What does a healthy coworking space look like? How do you know if your prices are set appropriately? What should growth look like? How do you know which parts of your business to grow?
For many space owners and operators, answering questions like these can spark stress and uncertainty. With so many variables in an ever-changing industry, business planning can seem like more of a coin toss than an actual plan. Here’s a quick and easy check-in (or introduction) on how to gauge and manage the health of your space (and your P&L statement):
1. Do you have a logical, easy to use tracking system?
Whether you’re using QuickBooks or a more sophisticated system, your spreadsheets and data collection are only as helpful as your organizational system. You should be tracking data regularly, and using appropriate tags or other search/organization tools to make the data easy to navigate, update, and use.
Tracking your cost per square foot, revenue per square foot, and occupancy can give you a quick snapshot of the appropriateness of pricing to your market, for example. You don’t need to be afraid of raising prices in order to increase your revenue per square foot, but if you suddenly see occupancy drop, you may need to back down. A good tracking system will allow you to easily notice that optimal price point that balances value with revenue for your particular space and market.
When you step back to look at your data, be sure to pay careful attention to what metrics seem to drive change. Did you see an increase in occupants after you dropped the price on a specific service? Are your members using more of a certain resource over another? Are some meeting rooms more often utilized, and if so, why?
The answers to these types of questions may well be the direction you need as you make business plans going forward, and continued data tracking and organizing will make it easy for you, your team, and any potential acquirer’s to see how and where you’re making progress.
2. What metrics are you tracking?
There are a number of metrics that can be helpful to track, ranging from how many clients are members of a given membership tier or plan and how those numbers have changed over time (and how you might alter price to get the most favorable balance of different members in different price points) to how frequently a given meeting room is used.
One place that is often overlooked is day or multi-day passes. Often, clients purchase these passes but don’t use the entire thing, which may mean you could actually charge slightly less for these passes, sell more, and still not see much change to the actual price per day the client is in the space (since they’re likely to not be in the space for all of the time they purchased anyway).
When tracking metrics, be sure to do more than track expenses and income; track space usage, where your leads come from, conversion rates from tours or community events, advertising conversions, and anything else that would indicate that measures you’re taking (or not taking) to attract and retain clients is working (or not).
3. Are specific expenses taking up too much of your budget?
As you’re going through your budget and financial data, it’s important to note whether specific line items are taking up more than their fair share of the percentage of the budget. For example, in most markets, rent that takes up more than half of your budget is probably not going to lead to a profitable business.
On the flip side, some services might take up a fairly small percentage of your budget and yet yield big results—something you also want to identify and consider whether it would be appropriate to allocate more resources, continue as is, etc. For example, community events—especially in very community focused spaces—can often cost very little per person in attendance while also doing a lot in terms of word of mouth marketing for your space.
4. Are you offering services that make sense?
Some coworking space services seem to almost run themselves, making them great, low-impact options for your expenses budget and also valuable perks and resources for your members. For example, virtual mail and/or virtual office services can easily cost you only around 30% of what you charge the client (assuming you are using a service for virtual offices). These sorts of virtual-only services also allow you to broaden your customer base to clients who may be attracted to your address but don’t necessarily live in your location—an important thing to note for more urban spaces, especially.
On the non-virtual side, well-designed meeting rooms and mail services for clients can be part of premium packages or service offerings on their own. However, these types of offerings often take very little in terms of upkeep or staff time, meaning that while they can generate a lot of revenue if done well, they also won’t cost much on the expenses side.
5. Are you tracking data that relates to ongoing or upcoming changes?
Regardless of where you are in terms of budget and revenue, you should always be looking to make positive changes to your space. Be sure that you carefully look at your data for evidence-based changes to make going forward, but make sure that looking at the data doesn’t end there, either. As you decide what changes to make, decide too how you’re going to measure and track the success of those changes. That way, you can course-correct earlier rather than later, and keep your momentum as you move forward.
