354. To Staff or Not to Staff - That is the Question...for Some Coworking Operators
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TRANSCRIPTION
354. To Staff or Not to Staff - That is the Question...for Some Coworking Operators
00:00:00,"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 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 co working industry."
00:00:43,"Welcome to the Everything co working podcast. Thank you for joining me again this week. This is your host, Jamie Rousseau. If you're new to the podcast, we talk about tips and trends in co working. We're going to do a little mashup of that today. We're going to talk about a trend and dive into some approaches that you can take to this trend. Before we dive in, I hope you're all having a great summer."
00:01:12,"I hope you're enjoying time with family, time with friends, getting some special projects done. Maybe in a little bit of downtime, or maybe busy time is about to kick in. We just did our fall membership drive training and playbook for our community managers and we are not far from the back to school mentality kicking in and folks wanting to get into the office and get productive. But I think there's still some summer vacation plans left to be had in there."
00:01:44,"So if you're still a little quiet this week or over the next few weeks to to be expected. But it's the perfect time to get prepped. And if you want to give your community manager access to that training and playbook, you can join our community manager university anytime and get the back training. We have a full library that they can access. Okay, so here's what we're talking about today."
00:02:12,"We're going to kick off with a question that was recently posted. Anyone own an unstaffed co working space under 5000 sqft? I'm honestly surprised baffled about the level of effort to run, market it and respond to questions from prospects for a self managed space. I thought it would be much more autopilot -2 hours. Boy was I wrong trying to bring it down to a single membership. Aside from conference room bookings and private offices, any silver bullets from owners of spaces like these that have helped?"
00:02:46,"I love the authenticity and the vulnerability in this post. Man, I thought this was going to be easy. It is not what is happening. The humans are happening. Humans don't do so well with automation, do they. Although I have started to see a lot of automation pop up in airports. Coffee for sure. I saw another one recently. It was some food related thing. And then what else? I had a friend who has like the fancy united access to their lounge and she said there was an automated gelato machine."
00:03:22,"Like you literally take a little pod and you put it in the machine and poof, it makes you fresh gelato. And she said theyre amazing. Totally unrelated, but. Okay. So this question comes up all the time, people thinking about how to manage unstaffed spaces. And one of the reasons this comes up is because if you open a small space, you realize pretty quickly it is very expensive to staff a small space under 5000ft."
00:03:50,"You just don't tend to have the inventory that it takes to make enough profit, revenue and therefore profit to have a full time staff person. So we are going to. Or you have another day job? I think the person who posted this has a day job. And so they're kind of looking at this as like a side hustle, something they do on the side, but they'd be able to manage both."
00:04:12,"Um, I will tell you before we dive into our staff versus unstaffed discussion that there are definitely models that make this work. Brian Watson is my most viral content ever on YouTube, on the podcast. And his space is alt. Space has made this work in mountain towns, mostly in Colorado, and mostly smaller spaces, like 2500 square feet. There's a gentleman who was in a program of ours recently who is in Florida, and his space is self managed."
00:04:46,"So what I would say is that it's totally possible, but you have to really think through your approach to the model, the pros and cons, the trade offs, whether it makes sense for you and your lifestyle and how you want to approach the business. So let's dive in. Let's talk about the easy case first, which is the case for staffed co working spaces. Why do we staff co working spaces?"
00:05:14,"Well, what is the buzzword of 2024? In co working? It is hospitality. At the end of the year, we're going to see the word clouds and the word of the year, et cetera, it's going to be hospitality. So we talk about the fact that humans who are often at home now, alone by themselves on Zoom all day long. Now, this is not everyone, but this is knowledge workers in general, those who can actually use co working spaces for their work."
00:05:43,"And they are. Our theory, our hypothesis is that they want a high level of human interaction. They want someone who welcomes them when they come into the building, when they enter the space they want someone who tells them their outfit is cute, that they like their shoes. Ask them how the dog is, how the soccer tournament was this weekend. You just want someone to see you who is not the UPS man or your barking dogs at home."
00:06:11,"I just had to pause because mine were barking like crazy at the neighbors. And staff can also we, you know, we often say, I often say the community manager is the heart and soul of the co working space. And so if there is no community manager, is there any heart and soul? So this is a major trade off to consider, right? There's no one to greet. And also the community manager, aside from all the operational, sales and marketing hats that they wear, is really there to enhance the member experience personalized interactions with members, helping them solve problems, coordinating events, making introductions, fostering those connections that don't really just happen organically."
00:06:54,"So having a human there to connect the other humans, if that is what one of the outcomes that you want for your co working space is undeniably really important, then there's the operational support. And I have to be honest, this is probably the key aspect for me that causes doubt in my mind about how on earth unstaffed spaces will work. And when I say unstaffed staff space, I mean like truly unstaffed."
00:07:24,"We're going to talk about some hybrid approaches when we get to that part of the discussion. But I think about how messy humans are, at least the humans that were members of my co working spaces. I picture coffee mugs or tea mugs in the sink with the tea bag still stuck in them. I picture people spilling their food on my carpet tiles. And what happens when that happens?"
00:07:47,"They don't, you know, necessarily take care of those things. Coffee mugs all over the place, licorice cans all over the place. Who keeps the space nice and clean if the community manager isn't there? Or a day porter. And the day porter may be where we get into sort of that hybrid approach, but cleaning, maintenance, it support, and even this sort of is borderline operational and hospitality. If you are going to try to leverage meeting room man, which is one of the absolutely highest growing revenue lines on a co working p and l after the pandemic, it's hard to imagine how meetings can happen and have the meeting room user be satisfied with the cleanliness and it support that would be missing in an unstaffed space."
00:08:41,"So the operational support of a staffed space is really helpful and can really enhance the user experience. Making sure that your users leave good reviews, refer friends, et cetera. So that operational support and personal touch can be a really important part of creating a strong reputation and attracting other users. Professional service such as such as mail handling. To get back to that concierge aspect, or, sorry, hospitality aspect, there are spaces who are adding concierges to their services there."
00:09:19,"We've had Grant Barnhill on, he's the CEO of shift workspaces in Colorado, and they have a culinary concierge on staff. So we're starting to see not just staff spaces, but like exceptionally staffed spaces. We interviewed Beth de Gaffenreid, who is the president of essential offices on the Flex Uncensored podcast recently, and she shared that they really lean into staffing because that is part of their unique selling proposition, part of their brand, part of their culture."
00:09:52,"They want a staff person at the front desk at all times for their members. They have a lot of professional services folks who have clients come in and they want their clients to be greeted, and so they lean into their staffing costs because it's part of how they attract and retain their members. We talked about community building, organizing, networking event, social gatherings, creating that sense of belonging and collaboration among members."
00:10:21,"So it's not hard to argue for a staff space in co working, especially in 2024, when hospitality is such an important part of the conversation and really what we think draws members out of their homes. So we talked. I did an episode last week about day passes and about how humans are sort of commitment phobic, and it's hard to get the get them out of the inertia of being at home."
00:10:53,"And one way to do that is to create a really unique experience that they cannot get at home. So if you are unstaffed, it is easy to see how it might be not much of an upgrade from being at home. That being said, the co working industry is really segmented. And so when we think about unstaffed spaces, I think it's good to think about it sort of like you would a niche space."
00:11:19,"Who are you serving with an unstaffed space? Is there truly a need for this in your market? And what are the considerations that you can have and address in an unstaffed space that can make this an attractive solution for the right segment of the market? I'm interrupting for a second. Are you working on starting a coworking space? I often emphasize how important the planning stage is. You've heard me say most unrecoverable issues happen well before you open your doors, and they are related to the size of your space, your real estate deal, and a few other things."
00:12:04,"If you think you are going to pick your favorite co working space and reverse engineer what you think you see happening in there and then pick your own paint colors and your favorite furniture, you are in for a surprise. This business is really about making the right fundamental decisions that align with your individual, personal and financial goals. So we want to help you avoid the mistakes that a lot of operators make in planning and launching that can really set you back in terms of time and finances."
00:12:39,"So we have got your back. We have created a free training to help you really get behind the three key decisions that we think are the most critical for you to get right when you're designing your co working business. The model, not the colors. The model. And these insights come from years of operating, designing the model for two different locations and then my work with hundreds of operators as they work on their businesses."
00:13:11,"So grab your spot in our training class. You can watch it anytime, it's totally on demand. And start your co working journey with confidence and the right strategies in place. You can grab that training at everything coworking.com forward slash masterclass so again, there are a lot of examples of unstaffed spaces in the co working industry and sometimes there are just reasons for them. So I kicked off talking about alt space."
00:13:41,"They operate in small markets. They have very small spaces. They can't fill, you know, 10,000 sqft. They're not going to fill even maybe 5000 sqft. So they have smaller spaces and those spaces just don't warrant a staff member. So they have approaches that make that work. They leverage a lot of technology. They do leverage humans on the back end so you can get a Facetime tour with an actual human."
00:14:10,"Usually on site there's a hospitality member who or host who is maybe doing a trade for space and doesn't work full time. So let's talk about, kind of go through this in a little bit of our framework. Let's talk about cost efficiency. So we're just diving in and talking about how alt space is an example. It's a smaller space, can't really absorb the cost of a staff person unless they wanted member rates to be very high."
00:14:38,"But with fewer members they'd have to, even though the rent is lower because the space is smaller, they simply don't have the inventory or the volume of meeting room revenue in order to generate enough revenue and profit to cover a full time staff person. So they need to lower their operational costs and reduce that staff by doing trades and having unstaffed time. And this can be done not necessarily to make membership fees super low, but to keep them affordable and approachable for folks who are local."
00:15:15,"Flexibility. If a space is set up and it's automated and there's door access technology, and there's good surveillance on the space, and members have been vetted 24 x seven access can be given without the need for staff presence, and members can manage their own schedules without any constraints. Now, it's pretty common for co working spaces to have some level of access for members outside of business hours, but it's not necessarily universal and in some markets this may be the case, or they simply don't have the technology to support it."
00:15:56,"So if you design a space carefully and with the intention that it is not going to be staffed, you can put these automations and technology aspects in place. So things like smart systems for access control, booking space, logging into the Wi Fi, and ways to get human support if you need it, imagine the easiest way to frustrate a member would be to not have access to a human if they can't get into the space, if something in the space isn't working well, if the space is dirty for some reason, or they need technology support."
00:16:36,"So you still need some access to a human, but it is not a human that needs to be in the space, nor dedicated only to this location. So it can absolutely be a shared resource. Some members, and this goes into the segmentation, even prefer a quieter environment with minimal distractions. They just want to come in and get work done. They have kids at home, dogs at home, they just don't focus at home, roommates at home, you name it, they don't want to be at home."
00:17:06,"And the coffee shop is really not ideal for a lot of folks who need to be on Zoom, who need to have professional conversations, or who need to focus, or whose butts hurt on those hard chairs after about an hour. So the. A lot of folks actually really do just really want to be productive and go someplace that can enable that. And I do think that that is a segment of people I don't think anyone dislikes."
00:17:35,"Hospitality, food and beverage, personal connection. No one is going to turn those things away. And yet for some people, those may be really extras. They don't, they are not what is important to them to go get their work done. And these people, you may not be able to relate to these people, but they exist and they are a segment of the marketplace. So I think what is important here is that you do the diligence to make sure that if you are going to have an unstaffed space, that that segment of folks exists."
00:18:10,"Here is one example that I'm just immediately comes to mind where this could be challenging, which is you are in a small market and there is already some real estate that is small and accessible to very small businesses. So a small business can already go and get 500 office space for a few hundred dollars a month. It's unstaffed, it's unserviced, it's unfurnished, but it's available and you know, the commitment might be year to year."
00:18:45,"It is pretty challenging to compete with that inventory in, in some markets, right? So you really have to segment, there's that really DIY inventory that's low priced and probably will start to be offered by more landlords. And then there's a highly serviced, hospitality folks focused co working space. And if you want to put sort of in the middle of that spectrum, a furnished, automated, tech enabled co working space, you're probably not going to be able to charge the rates that a serviced office, highly serviced co working space, et cetera, can charge."
00:19:24,"You're going to be somewhere in the middle and you might be closer to the lower end because you just might have a hard time attracting folks who really want to pay up for better design and better experience when there's no human involved. So know that going in in terms of your pricing assumptions, when you build out your pro forma and things like coffee service, aside from who's taking the teabags out of the coffee mugs, I'm thinking about who's offering the great coffee."
00:19:55,"And I will have to tell you, I think most of you probably have the same bias that I do, which is that, well, you must have great coffee at a co working space. It must be freshly ground and freshly made pretty much all day long, which is very high maintenance for most community managers. I remember doing a coaching call with a group in actually outside of New York, and I remember saying, asking them about their dishwasher and they said we were get getting into the, you know, real nitty gritty and, and they were like, well, we don't have one."
00:20:26,"And I was like, well, how do you wash your coffee mugs? And they were like, well, they're all disposable. We just have a keurig and then we have disposable coffee cups. Why would we want to do dishes? And so it, and their members were totally fine with that. Right. So again, you have to just think through the profile of your member. Who's your ideal customer? Avatar. This is the first step we always do in our co working startup school."
00:20:50,"Who are you serving? What's important to them. And you just have to make sure that the solution you're designing that is not staffed. That's kind of the core of the discussion today also doesn't care about things like coffee. There are certainly solutions. You can offer a keurig or a Nespresso machine. I am a big fan of the Nespresso machine with the milk frother. However you put the milk frother in the space, nobody's watching that thing is my theory."
00:21:16,"So you just have to make a really dummy proof system. You can get really great automated coffee machines. Like the jura, I think is an example. It's like a high end home machine. It can be used in co working spaces and make lattes, etcetera. So if you. I'm sneaking ahead a little bit. Have some sort of hybrid model where you have some day porter or somebody coming through, um, could maintain that, add the milk as needed, make sure it's stocked with beans, et cetera."
00:21:45,"So there are ways to handle this. Or you might be in an area where there are great coffee solutions next door, and you want to support the local coffee shop around the corner. And so you create a relationship with them and you make referrals, and folks just pop out to get their coffee in at the not included. And that might be reflected in the pipe price of their membership."
00:22:06,"So you could also have a bit of a co op approach, which I am personally biased against. I think those are really hard because I think those have to be really nurtured. And there, that's a culture that has to be created and developed and, and maintained over time. So I think this is really challenging. But you could have a DIY coffee making station where the members make their own coffee and sort of take turns."
00:22:36,"Give it a try, but have a plan b. Okay, so let's talk about the hybrid model, which might just be the best of both worlds. And I think there are a couple ways to look at this. There's hybrid model that is like front facing and sort of back of house, as the person that I quoted at the beginning of this episode mentioned. You know, there's a lot of stuff that's going on on the back end to support members."
00:23:02,"You're still onboarding, off boarding, handling support tickets, billing. There's still a lot of stuff that has to be done, but it doesn't have to be done by someone who's in the space and therefore can probably be done less expensively and without a full time commitment. If you take the operations and sort of send that, you know, back of house off site, somebody else is helping with those aspects."
00:23:26,"But you could still have a part time approach to staffing the space. You could have somebody come in at certain times of day. You could share staff if you have multiple spaces in a market, or you could do a, like a hospitality trade with someone. So you could do a hospitality trade with someone who spends or multiple people who kind of split up core hours of the week, and you could manage it that way."
00:23:56,"So you, or you could have a porter come through who cleans and just kind of maintains the operations of the space. And you could also limit meeting room hours to times when you have those community hosts on staff. I think having folks in and out of the space really increases the operational complexity and it just leaves you much more open to complaints and people not being happy with something because there's no human overseeing the experience."
00:24:25,"So I would be pretty careful about opening up to day passes and meeting room memberships with no staff. But it certainly can be doable again, especially if you have a porter who can come through and make sure things are clean, you know, a couple times a day. So here are some things that you're going to want to think about when you make this decision. Target audience. We talked about this."
00:24:50,"Make sure you're really thinking through who your end user is going to be. And you have to deeply know that that segment exists in your market and wants what you are going to provide, which is, you know, less service, less community focus, maybe good design, tech enabled, productive, et cetera. So you want to do some really good validation that those folks exist before you open an unstaffed space."
00:25:20,"Urban versus suburban locations, this may matter. I do think that you can. That segment, this segment exists in both of those locations. I mentioned the IWG brand. I will find that brand and put it in the show notes. But that's an urban location. I keep talking about alt space. They are sub rural, I would say. And I mentioned another location in Florida and I would call them more suburban."
00:25:48,"So I, I do think this can work in any type of market as long as you validate that those users exist. And when we think about unstaffed spaces, we're probably thinking about sub 5000ft, I would say maybe even sub three. I think once you're over three you're going to have enough activity in the space. Oh, I, you know what I just realized I am completely skipping switch yards and I think their model is roughly 4000 sqft."
00:26:19,"They're totally unstaffed and they have some true fans out there. We've had some of the folks on the podcast who just really adore that brand and they are expanding into other markets. So they have absolutely made it work and they have a really low priced membership. It's like a month. So they're going after kind of a different segment, which is more of a casual user. They don't have offices, they don't have meeting rooms."
00:26:45,"So you're really just going in there to do laptop work. So I'm assuming that the questions that are coming in about unstaffed spaces have a bit of a varied product mix. But again, if you're, if you have a space that's over three to 4000 sqft, you probably have enough folks in on a given day that you need to have people staffing the space and doing all the things that community managers do."
00:27:10,"So make the decision based on your target audience, your location. Does this work in your market? The size, if you're three to 4000, it probably works over that. It probably doesn't budget and resources, you know, what makes sense for your business model? What can the size of your space handle in terms of paid staff? And then, you know, what are your long term goals for the space? So hopefully that I."
00:27:37,"There's no silver bullet to this discussion. It really depends on you, your goals, the space, and how you can position an unstaffed space in a marketplace. But it's possible. And I think while hospitality is becoming so much of a focus, I also think on the flip side, technology and automation are also growing at a very fast rate in this industry. And we'll continue to see solutions that help with that automation, and we will continue to look out for those and bring those to your attention when we see them come up."
00:28:11,"So keep up the discussion and keep up the idea that there's a lot of opportunity for a segmentation in the co working world. All right, that is it for today. We will see you next time. I do want to mention, related to this conversation, if you are a building owner, an asset owner, and you are trying to think about how to provide co working or flexible office space in your portfolio in a way that is either staffed or unstaffed, we are taking new clients for our feasibility study, which helps you determine the financials, product mix, ideal customer for your offering in your market."
00:28:55,"And we do market research, market demand reports, etcetera, so that you can gain clarity around the type of business that or type of co working and flex business that might be a good fit for you. Or you might decide that it's not, and therefore save you a lot of time, money and effort. If you want more details about that, go to everything coworking.com forward slash feasibility and you can also book a call to see if that is a fit for you."
00:29:22,"So we'll see you next week. Thank you for listening to today's episode. If you like what you heard, I 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 everythingco working. We'll see you next week. Bye."
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