275. 3 Things to Take Action on in Your Coworking Business Before the End of the Year
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Masterclass: 3 Behind-the-Scenes Secrets to Opening a Coworking Space
Creative Coworking Partnerships: How to negotiate and structure management agreements from the landlord and operator perspective
Resources Mentioned in this Podcast:
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TRANSCRIPTION
275. 3 Things to Take Action on in Your Coworking Business Before the End of the Year
00:00:02 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. Thank you for joining me. I'm so glad you're here. So before we start, as usual, I have to give a shout out to my recently certified community managers,
00:01:00 Paula Young, with the Trep School in Danville, Illinois, and Jacquelyn Bryant with The Local Works in McComb, Mississippi. Congrats for getting your Coworking Community Manager certification. Okay, so today we are gonna talk about three things to take action on in your co-working business before the end of the year. It is October, my friends, it is sneaking up on us.
00:01:27 We're almost in the middle of October, so we are cruising into q4. So any of the big plans that you've made for 2022, they need to get done now. So while you're working on getting your big goals met this year or just about ready to start 2023 planning, and I think we're probably gonna run our planning session. We did a planning workshop,
00:01:53 I think in 2020. I think it was 2020, and I think we're gonna do it again. We did not do it last year, so stay tuned. Okay, so three things you want to be remembering to do in your business for the end of 2022. The first two are fairly related. One is make sure that your Coworking membership agreement have an auto increase in them.
00:02:20 So this means if somewhere in your agreement it says that this is for office members, generally, not for dedicated desk or flex desks or whatever you call those more flexible memberships, but for your offices, there's an automatic 5% increase every year. This is for a few reasons. One, so that you don't have to negotiate the price of the office if someone stays and auto-renews their membership.
00:02:47 And B, it gives you a way to make sure that you're not getting way behind market rates. If someone is a wonderful member and stays for years. Hey, we'll be right back. I just wanna share a couple of opportunities from our show sponsors. As a Coworking space owner, you are always looking to provide more resources and programming for your members,
00:03:19 right? How about access to financial education and even investment opportunities? Well, Noumena is the number one community for freelancers and founders looking to grow their businesses. So Noumena and Coworking spaces go together like peanut butter and jelly. We found that over 75% of our community already work in or are seeking out a Coworking space. We'd like to help our members connect with you and find your space anywhere in the world.
00:03:52 So join our Coworking space directory to be featured in our community and give your members access to a whole library of entrepreneurial resources and financial education programming all at no cost to you. By the way, visit pina.pro/ Coworking to fill out an interest form. That's noumena.pro/ Coworking. We will include that link in the show notes for anybody who's walking around and doesn't have time to write it down.
00:04:29 You can find it in the show notes for this episode at Everything Coworking dot com. Noumena financing the future of work. The amount of opportunity in the Coworking industry is absolutely mind-blowing. It's projected to grow by 13 billion in the next five years. Just staggering numbers. Now you've probably seen Success Magazine. It's hugely popular and focuses on professional development, personal development, and business coaching while they're branching out with their own franchised Coworking business called Success Space.
00:05:09 It's actually a brilliant franchise model with three revenue streams recurring and on-demand revenue from Coworking memberships, a full-service cafe and Success certified business coaching for small business owners to executives. To learn more about this exciting new Coworking business opportunity, check it out@successcowork.space. That's Success cowork.space. We will link that up in the show notes as well. So a few members in our Palo Alto space that were there for all seven years.
00:05:45 So we did not have the 5% increase in our member agreement and got into trouble because market rent was going up much more than 5% per year. So we got behind on tracking to market rates. And that is suggestion number two for one more thing you wanna do between now and the end of the year is you do it or have your Community Manager do it.
00:06:09 Do a market pricing review for 2023 to make sure you are aware of how prices have shifted. Things are, you know, still changing. We have inflation, but in many markets we have more demand than supply. So you wanna know where you stand. And I, based on experience, this can take you by surprise. So I operated in both Chicago and Palo Alto and in Palo Alto,
00:06:32 real estate prices were going up and up and up and we missed some opportunities to take pricing and that can be a pretty significant opportunity on your offices when they turn over. So sometimes we get so focused on the anxiety we feel when we have offices that open up that we're not paying attention to what pricing looks like. It can also go the other way.
00:06:54 What happened to us in Palo Alto was that dedicated desk and hot debt desk pricing went down on us while office pricing was going up. This was kind of a local market thing that was happening. And so we were overpriced on our dedicated desk and our hot desks and we had to make some adjustments, which is very tricky to do when you have current members who are rolling along paying a higher rate,
00:07:15 which you, So whether you choose to take action is one thing, but you need to make sure that you know what's happening in your market and don't assume that you do until you go out and actually look at what people are charging on their website. And new entrants are coming online all the time. And so the dynamics will shift. So get a spreadsheet out.
00:07:34 We had a template that once we got our game on, on this topic, we just created a template that had, you know, the local competitors and the types of products they offered. And we would just update the pricing. We'd get it from their website. You can call and ask and just fill that in so that you know, apples to apples.
00:07:53 I would do it on a perceived price basis because it's really tricky to compare office prices to office prices unless you know what the capacity of that office is. Again, sometimes it's hard to get apples to apples. Sometimes you're comparing a window office versus an interior office team suite pricing, you know, I was just doing this work for a market for a project that I'm working on and you know,
00:08:16 team suite prices, I was a little surprised to see went down as the number of seats went up. So not terribly surprised, but a little surprised at how much they went down. So a one-person seat in an office for only a one-person office was much higher than a one-person seat in an office that holds eight people, for example. So you just wanna kind of know what's happening in your local market so that you can,
00:08:43 even if you're not gonna make any changes, be prepared to speak to those comments or objections that come up when you give tours. But also you will have renewals that come up in 2023. And if you need to adjust your pricing, hopefully adjusting it up, you wanna be paying attention to that. And you also wanna know if you have room to adjust for inflation.
00:09:02 We have this conversation on our Everything Coworking Academy calls that we do every month, and a lot of folks are hesitant to take pricing. Actually, my best to CrossFit friend was texting me yesterday because our CrossFit gym increased their prices. So I work out at home a lot. So I am on the punch card and I was not aware of any pricing,
00:09:24 but the pricing for the full-time membership must have just gone up by about 30 bucks a month. And I said, Christine, she's adjusting for inflation. And she said, Christine did not like the fact that she was adjusting for inflation. And she said, Well, you know, I said, gas is more expensive, groceries are more expensive. If you leave your pricing the same,
00:09:45 you are effectively making less money because your expenses have gone up. And so in order to keep your margin the same, you have to raise prices. And so Christine's argument was that most companies are not raising employee wages. And so why does the CrossFit owner get to raise, you know, raise her wage? But business owners have to watch out for their margin and they have to create a sustainable business.
00:10:08 So I encourage you to do the same if you are able to take that pricing. And it may be that she needed to take that pricing increase a while ago, because I'm pretty sure that the other CrossFit gym that Christina and I used to go to before Covid and before it closed was more expensive by far than this one on a monthly basis. And so it may just be that she said,
00:10:30 You know what, I can't take it anymore and I'm comfortable using this crazy rate of inflation as an excuse to take pricing and did it. They also just did construction and they're making the space bigger. And so the reality of the expenses that they have probably, you know, kind of make that decision. So my point is, inflation is significant. So if you are in a market where you have enough demand,
00:10:54 you have a great product, you have great marketing, then you might consider taking some pricing at least on your offices. Again, take a look and see what the pricing is on your flexible options. The other thing you might do is look at creating a flexible office option so that you have a way to sort of, in a sense, take pricing because the flexibility of not committing to a full-time option comes with premium pricing.
00:11:20 So it's really hard to inch up pricing on that 10-day pass or anything that's just really, you know, an infrequent user. You can make it expensive, but making it more expensive over time is kind of challenging because those people don't really need the space. And so they're probably more price sensitive is my theory. I could be wrong about that. So mostly you're gonna focus on offices.
00:11:42 I would also focus on meeting rooms. If you have corporate clients that are coming in, you know, they have budgets and they're probably not particularly price sensitive unless they have a particular budget that they're working within and have to manage. I have to mention, this is a little bit of a side tangent, but I feel like this might be its own topic.
00:12:00 I'm just gonna introduce it for you to think about. So I interviewed Brandon Madeiras, who's the co-founder of ADE Partners for the Flex Uncensored podcast. And I had to do it, do it without Geo. That's the story for another day. So my co-host was busy, he had some drama in his day, so I got to interview Brandon, which is really interesting.
00:12:21 And he brought up this idea that he thinks that eventually building owners with flexible space in their building, so not necessarily, you know, the boutique highly serviced Coworking space, but flexible options will price the space differently based on what day of the week people use it. So he gave the example that manager, you know, from an enterprise company or even you know,
00:12:51 a mid-size business or a small business, might have a meeting budget for the month and they might run out of it if they use it for the highest demand days of the week, which are Tuesday, Wednesday, and Thursday. So they might spread that budget out by booking on cheaper days, which are Mondays and Fridays. So there would have to be a pricing structure in place to support that.
00:13:14 But I thought that was a really interesting food for thought. So side tangent on pricing, but start thinking about 2023 renewals on offices. And the reason I went on that tangent was meeting rooms and events. If that's really starting to pick up for you, make sure you're pushing on the pricing and increasing that margin as you are able to, because we all know expenses are going up,
00:13:38 labor costs are going up, everything's going up. Gas in California, I'm just gonna complain about that again. I paid $7 and 9 cents a gallon the other day for gas. So I am placing an order for an electric car shortly. Okay, so number first thing to think about before the end of the year is put an auto increase in your agreement.
00:14:00 If that's 5%, you're not even hitting inflation in the us, you're not getting close to inflation in areas of Europe and the uk. So you wanna protect yourself a little bit with that auto increase. Hey, I just wanted to jump in really quickly before we continue with our discussion. If you're working on opening a Coworking space, I wanna invite you to join me for my free masterclass.
00:14:22 Three behind the scenes Secrets to Opening a Coworking Space. If you're working on opening a Coworking space, I wanna 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 include some q and a. If you'd like to join me, you can register at Everything Coworking dot com slash masterclass.
00:14:47 If you already have a Coworking space, I wanna 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 operations,
00:15:14 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 Manager just can work through any challenges that they're having or opportunities get ideas from other community managers,
00:15:46 build their own peer network. 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 slash Community Manager. Number two, review your market pricing and make sure you know where you're going for 2023 renewals on office prices and meeting and event pricing for 2023. And number three, I want you to start thinking about what revenue stream will you focus on in 2023.
00:16:17 My top two suggestions are always mail and meetings. You probably have a lot of opportunity here for mail if you're not listed with multiple lead sources. Like Anytime Mailbox, I Postal, Da Vinci Alliance Opus, they're more consider doing that. And also work on your SEO blog posts and other content that in keywords on your website that will generate organic demand. Another little side tangent,
00:16:49 but we also interviewed Matt going the CEO of Anytime Mailbox for the Flex Uncensored podcast. He said that for anytime customers, I think he said 70% of a typical Coworking space operator's customers are within three miles of the space. I think that's what he said. I'll have to go back and check that set. But the main message is lots of male customers live close to the space.
00:17:20 So local SEO will help you in terms of generating your own leads in addition to listing on male platforms. If you're in a smaller market, then you might do really well with SEO. Same with meetings. If you have meeting rooms, make sure you go into an incognito browser and Google meeting room in Albany, New York, or maybe a smaller market that's probably too big.
00:17:42 Something specific. Go and look at Google in an incognito browser, which means it doesn't know who you are and doesn't have all of your cookies. And see if you show up or event space in, you know, name of your town or city and see if you come up in and how far you are in the search results because meeting room and event revenue is increasing as we talked about in the last episode.
00:18:03 But you might not be showing up for that category. So if you're not showing up for that, you gotta work on that for your SEO and content marketing. So think about what Rev revenue stream you're gonna grow in 2023, budget for some SEO work, some content marketing and budget some time for you and your team to spend focusing on those areas of your business.
00:18:26 Okay, short and sweet today. So thinking about 2023, 3 things to do. Quick recap, auto increase in your agreements, 5% or more market pricing review for 2023 renewals in meeting rooms, and what revenue stream are you gonna focus on in 2023? Decide set aside some budget and commit your team to some time. And that is it for today. We will see you next week.
00:18:55 Thank you for listening to today's episode. If you like what you heard, tell a friend, hit that subscribe button and leave us a rating and review. It makes a huge difference in helping others like you find us. If you'd like to learn more about our education and coaching programs, head over to Everything Coworking dot com. We'll see you next week.
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