260. How Many Flex Desks Should My Coworking Space Have?
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TRANSCRIPTION
260. How Many Flex Desks Should My Coworking Space Have?
00:00:03 Welcome to the Everything Coworking podcast, where every week I keep you updated on the latest trends and how tos in Coworking. I owned and operated coworking spaces for eight years, and then served as the executive director of the global workspace association for five years. And today I work with hundreds of operators and community managers every month, allowing me to bring you thought provoking operator,
00:00:29 case studies and inspirational interviews with industry thought leaders to help you confidently stay on top of what's important and what you can apply to your own role in the Coworking industry. Welcome to the Everything Coworking podcast. This is your host, Jamie Russo. So what do you think of the new intro? I had a bunch of comments on it in our academy slack group,
00:00:59 and I had forgotten that I had the new intro that has been on my to-do list for far too long. If you want to feel better about procrastinating on something, I could admit how long it's been on my to-do list. It needed to be updated. And I kept over complicating it in my head thinking I needed a copywriter. I couldn't pick music,
00:01:22 you name it. I had a reason for prolonging that project. And then I started a second podcast with Giovanni pelvic genie. And if you don't know who Giovanni is, or if you haven't listened to our podcast, yet you need to go subscribe. It's called flex uncensored. And Giovanni is so like, just let's do it kind of guy. And so his timeline was much different than mine for launching podcast.
00:01:50 So we had to do an intro really quickly and you know what? We just did it and it was totally fine. We recorded it in one take, will we updated someday? Probably, but it was fine. And so I realized, okay, if we could do that and you know, an hour, then I can update mine. So it's updated all fresh and new and some fun new music.
00:02:12 So if I took some of you by surprise, hopefully you didn't unsubscribe because you didn't know what you were listening to. Super excited to be here today. What else did, I have a whole list of things. I was like, I need to talk about these things. Oh, one exciting update. We're getting a puppy. So I have a seven year old mini golden doodle named Louie.
00:02:33 We had another one who was 10 and we lost him last year. And that was devastating. He was such an important part of our family. So we've been promising my daughter, a puppy for a long time now, and it's never a good time to get a puppy. Just like, it's never a good time to have a kid they’re so much work.
00:02:52 So we were resisting and resisting and all of a sudden it's summer. And we are not one of those people who's running off to Europe for the whole summer. I don't know if you have friends who are doing that. I know a lot of people who are spending a lot of time overseas, if you're overseas, I don't know where you're going. Hopefully someplace fabulous.
00:03:10 Maybe you're coming here and we just decided, okay, I guess I decided let's do it. So I'm picking her up on Tuesday, also not a great day to pick up a puppy. Why not the weekend? Because it's the 4th of July weekend here. So I have to get her on Tuesday because we're camping this weekend. So wish me luck. Anybody who has calls with me next week,
00:03:31 we'll probably meet her. Her given name is Cholula. We usually do a jazz singer names. So we were going to go with Ella. We'll see how that goes. My daughter and I are kind of into Cholula. My husband's been out of town the whole time. This has been confirmed. So he has not gotten to weigh in on the name yet.
00:03:49 So hopefully he gets back tomorrow and we can discuss. So a couple of things before we dive in that are not puppy or interrelated, congrats to our latest certified Coworking Community Manager, Kelly C. Hayes from co-work 5, 9 1. She just finished her certification. If you are, or have a Community Manager that wants to get certified, you can get more info at Everything. Coworking dot com forward slash Community Manager and okay,
00:04:20 it is July almost. We are halfway through the year. Is that not crazy? I was just looking at finances and all the things and so crazy halfway through the year, by the way, I just went through all of my software and we're trying to prune our software list to good thing to do in the middle of the year. And I prepaid some of the things that had big savings for the whole year.
00:04:45 Our software bill is out of control. I'm sure yours is too. And just doing some of the things like we're halfway through the year, doing some planning. What else are we going to accomplish for the rest of the year? And I got to thinking that this would be a good time because our Facebook group and all of our operators are talking about how slow it is during the summer,
00:05:06 unless you're in Australia where it's winter, but we have an interview coming up with an Australian and a couple of weeks, and it was winter for her in summer for me. But for those of you, if summer is getting quiet in your coworking space, and I'm sorry, it's a really hard time of year. If you're a new operator, this is totally normal.
00:05:24 Especially, you know, some places who are still emerging from COVID that compounded with the summer. It's super tricky. People are at home with kids. I have a kid home this week with no camp. It makes me feel like a horribly guilty mom to be at home, having her no camp, because of course she's under screen far too much, even though I bought her a kid puppy training book that she's supposed to be reading cover to cover this week.
00:05:47 So it's a good time to get some projects done. So here's what I'm being sort of spontaneous about this approach. I want to do support some projects in our Everything Coworking academy, which we just launched at the beginning of June. We're a month in, but I want to experiment with the format for July and August. And I want our members to,
00:06:08 if they want to opt in to a project for Q3. So it doesn't have to get done right away, but we want to provide resources, coaching template, peer support, whatever it is that you need. That's what the academy is about is really supporting you in a way that meets you where you are pick a project that will have a real impact on your business,
00:06:32 that you have not yet tackled because you didn't have the momentum to get started. Didn't have the time didn't have the support, whatever it is, focus on it for about eight weeks. So July, August, we're going to go to the middle of August with this and get coaching and resources from our team and our network of experts. So the first thing that you'll do is decide what you want to work on and schedule a one-on-one kickoff call,
00:06:57 which will probably be with me unless it's on a week when I'm out of town with my family or you're going to attend, and then you're going to attend your kickoff call. We're going to create a project plan and identify what you're going to work on, the resources and coaching that you need to get that done. We're going to create a little project plan with timelines.
00:07:14 Not that all of you need this, but I know what it's like to have something on your list that, you know, you need to get to. And you just don't. So sometimes you need to commit to it with somebody else and have them help you make it go faster. I just committed to some coaching for myself. Partly for those reasons,
00:07:30 sometimes you need somebody to hash through some things with, and then you're going to schedule a one-on-one check-in so that we can assess your progress kind of in the middle. And we're going to do group coaching calls to help you make progress this way. You'll get to know other operators. A lot of our folks are joining the academy because they want access to other operators and what they're working on and what's working for them.
00:07:51 So this will be one of the ways to do that. And also you're committing to a project that is revenue generating, ideally for your business so that you can, you know, focus on adding meeting room revenue, focus on putting up a virtual mail program. Maybe you need to hire and you need an employee onboarding program, whatever it is we within reason wanting to support you.
00:08:15 So we have five spots that we can add to the academy this month. You just have to be an academy member to participate. So you need to do that. This probably errors, July 7th ish. So when you hear this, get a go register, cause we're going to cut registration off at some point, because you won't have enough time to get the eight weeks in.
00:08:36 So probably by about July 10th, we'll close registration for the slots. So you just have to join the academy. There's no long-term commitment. You can get through these eight weeks as a member and you get access to our content portal. We are not going to do an expert training that month for July or August. And if you join a little late, you're going to miss our group calls,
00:08:58 but you'll get in there in order to take part in this program. So to learn more about that, go to Everything. Coworking dot com forward slash academy, the registration page does not talk about this because this is something I'm testing and decided that I thought it was a great idea. So you will not see these details on that page. I'm not going to update the page because it's too much work.
00:09:20 You heard it here. If you have any questions, send us an email, but rewind and listen to the steps. If you need the details again, you can find the registration info at Everything. Coworking dot com forward slash academy. Okay, today we are talking about how many flex desks should my coworking space have. This came up in the Facebook group and I recorded a long-winded response because I'm very passionate about this topic.
00:09:47 I'm very passionate about this topic because being very candid here, it's hard for me to think of a single example of a coworking space that is not profitable, that isn't suffering from having too much flex space, too many hot desks, flex desks on assigned desks, whatever it is that you call them. Generally, the reason why we see folks not being profitable,
00:10:14 it's really related to how much flex space they have, which is, you know, there are a lot of tangential problems that there might be there, but generally people have over assumed how much flex they need and how many times they can oversell it. So they've puffed up their proforma thinking. They get oversell many times and they'll sell quickly. They don't sell quickly generally.
00:10:41 And they don't sell that many times. Generally. There are always exceptions. As a matter of fact, someone popped into the thread on the Facebook group and said, I have an exception and he's killing it with this flex desks. I keep mentioning Sarah Trevor's. She was, I think, episode three on the flex uncensored podcast. She's killing it on flex desks,
00:11:01 but that those are exceptions. And so if you are working on starting a co-working space, then we just talk about how to think through how much flex you should put in your coworking space and how many times you can sell your flex desks. Okay. Let's start with a very important concept. There's a difference between what the math says and what you can sell.
00:11:26 And there's probably a better way to word this, but if you do the math, somebody popped into the thread and was like, oh yeah, we have like 90 members. And we're only at 5% capacity because they never come in. That is math, right? So totally the math might be that you could oversell your desks three times, four times,
00:11:46 six times. If your user base is not using your space very often. So if you a 10 day pass and everybody's using the space five days, not 10 days, then somebody can use the same desk. Many times. I'm not going to actually do the math on a spreadsheet, but that's the math that people are doing when they build their proforma.
00:12:10 And I do this all the time with folks in my Coworking Startup School, because we choose our product mix. We build it into the pro forma and then we see what the performance looks like. And if the numbers don't work, then what people tend to do is say, I'll just sell more flex desks and I will sell them faster. But that in reality,
00:12:27 it doesn't happen. And so I want you to be successful. And I want you to build the products that are going to sell in your market. And that is always very, very specific to your user base, who your ideal client member will be and what your market will support. So while technically you could oversell a desk many times because you have members that only come in a few times a month.
00:12:56 And so that desk is really not being used and you can sell it three to, you know, somebody said six times, I think Facebook group, please don't use that number. Your actual ability from a sales funnel standpoint to sell that seat six times is not going to happen unless you are a superhero or in a very unique market. So let's talk about supply and demand somebody.
00:13:19 I can't remember. I saw it posted on LinkedIn, worded it very eloquently. This is it's really about supply and demand. How much demand for flex is there in your market or how much can you create? So Sarah Trevor's at work bar has created just a really unique offering. And I would argue she's like creating demand for flex space because she's got a great product and they're great at marketing.
00:13:45 And oh, by the way, they've been doing this for like a decade. And so they've gotten really good at it in general, though, if you're new and many of you are starting spaces in markets where Coworking is not very mature yet, you want to figure out how much demand is there for flex. And you want to supply, you know,
00:14:04 a little less than what the demand is because supply and demand. This is a definition I found on. Actually I didn't note where I found it on is the amount of goods and services that are available for people to buy compared to the amount of goods and services that people want to buy. So if less of a product than the public wants is produced,
00:14:25 the law of supply and demand says, you can charge more for the product or to put it more simply if you have too much flex space and not enough demand, not enough people wanting to buy it, then you're not going to sell it three times or four times, or maybe even one time. So it's super, super important. Don't use industry stats.
00:14:49 It's so market specific, you have to know what does the demand look like in your own market? So in my Coworking Startup School, we have a whole workbook on how to choose your product mix, how to validate what you users will buy and at what price, Hey, I just wanted to jump in really quickly before we continue with our discussion. If you're working on opening a co-working space,
00:15:13 I want to invite you to join me for my free masterclass three behind the scenes secrets to opening a coworking space. If you're working on opening a coworking space, I want to share the three decisions that I've seen successful operators make when they're creating their Coworking business. The masterclass is totally free. It's about an hour and includes some Q and a. If you'd like to join me,
00:15:36 you can register at Everything Coworking dot com forward slash masterclass. If you already have a coworking space, I want to make sure you know, about Community Manager, University, Community Manager, University is a training and development platform for community managers. And it can be for owner operators. It has content training resources, templates from day one to general manager. The platform includes many courses that cover the major buckets of the Community Manager role from community management,
00:16:08 operations, sales, and marketing, finance, and leadership. The content is laid out in a graduated learning path. So the Community Manager can identify what content is most relevant to them, depending on their experience and kind of jump in from there. We provide a live brand new training every single month for the Community Manager group. We also host a live Q and a call every single month so that the community managers can work through any challenges that they're having or opportunities get ideas from other community managers build their own peer network.
00:16:43 We also have a private slack group for the group. So if you're interested in learning more, you can go to Everything, Coworking dot com forward slash Community Manager. So here's also another super important candid point that I want to make. If you are new to starting a coworking space, flex desks are typically the least expensive membership. So we think they will sell quickly and I'll sell a lot of them.
00:17:12 But the reality is that they usually fill up more slowly and they add the least amount of monthly recurring revenue or MRR to your business. So if you're selling a flex desk and it's $200, you have to sell five of them to make at a thousand dollars of recurring revenue to your business. That may not sound like a lot, but if you think through your sales funnel and how many leads you have to come have,
00:17:40 come in. I know I kind of worked through sales funnel math a lot, but I think it's the only way to drive home the reality of closing. So if you have 50% conversion rate, if you close half of the people who walk in the door and you have 10 tours, you're going to have 10 tours a week, probably unless you're really high volume space.
00:18:03 If you get 10 tours, which might take you several weeks to get, and you close half of them, you're going to close five of them. And then some percentage of them you're going to lose every month. And so the ability to close and keep members at the $200 range, it just, you might just be kind of, even on that for a long time,
00:18:25 you might close them and then lose them and then close them and then lose them. It's really hard to kind of get ahead at a certain point. Once when you first open, hopefully you're going to kind of, you know, get folks in. But over time, sometimes that business is just really flat for people. And it's very stressful during seasonal periods like the summer,
00:18:45 which we're in at the time of this recording, those flex desk members leave like with no regrets. And, you know, you can try to get creative and I've been brainstorming like, okay, how do we get folks to just commit for the longterm and not leave for the summer? People will leave, you know, for December because lots of people,
00:19:04 you know, just busy over the holidays, et cetera. So the flex desk in and out is really hard to build a sustainable, significant business. That's gonna pay your mortgage on flex desk just because they're such a low price point and you need a very high volume of them. Now, some people can attract a very high volume of them. Work bar is one of them.
00:19:25 They love the 10 day pass. Sarah said on our podcast interview and they love to oversell those seats. They think most people are only using a coworking space for 10 days a month, which is also true. So I'm not saying have no flex desks. I just want you to be really realistic about what flex desks are going to do for your P and L and how many to provide.
00:19:49 And that's it. Sorry, getting a little dine up there. Okay. So again, is it possible to oversell flex desk? Yes. People do it. You might be listening and saying I do so for sure. I'm not saying there are no examples of people who oversell their flex desk. If you're overselling them, then what you did is you have too few for the demand and your space is compelling.
00:20:13 You're a good marketer. You have a great experience, all the things, right? There's a whole package that goes around selling flex desk and somebody in the Facebook group. I think the woman who posed the question in the first place said, oh, you have to be a really good marketer to get enough leads to sell something over several times. Absolutely.
00:20:32 That is the case. So you're doing a ton of things, right? Including just getting the supply and demand, right? You were also a great marketer. You also have a great experience for your members. Maybe you have great amenities, et cetera, et cetera. So your sales funnel is rocket enrolling, which is not true for a lot of operators,
00:20:51 especially when you're just getting started. You're still really figuring that out. So you want to be careful that you're not relying on a sales funnel, those not at its peak performance in order to sell a product that is not adding a lot to your monthly recurring revenue. So if you're starting a new space, here's some things to think about in terms of how many flex desks should you offer?
00:21:14 Who are you serving? What do they do for work? Do they need space to make phone calls? I know this seems very basic when I say it out loud, but this is the, I think when operators start spaces, I was one of these people. I had worked in an open plan space and that was normal for me. I'd done it for a long time and oh,
00:21:33 by the way, it's super expensive to build offices. So I go through this process with my startup school students all the time, making trade-offs around the build-out costs and the size of space and all the things that go into creating a Coworking business from scratch. Yeah. It's a lot cheaper to create a space that doesn't have a lot of walls and electrical and HVAC and all the things that you need to put in an office.
00:21:58 So I think that's oftentimes they're operating from the startup budget versus who am I serving and what do they need from me and what are they going to buy? So today lots of people are on zoom, right? It's very rare that we have days. And I keep talking about this, but I think it's super, super important to talk about. It's very rare that we have days when we don't need to take phone calls or zoom calls.
00:22:22 Yes. You can design a space where people can take those calls at their flex desk. You have to be really intentional about that. And you have to understand the dynamics of how that works. You have to onboard people really well. You have to have the right culture, all the things. So it is possible that they could do that in open space,
00:22:37 but in general, lots of people need to make phone and zoom calls during the day. So if you provide flex desks, is there access to phone rooms or meeting rooms so that they can easily take those calls? That's one of the things that Sarah Travers talked about, they have lots of flex space, but they also have a lots of phone rooms and meeting space.
00:22:56 So it's super clear when they give tours, Hey, here's where you make your phone calls. They also have, we've talked about this also a switchboard room where you can just take your zoom call out loud. So, you know, really creating an environment that is supportive of the flex member. But again, they've been doing this for like a decade.
00:23:12 They really understand how to do this. And others of you listening may have gotten this too. And if you have, I want to hear from you. I want to hear how you are rocking flex, because I think it would be really helpful for others to hear. So we'd love to share your story. So what do people do for work? You know,
00:23:30 can they use the flex desk? Will they only use an office? You have to talk to people and interview and really do your due diligence to understand what they'll buy. If they're not super familiar with Coworking, then they might eventually buy it. It will take. And so when you make your perform about what your first year, 18 months looks like,
00:23:50 the number of flex folks is going to happen really slowly. So you have to account for that. So try to get a sense of what the demand is for flex desks in your market. If there are other spaces open, then go talk to them and don't mystery. Shop them, just walk in and say, look, I'm starting a space. What are you selling?
00:24:09 And it has to be a space that has flex desks. If you go to a religious, you're probably not going to find flex desks. If you go to a space that is also, they have flex desks, they have lots of flex space. It's probably empty because they just don't run the kind of vibe where there's a lot of people in their open space.
00:24:25 So try to look for a model that's more similar than not to yours and see what are they selling? I was talking to Fiona Mayer from the thrive network in Melbourne Australia. She's going to be on the podcast soon. And she said that she and Brad, they started the flexible workspace association in Australia. And they went to a region where they were just killing it on flex desk.
00:24:50 And she said, she and Brad like shed a little tear. So look around and see what's selling in your market. If other spaces that look like they mostly serve who you're going to serve, you know, same level of finishes, kind of similar vibe, and they're killing it on flex desks. Then your market might really support flex desk. Just make sure you really understand what it is about the flex desks that's selling in those spaces.
00:25:14 So shop other spaces locally, but be careful to compare what they offer to what you are going to offer. If they're just a different level than what you're doing, either fancier or more basic than their ability to sell flex may not apply to you. So you have to kind of take all that into consideration. This is not simple, Fiona. And I actually talked about that on the podcast.
00:25:35 She's like, yeah. I mean, I just thought I could, I was a member of his space and I just thought, well, this looks easy. I'm going to do this on my own. It's very hard to reverse engineer the Coworking model because it looks simple, but there's a lot of nuance into what goes into it, right? So if you're one of the first folks in your town and you cannot go to other spaces to see what they're selling,
00:25:54 try to find some sister towns, other towns that are maybe similar in makeup, similar in demographics, you can go. There's a, I think it's data.io. If you search like demographic data, Sioux falls, South Dakota, it'll pull up like lots of stats about that city. And you can find cities that are similar to yours. Find some co-working spaces in those cities,
00:26:17 reach out and ask them, what are you selling? What would you do differently if you started your coworking space? Again, the thing you cannot know when you're looking at another coworking space is, you know, are they good at marketing? Are they good at the sales process? Are they good at, you know, building culture and all the things that it takes to create a successful coworking space?
00:26:39 So you can't necessarily say if this, that, you know, if it's working for them, that will work for me. Or if it's not working for them, it won't work for me. There's so many factors that go into it, but you're triangulating here. So you're trying to pull data points that tell you what to create. Do not just make this up.
00:26:57 That's what I worry about. People doing that a lot. I think people just produce it in their head. Then they don't do a lot of triangulation. Cause it takes a lot of time and energy. I totally get it. So in general, you used to be the Coworking, like by definition was flex desks, open space, right? Those spaces didn't make money.
00:27:18 So now we see more of a hybrid model where we see offices and flex and the really profitable, bigger spaces are closer to 70% private space, 60% private space, Sarah trappers, the CEO of work bars that they're 50 50. So they have teams suites, which you're also profitable. You could sell them because it's a big room and it's, you know,
00:27:43 the HVAC and electrical is not in, you know, micro offices, micro offices are like the most extensive thing you can build. Oftentimes they sell really quickly. So 70 30, which probably to some of you sounds ridiculously office heavy, but again, you want to really assess what your market's going to buy and what you need in order to meet your financial goals.
00:28:06 That's super important to you. And I always try to be very conscious of that. When I work with my startup school students, what are your goals? So if you are new to starting a coworking space, be very, very conservative on your flex desk inventory, unless you've validated the demand or if you have a unique model. So we have a member of our startup school and he isn't a town.
00:28:29 I'm not going to give a lot of details. I don't think he would mind we'll have him on the podcast. He has this super awesome model where they're creating like the entrepreneurial hub for a smaller city. The city has given them space and they have a lot of open space and they're selling like the gym model membership. They have, pre-sold some ungodly number of memberships that I think are 50 bucks a month.
00:28:55 I think they've sold over a hundred of them and they don't open for a while. So they have this unique model and they have this unique role in the community and they're just doing really well, but they know that they're unique. They knew what they could do and they went after it. So again, there are exceptions to every approach. So if you were new,
00:29:18 make sure you're validating. And if you're new, come through our Coworking Startup School and we will walk you through this whole process. Step-by-step if you're an existing operator with too much flex inventory, what do you do is hard to fix? I totally get it. It's super hard. And I talk to operators all the time who don't have the right product mix.
00:29:38 And if you haven't started a space yet, please know that this is like make or break kind of thing with your, your real, your lease is super critical and your product mix is super critical and you should not do those things on your own. You should not negotiate your lease with that. A broker should not do your product mix on your own.
00:29:58 You should get help and other eyeballs on what you're doing, because it is what will make your business model and your ability to be successful. But if it's too late and you're stuck, stuck with what you have, I've been there. You know, one of the reasons I started the work that I do is because that was me. I took 4,000 feet and it was mostly open space.
00:30:21 And I realized very quickly, oh, this isn't going to work. And I had a consulting job and I was writing checks. I took my consulting cash and I paid the contractor to put in more offices. And I doubled the space with 4,500 square feet. We went to about 10,000 square feet because the 10,000, the other side had prebuilt offices. And so I needed more private space.
00:30:44 That was the only way to make the model work. So I have been there. I have slept through the, how am I going to make this work, put up more walls? And for some of you, that's not a possibility. And I totally get that too. So you have to figure out what makes sense. What can I do? Here are some options you could put up more offices.
00:31:03 It depends on the length of your lease. Depends on access to construction, resources, permit, timings, all sorts of things. So you have to do the ROI on that. You might add more phone rooms in order to make the membership more usable. So maybe it's hard to sell flex desk because you don't have enough places for people to take phone calls.
00:31:23 That is not always the case, but if that's you make the investment and decide soon room, phone, booth room finances, I think it's, it's really inexpensive financing. Like 3%. You can make monthly payments, but they take 12 weeks to come. So that's three months away. If you want to fix that problem with some phone booths, order them today,
00:31:42 consider making your memberships more flexible. We've talked about that a lot. Maybe if you're selling full-time flex desks and they're just not selling them. If they're not selling experiment with shorter commitments, 10 days a month, kind of thing, maybe sell combo packages, such as memberships that include some flex desk time, some private office time. You might throw in the towel on flex desk to some extent and focus on meeting room revenue.
00:32:09 Fiona and I were talking about that. I'm giving you some spoiler alerts here for our discussion. I loved our conversation. She is doing really well with meeting rooms and she made the point that, you know, if you sell a meeting room for a whole day, it's like Office revenue for a month. So she goes really hard at SEO and marketing on her meeting rooms.
00:32:30 So you might need to just shift your focus and focus more on what's selling or mail memberships to include increase your monthly recurring revenue. Okay? That's it for today. So quick reminder, if you're starting a new space, please come to us and go through the process. So you get your product mix, right? The Coworking Startup School, you can find it on the website.
00:32:50 And if you're interested in our, you know, get a significant project done that is revenue generating for Q3. Come join us in the academy for at least July and August. Everything Coworking dot com forward slash academy. And if you have not checked out the new podcast, Flex Uncensored, wherever you find your podcasts, okay, we will see you next week.
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