296. Part I: Why the Best Business Models are Known Prescriptions for Known Problems

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296. Part I: Why the Best Business Models are Known Prescriptions for Known Problems

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. Happy to be here with you today. So I'm gonna share a perspective that I had while talking with my CrossFit bestie Christine this weekend.

00:01:03 So this was the last weekend of the CrossFit open. So it was three weeks of workouts and I did the workout Thursday because I thought I was gonna be out of town all weekend for a girls weekend in the mountains for my birthday, which I had been greatly looking forward to. And that was interrupted by yet another blizzard that came through, closed all the roads and so I could not go,

00:01:29 mostly I could go but could not get back. So I had to get back. My husband was leaving town first thing Monday morning. I could figure out what to do with my daughter, but I could not figure out what to do with my two dogs all day. So I had to come back and cancel the trip. Anyway, so we had some friends over Saturday night.

00:01:46 I had maybe one glass of wine, too many to be redoing my CrossFit workout Sunday morning. But I did, I did not do any better. I've never done better redoing a workout. I usually just get what I'm gonna get on the first round. But out of principle, I wanted to redo this for anybody who's listening, who's doing these workouts,

00:02:05 I'm sure you can relate to this. It was a very super short workout. It was six minutes, well, you could get nine minutes or 12 minutes if you hit the milestone for the first six minutes, which I did not do. So it was wall walks and double unders, which I'm quite good at, and then snatches and then repeat with some heavier snatches.

00:02:22 And my shoulders completely like gave out on the snatches. So got seven of the 12 snatches that I needed to get to move to the next milestone. And I just really wanted to figure out how to get more snatches on the second. Second do-over. Anyway, so I got my friend Christine to meet me at the CrossFit gym at 8:00 AM Sunday morning. And I took her out for coffee and some bagels after the workout and we were catching up.

00:02:47 So she and her husband are looking for a business to buy. So they've hired a franchise coach who's helping them review concepts that would be a fit for them and have licenses that are open in the area where they wanna open. And so they're looking at a bunch of different business models. And so I've been getting some updates along the way, and I'm gonna bring this back to Coworking in a second.

00:03:10 So you know, she shared a few, there's two that they kind of narrowed it down to. So one is basically like a short circuit fitness program for people that really don't like to work out and that need to be told exactly what to do. And this concept comes with proprietary machines that facilitate this workout. So that's interesting. You don't need a lot of square footage to run it.

00:03:38 It kind of targets sort of an aging population that needs to, you know, build strength but isn't a good fit necessarily for a typical gym. And I always think it's useful when franchises come with something proprietary because in some cases it's hard to sort of find the value in a franchise. So considering that one, I had some concerns about that one, which we'll talk about in a second.

00:04:02 The other one, so my friend Christine liked that concept more. She's super into exercising and just like that was a better fit for her personally. The other one is a physical therapy franchise, which sounds like kind of boring, right? Like neither of them are PTs, like physical therapists, like just kind of, you know, who has passion for that kind of business,

00:04:23 but physical therapy. So you need more space, you need trained professionals to run it. You need somebody who knows how to handle insurance. So there's a lot of stuff on the backend that just sounds harder to manage with that model. But her husband and I came around to liking the PT model because I kept sitting there with Christine and saying, Christine,

00:04:44 I want you to call the franchisees for the first concept, which is the fitness concept where you go in and you do this like short 30 minute circuit with these proprietary machines and ask them where do they get their customers. Like this is kind of an a different concept. You're sort of targeting like not older people, but people who just don't really work out.

00:05:07 And so my concern was where does this demand come from? And this demand to me is like demand for go working, which sounds like bad news. I want to interrupt you for a minute With a special offer, if you are an operator that is getting ready to launch, or your space is less than a year old and less than 200 members, office r and d is piloting a program called Flex Startup program,

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00:06:32 That's Everything Coworking dot com slash O R N d. We'll also throw that link in the show note. So if you open your podcast app, you can grab the link right there. But I kept thinking about this sort of analogy and the thing I was like, Christine, the physical therapy business, the really beautiful piece about that is that healthcare professionals out there that literally write a prescription for physical therapy.

00:07:00 So I went through 12 weeks of physical therapy last year, and total side note, I didn't end up getting served by the one that was closest to me. I had to drive an hour to one. And I think I did a podcast about this because it was one that specialized in athletes and like CrossFit athletes. And the physical therapist used to be a coach at my CrossFit box.

00:07:20 And so I just knew they could fix my problem and they did. I, for the record, had my best open performance of my whole life. And I'm a year older this year, and I'm like, good is new. So you know, I was assigned to go to physical therapy. I knew I had to solve a problem. I was really uncomfortable in my daily life and was having trouble doing the workouts that I wanted to do.

00:07:43 So I was going to fix this no matter what. And I went to pretty great lengths to get it fixed. And that was sort of for, I mean, it was impacting my daily life. But people have injuries, people have all sorts of reasons to go to physical therapy. So it gets prescribed. You don't really opt into physical therapy. You get told by somebody,

00:08:01 the thing that's gonna solve this is physical therapy. So you get a prescription and depending on your healthcare plan, and this is, you know, you this use case or workflow is specific to the us, you get a prescription. In my case, you know, it was, okay, go find one that takes your insurance. And so, you know,

00:08:17 I do the Google, like Google for one near me because I had been to PT before and I knew that, so I didn't end up going to the one closest to me, but most people will because the barrier to going to PT is like the dime. You know, it's so time consuming and you gotta go two or three days a week at the beginning to have it have the right impact and to really make progress.

00:08:38 And if you're driving, you know, far, and this was, you know, the last time I went was pre covid, it was like, even if it's not covid, you're working from home, like you gotta take time off outta work during like meeting time. You gotta get there. So if it's a long drive, you know, it can really multiply the time you're taking outta your schedule to get this done.

00:08:57 So people are looking for proximity and th and they're also looking for Google reviews, right? Evidence that this is the right place, that they have great experience and great practitioners. So what I love about the physical therapy model is that the demand channel is a given. So you know, there's demand because prescriptions get written daily for this many times a day in any given area,

00:09:22 there's a prescription written for somebody to go to physical therapy, and the person who writes that prescription doesn't provide that service. And so that individual has to go out and find it. And to be able to find it, you just have to have a physical therapy treatment location that is in a good location. It's close to where people live and it has great Google reviews.

00:09:43 And so to me, that business model is easier because, well, you can't screw up your real estate deal, but unlike Coworking, you're not selling, you know, you're not just marking up the real estate. And we talk about that a lot. Coworking is a challenging model because of that. But really you just have to be good at getting Google reviews and find the right location after that.

00:10:05 Yeah, there's a lot of stuff you can screw up, but it's fixable at any moment, right? You can't fix demand very easily. You can fix, oh, we're not submitting to insurance the right way. Or Oh, you know, our staff needs to be trained on how to do paperwork the right way. Or you know, even harder things like we're having trouble recruiting physical therapists to work in this market.

00:10:30 That could be a bigger challenge. But all of that is addressable. If you have demand, because demand equals sales equals revenue. And if you have revenue, you can solve a lot of administrative problems, right? So to me, you want a business where you know the demand is there and then we're not really worried about the backend cuz there's a lot of folks who can help with those,

00:10:52 with the execution of a model. You can hire people to fix your marketing, you can hire people to train your staff. That is all solvable. But it's really hard to solve a demand problem. And I find this with the people that I work with. I really try to be thoughtful about how can I help a business. And right now my,

00:11:10 you know, probably my very best value is driven by helping folks before they make their real estate decision because the real estate decision is tied to demand, but also your real estate structure. And I've done a lot of podcasts on that, so I'm not gonna talk about that. But the next part of it is product mix. And this is starting to come to light more and more.

00:11:32 And I'm talking a lot about this concept, but I think it's really important because I think when something's important, we need to hear it a lot of times. And I'm starting to see like figure out sort of how to to talk about it. And so related to Coworking, you know, in demand and this idea of a prescription, okay, the closest thing to like a prescription for Coworking is people who need an office,

00:11:56 right? Like somebody says to themselves, you need an office for this work or you need an office because you meet clients or you need an office because the kids are at home and you cannot get anything done. Or you need an office cuz you have a roommate and you don't have an office at home and you need to be on Zoom calls like an office is a requirement.

00:12:14 And so there's some segment of the population that needs an office and that is not really some big conclusion. They come to like working out, you know, if I'm a 60 year old female, probably, you know, my, maybe my family has said, oh, it'd be really good for you to, you know, build up your strength. Maybe even a doctor has said,

00:12:34 you know, you really should get to a gym and do some weight training, but there's no prescription for that, right? So you really have to come to that conclusion on your own. And that is true of many, many, many things in the world. So again, back to the demand piece, like the best business you can be running is when there is clear demand and you're solving a very,

00:12:53 very clear problem when you can articulate like, here's the problem I'm solving for you. Or people know they have the problem and you just have to be the one who says, well we solve it best. We've got the best Google reviews and we're close to where you live. Somebody's got a prescription, I need an office. We solve that problem best for you.

00:13:12 So offices are the best sort of product when you want a solution that is prescribed essentially, right? So if you are selling something else, there's no prescription for that and people may not even know it's a solution that there's a problem for. Sometimes this is totally the case. So lots of you listening are selling flex desks and dedicated desks and meeting rooms.

00:13:38 And meeting rooms are also, I would say a prescription actually I would lump meeting rooms right into offices. I would also lump the business identity into that. Those are all problems that people recognize they need to solve. I need a place where I can register my business and get mail. I need a place where I can have a meeting with my team,

00:13:56 let me Google it and find it. I have been prescribed to that. I understand that need. It's very clear. It's a pain point I need to solve who does it best. So I'm gonna look for that. There's natural demand for those things. Hey, I just wanted to jump in really quickly before we continue with our discussion. If you're working on opening a Coworking space,

00:14:16 I wanna invite you to join me for my free masterclass. Three behind the scene 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,

00:14:39 you can register at Everything Coworking dot com slash masterclass. 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,

00:15:12 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 can work through any challenges that they're having or opportunities,

00:15:42 get ideas from other community managers, 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, the natural demand does not exist as much for Coworking or dedicated desk, those folks. And I'm calling those products that, because that's generally what we've been calling them.

00:16:09 Pre C O V D, I would argue that dedicated desk is now a terrible name for that product, unless your end user is of a specific user type, which we'll talk about later. But the rest of it, anything that's not an office is hard to gauge. And so you can assume that you'll get some demand for that probably, but you're introducing risk into the model.

00:16:35 Anytime you start producing something that doesn't have a prescription or a clear line of, you know, I have a problem and there is a solution. So office meeting room, business identity, which can be male, some sort of virtual office type of program. So it's super important to recognize that if you are deviating from the office model, which is a prescription to solve a pain point,

00:16:59 you're introducing risk to that model. I spoke with a group recently who's doing work that I absolutely admire and think is the future of how people will want to operate, but they have very few offices and the language they use is not about solving an office problem or a workspace problem. And so the conclusion we came to after kind of working through this together in an advisory session was the model you're running is really not co-working.

00:17:31 It is much riskier and requires different funding. It requires, you know, maybe an investor that believes in your vision and wants to give you runway to figure it out. You are like a Startup, right? Like an office, A shared office model is not a Startup because this model's been running for decades. It started in the seventies as shared office space for attorneys.

00:17:56 It's been running forever. We just started getting way more creative about use cases. And in my mind, the use cases were sort of bringing to the table are around demand channels that are not a given. There's no prescription for the things that we're kind of putting into place. Nobody says, you know, you are depressed, you should get a co-working membership.

00:18:17 Nobody says you're struggling to be productive. Get a co-working membership. We say those things, we're the solution providers. So we have to create that behavior change or we have to drive that message. Guess what, that's a hell of a lot of work for an independent operator. So if I had a dream, it would be that the association would start doing that work.

00:18:39 So I grew up on a dairy farm and I did some work. I, I only confess the details of this work with close friends or when you do those two truths and a liar, whatever with the basically the milk board. So there was an association that was essentially like the Milk Association and they were behind the got milk ads. And if you're of a certain age,

00:19:02 you remember the got milk ads and they were TV campaigns, they were everywhere. And they had this local, and this is what I was involved in, like really grassroots local work that they did to go promote basically like health benefits and the coolness factor of milk locally. Dairy products, not just milk, but all dairy products, right? So it was this like education around why you wanna drink milk was a campaign.

00:19:27 It was a campaign around dairy to drive consumption of dairy. And the dairy farmers were not running those campaigns, right? They were not running Facebook ads about to their local audience about why, you know, milk was amazing. So my dad was a dairy farmer and he's pretty tech savvy for a dairy farmer, let me tell you. But there was no way in the nineties he was running,

00:19:49 you know, there was no Facebook back then. He was not gonna run ads locally. It's not like that's way out of scope. So somebody else needs to do that work and I think at some point it'll happen, but it hasn't happened yet. So on the next episode I'm gonna get more detailed about how do we think about this challenge, but for now I just want you to kind of sit with this concept that if your model is mostly offices,

00:20:14 whether you wanna run that model or not is the question. And so in the next episode we're gonna talk about like how do you think about your model if it's not offices and how do you think about marketing and all these other things and how to manage it. But if you have mostly offices, there's essentially a prescription for those offices and people will come by them and you will not have to work very hard except to have really fantastic staff.

00:20:37 A really, you know, a great space Google reviews and guess what? You can fix all those things. You can fix all those things after the fact as long as you have offices and they're in the right location and your lease is structured correctly, you're paying the right rent for the market, you've got a long-term lease, you've got the right support on ti.

00:20:55 None of those things are easy by the way, but that is step one. So once we get past that, we gotta have the right product mix. And offices is the simple approach because there's a prescription for that. There's built in demand for office space. The rest of it we're trying to figure out. And we think that that demand is out there,

00:21:13 right? Because of all the people working from home. Now that never existed before March of 2020. So we're gonna talk about how do we like tap into that and how do you think about your business model outside of the offices or the meeting rooms or the mail that aren't prescribed. So sit with this prescription idea and we're gonna come back and talk about sort of the the what does it mean.

00:21:38 So I will see you for that next week. 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.

00:22:04 We'll see you next week.

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