small and agile.

*Finance Operations:*
An initiative by my brother Oliver, we will continue to review every
transaction monthly and ask ourselves if we can reduce the cost here while
maintaining our service, feedback from the Town Hall Meetings will also
help inform this process

*Business Intelligence:*
I work with a business coach, who monthly comes into our space, review our
finance, operations, team and culture, and asks the hard questions that we
as a team have not yet considered. This process has already allowed us to
grow our profit from 6% to 30% in 1 year, while at the same time growing
member satisfaction (measured through the NPS survey) from bad (NPS of -36)
to great (NPS of 53)


What I am most interested in is understanding what other spaces experienced
with member churn, specific way that churns happened and if in hindsight
there was a way that you could have supported that member more to stay in
your community.

Also any other tips, tricks or observations would be welcomed.

Cheers,
Carl
Your Desk

[Tracy Wilson]

Angel - This is great. I hope that operators keep this in a handy spot to
pull out when (assuming) the next economic downturn comes. As someone that
opened centers in both 2008 and 2009 - when I thought things were tough but
had no idea what misery was to come - I would say a lot of this is 'right
on.' There is no substitution for the creativity and flexibility required
to keep things going during those times - and your piece will be a good
framework for those people needing some fresh ideas for looking at their
operation. Probably the hardest thing was finding the balance between
holding to optimism and making the really tough decisions, and having the
faith to know when each was the required course. And, that no matter what,
I'd survive.

I *just* wrote an article on Recession-Proofing your Coworking Business
https://www.diycoworking.com/blog/2018/10/24/how-to-recession-proof-your-coworking-business
Angel

Post by Carl Sullivan
Hey Guys,
I have seen with increasing regularity, news articles are not being
written daily about the "impending market crash/correction" both in
Australia, in Asia, across Europe and in the US.
I founded Your Desk in 2011, three years after the GFC hit the world, but
unlike almost every other country, Australia never saw any real negative
effects from that time in history. So it would be fair to say that while I
started coworking in the aftermath of one of the (only) market crashes I
have experienced in my adult life I know there were many others that
successfully navigated that market correction.
So when the next negative cycle hits the world's economies (and with
Australia poised to be hit harder than almost any other country) I am
curious about how others successfully navigated or pivoted to keep the
business going and support their members?
*Community:*
Our community is great, but not well supported right now, with our
approach to date to simply leave them be to do their work. I am looking at
rolling out an internal referral program as both a cheap way to source new
members and as a jump start on those members already having at least one
meaningful connection with another member in our space.
*Message:*
As we grow and as other coworking spaces set up (weekly) we are going
back to the basics of "what do we stand for". As a suggestion from Alex
from Indy Hall, I will start to do Town Hall meetings with the members to
allow them additional opportunities to voice concerns, observations and
suggestions on how we can improve our ecosystem to best suit them
*Operations: *
We already have a lean team, and while I will be hiring some (sorely
needed) additions from February 2019, we will purposefully keep our team
small and agile.
*Finance Operations:*
An initiative by my brother Oliver, we will continue to review every
transaction monthly and ask ourselves if we can reduce the cost here while
maintaining our service, feedback from the Town Hall Meetings will also
help inform this process
*Business Intelligence:*
I work with a business coach, who monthly comes into our space, review
our finance, operations, team and culture, and asks the hard questions that
we as a team have not yet considered. This process has already allowed us
to grow our profit from 6% to 30% in 1 year, while at the same time growing
member satisfaction (measured through the NPS survey) from bad (NPS of -36)
to great (NPS of 53)
What I am most interested in is understanding what other spaces
experienced with member churn, specific way that churns happened and if in
hindsight there was a way that you could have supported that member more to
stay in your community.
Also any other tips, tricks or observations would be welcomed.
Cheers,
Carl
Your Desk

[Alex Hillman]

This is a super interesting thread - I agree with *lots* of the
advice/perspective in Angel's article (and not just the stuff attributed to
me lol).

An important thing I wanted to expand on a bit:

People who cancel for the reason "I'm not using it enough" is probably
among the most common reasons (behind people changing jobs and/or moving).

But I've learned to read this as *"I don't see value in staying a part of
this community now that I don't need a desk"* which is only a short hop to
either *"I haven't really connected with anyone here"* or *"I'm not aware
of the other ways to get value besides using a desk" *and in both cases I
consider that a failure of communication on OUR part.

We I can look at their profile for our online community and see that they
never created an account, or never intro'd themselves.
We can go back to their tour notes and get a sense that they came in with
an expectation of "I can rent a desk here" and we didn't do a good job of
showing them how they could participate in other ways.

There isn't a correct way or pace for people to discover their place in a
community, but we DO look at *early* indicators that they weren't actively
seeking a sense of belonging. And that's okay! Lots of people aren't, at
least not actively.

But quite often, people just aren't actively aware of the options that
already exist (like a membership option that lets them downgrade instead of
cancel) or that they have the agency to create something that they want,
but doesn't exist. They haven't asked for it, and we haven't done a good
job of showing them that it's possible.

Another thing is that when we opened (at the beginning of the last
recession) we had an INFLUX of people who were "newly independent" - some
by choice, many by force. They weren't looking for an office, they
were *looking
for people* who were already independent and they might be able to learn
from. That was literally the foundation of our first wave of growth.

In our next economic downturn, I expect we're going to see something
similar except that a decade later the physical and social infrastructure
to support a newly minted independent is WAY better. I think this will
likely be a good thing for coworking spaces, with a caveat that people see
and feel a sense of connection to the other members. If not, the coworking
space is simply a cost that can be removed/reduced. And I think *that's*
going to hurt a lot of spaces, especially the larger ones.

All of this is to say: people join coworking spaces for lots of reasons,
but the reasons they *stay* are fairly consistent, and that's the
relationships. I can tie retention patterns *directly* to active and
passive relationship building, and the interactions that our members have
with each other.

-Alex



------------------
*The #1 mistake in community building is doing it by yourself.*
Better Coworkers: http://indyhall.org
Weekly Coworking Tips: http://coworkingweekly.com
My Audiobook: https://theindyhallway.com/ten

Thanks Tracy! If a recession comes, I'll be SO curious to see how it
affects coworking esp. if there is a major difference in chain vs. indie
coworking.
Angel

Post by Tracy Wilson
Angel - This is great. I hope that operators keep this in a handy spot
to pull out when (assuming) the next economic downturn comes. As someone
that opened centers in both 2008 and 2009 - when I thought things were
tough but had no idea what misery was to come - I would say a lot of this
is 'right on.' There is no substitution for the creativity and flexibility
required to keep things going during those times - and your piece will be a
good framework for those people needing some fresh ideas for looking at
their operation. Probably the hardest thing was finding the balance
between holding to optimism and making the really tough decisions, and
having the faith to know when each was the required course. And, that no
matter what, I'd survive.

I *just* wrote an article on Recession-Proofing your Coworking Business
https://www.diycoworking.com/blog/2018/10/24/how-to-recession-proof-your-coworking-business
Angel

Post by Carl Sullivan
Hey Guys,
I have seen with increasing regularity, news articles are not being
written daily about the "impending market crash/correction" both in
Australia, in Asia, across Europe and in the US.
I founded Your Desk in 2011, three years after the GFC hit the world,
but unlike almost every other country, Australia never saw any real
negative effects from that time in history. So it would be fair to say that
while I started coworking in the aftermath of one of the (only) market
crashes I have experienced in my adult life I know there were many others
that successfully navigated that market correction.
So when the next negative cycle hits the world's economies (and with
Australia poised to be hit harder than almost any other country) I am
curious about how others successfully navigated or pivoted to keep the
business going and support their members?
*Community:*
Our community is great, but not well supported right now, with our
approach to date to simply leave them be to do their work. I am looking at
rolling out an internal referral program as both a cheap way to source new
members and as a jump start on those members already having at least one
meaningful connection with another member in our space.
*Message:*
As we grow and as other coworking spaces set up (weekly) we are going
back to the basics of "what do we stand for". As a suggestion from Alex
from Indy Hall, I will start to do Town Hall meetings with the members to
allow them additional opportunities to voice concerns, observations and
suggestions on how we can improve our ecosystem to best suit them
*Operations: *
We already have a lean team, and while I will be hiring some (sorely
needed) additions from February 2019, we will purposefully keep our team
small and agile.
*Finance Operations:*
An initiative by my brother Oliver, we will continue to review every
transaction monthly and ask ourselves if we can reduce the cost here while
maintaining our service, feedback from the Town Hall Meetings will also
help inform this process
*Business Intelligence:*
I work with a business coach, who monthly comes into our space, review
our finance, operations, team and culture, and asks the hard questions that
we as a team have not yet considered. This process has already allowed us
to grow our profit from 6% to 30% in 1 year, while at the same time growing
member satisfaction (measured through the NPS survey) from bad (NPS of -36)
to great (NPS of 53)
What I am most interested in is understanding what other spaces
experienced with member churn, specific way that churns happened and if in
hindsight there was a way that you could have supported that member more to
stay in your community.
Also any other tips, tricks or observations would be welcomed.
Cheers,
Carl
Your Desk

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[Jeannine van der Linden]

This right here.

I opened my first space just as the last recession was hitting -- though it
was a slower, shallower curve here in Europe, the sudden shift to mandatory
entrepreneurship came in like a bomb. Suddenly people were being
confronted with doing the same job they always had done as an employee, as
a freelancer. They were nervous and worried and not at all sure they were
up for this Brave New World.

I intentionally made that space homey and personal and intimate. A shiny,
corporate environment was exactly what they did not want. We had a guy
from the tax office come in and give lessons on how to keep books and
records as a freelancer, we had intentional freelancers come in and talk
about what it's like to freelance, we had folks come in and talk about how
to manage your retirement now you are a freelancer.

We are now two cycles away from that and have changed a lot of things since
then. I sort of miss it sometimes, though I am glad those folks are settled
now mostly.

Tip for Coworking in a recession: keep your costs low and your powder
dry. :-)

Post by Alex Hillman
Another thing is that when we opened (at the beginning of the last
recession) we had an INFLUX of people who were "newly independent" - some
by choice, many by force. They weren't looking for an office, they were *looking
for people* who were already independent and they might be able to learn
from. That was literally the foundation of our first wave of growth.
In our next economic downturn, I expect we're going to see something
similar except that a decade later the physical and social infrastructure
to support a newly minted independent is WAY better. I think this will
likely be a good thing for coworking spaces, with a caveat that people see
and feel a sense of connection to the other members. If not, the coworking
space is simply a cost that can be removed/reduced. And I think *that's*
going to hurt a lot of spaces, especially the larger ones.

[Jeannine van der Linden]

Oh yes, so much this.

I find it sort of humorous that we are now talking about whether coworking
can survive a recession, there are serious articles from back then (and it
wasn't that long ago) about whether coworking was really just a
manifestation of recession and whether it would go away as soon as the
economy took an upturn.

To which I sad then as I say now, come back in ten years, we'll see then
who's still standing.

Jeanine,
I remember this woman who was familiar with Cohere but was working in a
regular job in the next town. She showed up on our doorstep one day after
lunch and proclaimed, "I just got laid off. I didn't want to go home so I
came here instead."
A
On Wednesday, October 31, 2018 at 3:37:30 AM UTC-6, Jeannine van der

Post by Jeannine van der Linden
This right here.
I opened my first space just as the last recession was hitting -- though
it was a slower, shallower curve here in Europe, the sudden shift to
mandatory entrepreneurship came in like a bomb. Suddenly people were being
confronted with doing the same job they always had done as an employee, as
a freelancer. They were nervous and worried and not at all sure they were
up for this Brave New World.
I intentionally made that space homey and personal and intimate. A
shiny, corporate environment was exactly what they did not want. We had a
guy from the tax office come in and give lessons on how to keep books and
records as a freelancer, we had intentional freelancers come in and talk
about what it's like to freelance, we had folks come in and talk about how
to manage your retirement now you are a freelancer.
We are now two cycles away from that and have changed a lot of things
since then. I sort of miss it sometimes, though I am glad those folks are
settled now mostly.
Tip for Coworking in a recession: keep your costs low and your powder
dry. :-)

Post by Alex Hillman
Another thing is that when we opened (at the beginning of the last
recession) we had an INFLUX of people who were "newly independent" - some
by choice, many by force. They weren't looking for an office, they were *looking
for people* who were already independent and they might be able to
learn from. That was literally the foundation of our first wave of growth.
In our next economic downturn, I expect we're going to see something
similar except that a decade later the physical and social infrastructure
to support a newly minted independent is WAY better. I think this will
likely be a good thing for coworking spaces, with a caveat that people see
and feel a sense of connection to the other members. If not, the coworking
space is simply a cost that can be removed/reduced. And I think *that's*
going to hurt a lot of spaces, especially the larger ones.

[Carl Sullivan]

This is all great stuff and a good launch point to form an action list to
implement over the next 12 months.

One point that I have already taken action on is our community has always
been designed for creative businesses and most of our (Companies who are)
members identify as a Social / Design / Web / SEO / Architectural / Graphic
Design / Literacy / PR... Agency. But we fell into the trap of charging
more (read Sydney market prices) because we could, not because it was the
best thing for the teams.

The learning here is that we value the diversity our small 1-4 person
companies brought to the community, but incentivised larger companies
through cheaper desks (because they bought more), the old pricing structure
was:

1-3 Desks... $750 a month
4-8 Desks... $700 a month
9+ Desks... $650 a month

But we have now just changed it to a flat $650 per desk per month
regardless of numbers, and surprisingly (or not) 6 of our smaller companies
instantly committed to taking additional desks, which is going to
completely replace a company of 10 that are due to move out at the start of
December.

@Angel your article was great, thanks for writing it and linking to it.

@Alex your points on what is the actual value to members was the final
prompt for me to change the pricing up for our members, and now the
challenge is to reconnect with the community to identify other ways to
bring them value and actively support them in leaner times

- Carl, Your Desk


On Friday, November 2, 2018 at 10:01:34 PM UTC+11, Jeannine van der Linden

Post by Jeannine van der Linden
Oh yes, so much this.
I find it sort of humorous that we are now talking about whether coworking
can survive a recession, there are serious articles from back then (and it
wasn't that long ago) about whether coworking was really just a
manifestation of recession and whether it would go away as soon as the
economy took an upturn.
To which I sad then as I say now, come back in ten years, we'll see then
who's still standing.

Jeanine,
I remember this woman who was familiar with Cohere but was working in a
regular job in the next town. She showed up on our doorstep one day after
lunch and proclaimed, "I just got laid off. I didn't want to go home so I
came here instead."
A
On Wednesday, October 31, 2018 at 3:37:30 AM UTC-6, Jeannine van der

Post by Jeannine van der Linden
This right here.
I opened my first space just as the last recession was hitting -- though
it was a slower, shallower curve here in Europe, the sudden shift to
mandatory entrepreneurship came in like a bomb. Suddenly people were being
confronted with doing the same job they always had done as an employee, as
a freelancer. They were nervous and worried and not at all sure they were
up for this Brave New World.
I intentionally made that space homey and personal and intimate. A
shiny, corporate environment was exactly what they did not want. We had a
guy from the tax office come in and give lessons on how to keep books and
records as a freelancer, we had intentional freelancers come in and talk
about what it's like to freelance, we had folks come in and talk about how
to manage your retirement now you are a freelancer.
We are now two cycles away from that and have changed a lot of things
since then. I sort of miss it sometimes, though I am glad those folks are
settled now mostly.
Tip for Coworking in a recession: keep your costs low and your powder
dry. :-)

Post by Alex Hillman
Another thing is that when we opened (at the beginning of the last
recession) we had an INFLUX of people who were "newly independent" - some
by choice, many by force. They weren't looking for an office, they were *looking
for people* who were already independent and they might be able to
learn from. That was literally the foundation of our first wave of growth.
In our next economic downturn, I expect we're going to see something
similar except that a decade later the physical and social infrastructure
to support a newly minted independent is WAY better. I think this will
likely be a good thing for coworking spaces, with a caveat that people see
and feel a sense of connection to the other members. If not, the coworking
space is simply a cost that can be removed/reduced. And I think
*that's* going to hurt a lot of spaces, especially the larger ones.

[Alex Hillman]

This rules. Also a perfect lesson in using basic economics to incentivize the preferred outcomes.

I actually have thought about charging MORE for teams than individuals as they grow, rather than bulk discounts. But I love this solution and the outcome. Well done.

Alex

This is all great stuff and a good launch point to form an action list to implement over the next 12 months.
One point that I have already taken action on is our community has always been designed for creative businesses and most of our (Companies who are) members identify as a Social / Design / Web / SEO / Architectural / Graphic Design / Literacy / PR... Agency. But we fell into the trap of charging more (read Sydney market prices) because we could, not because it was the best thing for the teams.
1-3 Desks... $750 a month
4-8 Desks... $700 a month
9+ Desks... $650 a month
But we have now just changed it to a flat $650 per desk per month regardless of numbers, and surprisingly (or not) 6 of our smaller companies instantly committed to taking additional desks, which is going to completely replace a company of 10 that are due to move out at the start of December.
@Angel your article was great, thanks for writing it and linking to it.
@Alex your points on what is the actual value to members was the final prompt for me to change the pricing up for our members, and now the challenge is to reconnect with the community to identify other ways to bring them value and actively support them in leaner times
- Carl, Your Desk

Post by Jeannine van der Linden
Oh yes, so much this.
I find it sort of humorous that we are now talking about whether coworking can survive a recession, there are serious articles from back then (and it wasn't that long ago) about whether coworking was really just a manifestation of recession and whether it would go away as soon as the economy took an upturn.
To which I sad then as I say now, come back in ten years, we'll see then who's still standing.

Jeanine,
I remember this woman who was familiar with Cohere but was working in a regular job in the next town. She showed up on our doorstep one day after lunch and proclaimed, "I just got laid off. I didn't want to go home so I came here instead."
A

Post by Jeannine van der Linden
This right here.
I opened my first space just as the last recession was hitting -- though it was a slower, shallower curve here in Europe, the sudden shift to mandatory entrepreneurship came in like a bomb.  Suddenly people were being confronted with doing the same job they always had done as an employee, as a freelancer. They were nervous and worried and not at all sure they were up for this Brave New World.
I intentionally made that space homey and personal and intimate.  A shiny, corporate environment was exactly what they did not want.  We had a guy from the tax office come in and give lessons on how to keep books and records as a freelancer, we had intentional freelancers come in and talk about what it's like to freelance, we had folks come in and talk about how to manage your retirement now you are a freelancer.
We are now two cycles away from that and have changed a lot of things since then. I sort of miss it sometimes, though I am glad those folks are settled now mostly.
Tip for Coworking in a recession:  keep your costs low and your powder dry.  :-)

Another thing is that when we opened (at the beginning of the last recession) we had an INFLUX of people who were "newly independent" - some by choice, many by force. They weren't looking for an office, they were looking for people who were already independent and they might be able to learn from. That was literally the foundation of our first wave of growth.
In our next economic downturn, I expect we're going to see something similar except that a decade later the physical and social infrastructure to support a newly minted independent is WAY better. I think this will likely be a good thing for coworking spaces, with a caveat that people see and feel a sense of connection to the other members. If not, the coworking space is simply a cost that can be removed/reduced. And I think that's going to hurt a lot of spaces, especially the larger ones.

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