As we talk to clients in the coworking space, it’s clear there’s a huge amount of stress surrounding the overhead of coworking facilities and the future of the industry more broadly.
Understandably, coworking members across the country have in many cases put their memberships on hold due to stay-at-home orders and general cautiousness about heading into any kind of communal space.
But without members paying their fees, coworking firms are seeing massive revenue depression, while trying to figure out how they can survive and continue paying rent in this all-consuming downturn.
There have been endless conversations about whether coworking companies can survive in a post-Covid-19 world. From the Wall Street Journal to the LA Times, conversation has been focused on this question, often with bleak outcomes predicted.
The answer, however, is yes. They can not only survive, but thrive. But a significant shift in business model will be needed.
The Challenges
As a first – and obvious – step, businesses will have to look at the facilities side of their operation, such as:
- Cleaning
- Air filtration systems
- Check-in processes
- The use of kitchen areas
Also of note is that the demand for office space is likely to be much higher, while communal tables are set to utilize less – if any – square footage.
Elements such as these mean increased operational costs and potentially less revenue per square foot, both of which make it understandable to question whether coworking companies can survive post-pandemic.
They can, and the key lies – as is so often the case in times of crisis – in diversifying.
The Solutions
Virtual Coworking
Whoever said coworking had to be a physical endeavor?
The point of coworking is to belong to a community, however it may present itself.
Covid-19 has caused a tremendous sense of isolation for workers, with millions of us working from home without the camaraderie of being in an office space with our team.
So how can coworking companies address this without going back to their old business model of bringing people together physically?
A virtual space combined with less emphasis on in-person workspace can offer a blended coworking experience that hasn’t yet been implemented but that people are likely to be much more open to trying now.
For example, the weekly gatherings we used to attend at our coworking spaces may no longer be viable (or attractive), but that doesn’t mean they have to stop.
Events can be run virtually and the free coffee onsite can be replaced by a delivery of something simple to each participant. A nominal fee per event or incorporated within membership fees can be considered to put towards covering event costs.
Business Opportunities
Coworking spaces can also opt to offer business-matchmaking services.
For many members who may be wondering what the point is of staying with their coworking facility, if they suddenly became a source for viable new business leads, staying on board would be a much more attractive option.
Coworking companies could also offer members the option of being part of a virtual business – a co-business – giving you access to a Voice over IP (VoIP) line, a Microsoft Office suite, or a CRM platform, for example.
In fact, any essential operations platform that as a sole trader the economies of scale simply wouldn’t be there could be an excellent opportunity for ‘team members’ of a co-business facility.
Business Services
On top of this, there is a massive opportunity for coworking companies to diversify into offering business services, such as accounting, HR, or marketing.
With outsourcing already gaining momentum well before the pandemic and its impact, businesses were already looking to outsource various aspects of their operations in a cost-effective manner.
This is only set to increase as we try and return to some semblance of normality once stay-at home orders are lifted and we start working out how to rebuild our businesses. It’s going to be a lot easier for companies to outsource functions than rehire for positions they had to cut as the pandemic took hold.
On top of this, coworking companies could take their co-business offering to the next level and offer fully managed IT services. While companies like Regus offer IT staples such as VoIP, it’s very much a utility model rather than a service, meaning the opportunity is wide open for coworking companies to explore. And services offer attractive margins, meaning an effective way to bolster the bottom line and enhance value.
There are all sorts of possibilities for coworking companies to pivot towards a co-business model that can offer not just virtual coworking opportunities, but co-business opportunities and a myriad of services opportunities.
It may not be a simple pivot, but it is an essential one that will enable coworking firms to not only survive, but thrive.
