You are a solo creative profession, entrepreneur, or a small business owner and you are sitting in a café working by yourself. Sound familiar? Did you know that there are places where you can rent desk space by the hour, day or month. It’s called coworking and it’s redefining the way we work. Coworking answers the question that so many of us face when working from home: “Why isn’t this as fun as I thought it would be?” Beyond just creating better places to work, coworking spaces are built around the idea of community, collaboration, sustainability, openness, and accessibility.
[David Judson:] How did W@tercooler start?
[Jenifer Ross:] The idea of W@tercooler was hatched while I was sitting in my local coffee shop with a friend, laptop-to-laptop, racing to finish some work before our free hour of internet elapsed. At one point I looked up and said “how great would it be to have a space where we could actually work alongside other freelancers and have everything we needed to run our businesses and we would just pay a fee to belong.”
To this she answered, “There are these kind of places for writers in the city. Maybe there are some that cater to all kinds of freelancers.” Well, that led to a simple Google search on shared work spaces. I hadn’t even heard the term coworking yet, and WOW, I was sold. I found that there were hundreds of spaces world-wide where people could pay a fee for a desk by the hour, by the day, by the month and work with like-minded folks in a shared setting.
You solved a problem you had? You wanted to work independently, not from home because it’s isolating?
Home is very isolating and distracting. As a mother of two in a suburban town, my husband and I felt that it was important to have one parent working in our community, if the other was going to be commuting. By bringing coworking to my town, I was able to stay local while also creating a business that would serve the community at large.
How did you test the market? How did you know that this could work or might work?
At first much of my “research” was simply telling people about the idea and asking if they thought they would use this type of workspace. Later I created a questionnaire on Survey Monkey and asked more specific questions about what types of services were most important and how much would folks be willing to pay for these services.
So word-of-mouth? You just started saying, “I’m thinking about this idea,” and people said, “Wow…I’m in when you’re up and running!”
Yep – That’s about it. Creating buzz is easy in a small town. I think if I just hung out in the dairy aisle at C-Town for a day, I could likely sign up half the town!
There are probably a lot of people now in small towns across America that are working from home and wish they could work in a coworking space?
No doubt. Well, that is, once they know that what they are looking for is called coworking. So much of the effort is still tied to educating people about the movement.
So coworking is a potential growth area?
It’s undoubtedly a growth area. It’s a movement really and it’s happening globally. In cities primarily, but if you follow the Coworking Google Group email threads, it’s clear that it is happening everywhere. While most coworking spaces open in larger cities like LA, NY and Seattle, a fair number of recent posts have been about rural and suburban coworking.
I’m an example of small town coworking space, more of a boutique operation. Spaces range from the smallest around 900-1,200 square feet, up to tens of thousands. I’m 1,600 and I am able to house ten desks, a conference room, one private office a lounge area and a kitchen. I would love to have another 1000 square feet, but there really weren’t too many open plan spaces to choose from in my target area. In the end I realized that what my space did have in terms of light, central location, and flexibility made up for the size.
Are you thinking about expanding?
Actually yes. In addition to working with a potential partner for a second W@tercooler location within Westchester, I have been speaking with the landlord of the building immediately next door to me. He is eager to see me expand and sees my limitation in this building.
What are some issues with scaling? Is it a quality control issue or not?
I think quality control will play a huge part in how we expand. Defining, maintaining and being consistent with your brand and business model is essential. I think it begins with identifying what makes our space different and unique, from the design and color choices to programs and amenities. It will be important to make sure that these core elements are replicated in future spaces and that if we do license our brand, that these future space owners truly understand and believe in the model.
How do you market your space?
Mostly on Facebook, Twitter and LinkedIn. I’m very active in my promotions through those social media venues. I also use Mailchimp for weekly alerts about programming and WC news. I place one monthly local ad, and do a ton of local networking and always carry cards. Can’t forget to mention the car magnets!
So your marketing is definitely local.
Do you make more money from your full-time people or the part-timers?
At this point from my full-timers. I have 7. I’ve structured myself differently from a lot of the other coworking spaces. I do 5-, 10- and 20-day passes that are good for six months, whereas most of these places do 1, 2 or 3 days or 5 days and you pay every month whether you use it or not.
When I first opened I was nervous to overbook so I created a system where passes were good for 6 months. Now I am finding this impacts cash-flow consistency and am in the process of changing my business model to do monthly memberships instead.
So before you opened, did you crunch the numbers and say, “I can make good money doing this?”
Yes. I did crunch the numbers but it’s not exactly the way I thought it would be either. I thought I was going to have more desks and that the conference room would be more actively used. On the flip side, I am doing many more workshops and space-rental events than I had originally planned and this a not only a great revenue stream but also forces me to promote the space on a daily basis. It also brings potential members into the space every week.
And you saw the conference room as a potential money maker?
Do people use the conference room?
They do, just not as much as I would like to see it utilized. We have a weekly writers group that meets every Saturday as well as a few lawyers that use it weekly. A number of our members use it regularly and it is used for tutoring, workshops and board meeting on a weekly basis.
Is it extra?
All memberships include some level of comp time. If they go over that number it is billed at half the regular rate of $35 an hour. We also offer 10- or 20-hour passes which include a 10 and 20 percent savings respectively.
So what are some mistakes you made along the way?
I wouldn’t call is a mistake, but I think I would have researched the cash flow idea more diligently and spoken to other spaces to see where they were finding problems. It’s hard to know how it is going to really look and function when you are in the planning stages. So many issues can only be seen and addressed once you are open. I would suggest that others really understand their community and what it is they want to be to these future members. You can’t be everything to everyone, so you need to decide who you are and stick with it.
How did you fund the opening of the space? Was it expensive to do?
I suppose it’s all relative. I chose a 1600 square foot space that did not have a single wall and was lit entirely by florescent lights. I needed to install a full kitchen, everything needed to be updated, the bathrooms, the carpeting, the floors, ceiling tiles, etc. I borrowed $55,000 and put in $10,000 of my own.
So that’s not cheap. A year’s pay.
Well, the $65,000 also includes first and last month’s rent, security deposit, all my lighting, all my electrical, every bit of furniture, printer, the coffee maker, mugs, vacuum, you name it. I wanted it to look and feel a certain way, and it does. It inspires everyone that walks through the door. It was worth it.
Have you recouped that?
Not at all! But I am paying all of my bills, which I think is good for ten months.
Did you crunch numbers to try to get to see when you would get to break-even?
Yes, in my business plan. Those numbers were only speculative. Until you are really in, it’s hard to know what the real numbers will be.
$55,000 is an investment.
Businesses are investments. My goal was to make something that was really impressive visually and be an inspiring place to work. I’m creating a brand and that takes money.
It’s a very inviting space.
It’s like the loft you never had. It’s part zen, part hipster, and part professional.
Was it the vision you had?
Oh yes. If I showed you my sketchbook, you’d see this room and space as a line drawing.
You are an artist, you come from a creative background, you knew how to build the brand. But the finance numbers were harder for you it seems.
Did you have anyone to help you with that aspect?
I did a little bit. One of my initial members is a grant writer and he helped me do my cost-flow analysis and break-even. It was a huge gift.
It needs to be a profitable model, obviously.
It does! Some spaces look to just break even and simply be a place for themselves and others to work. My goal is to grow W@tercooler and have it be my living. The size of my space makes it a little more difficult to see a significant profit unless all revenue streams are maximized.
So the fees that your community is paying to you are, essentially, not enough?
Correct. When my five full-time desks are rented and my private office is rented, I am able to cover my costs. Above that, all the other peripheral money that comes in could conceivably pay for the loan, a salary, etc. It’s definitely possible that a coworking space of this size could make a profit. I think you have to structure it in a way where you have an identifiable consistent income.
To break even in six months is good start.
Yes. I feel confident that it has potential. I have a lot of ideas about how I can maximize the use of the space. For example, inviting more Meet-Up groups to hold their meetings here. Right now we have the Westchester WordPress MeetUp and I love it. They organize, they pay and they bring the people, and not just any people, but potential members.
Do you consider yourself a serial entrepreneur?
Serial idea person. I have owned one other business aside from W@tercooler – but I love to concept.
What were you before? An artist?
Always an artist – but not for money. A freelancer. I have an arts background but I never did art for a living. My previous business was a gallery in town – that spun off other businesses, like a monthly arts-culture-commerce event that is now in it’s 8th year.
So what’s the difference between a freelancer and an entrepreneur?
That’s a good question. I think a freelancer is somebody who takes on independent projects that come and go within a field, whereas an entrepreneur is somebody who creates businesses. They tend to be ahead of their time and have the balls to take the leap even though everyone thinks they’re nuts.
Calculated, but a risk.
So was this very risky for you?
Well it was because my husband was perma-lancing when I launched the business with no steady income or benefits and I didn’t have an income for myself built into the business plan, but so far so good.
And you borrowed all the money?
I have a credit through my mother’s business. I wasn’t able to secure my own as a new business. But I didn’t feel as though that was a huge risk. I was comfortable with it.
Does this keep you up at night at all or do you love it?
I love it.
What do you love about it?
I love being a connector in my community, a hub, a resource. My whole life, I’ve always been somebody who has liked to help other people.
It’s really about connecting, not just providing a desk.
Yes. You’re helping people live their dreams and follow their inspirations. I relish overhearing the interactions that happen between members. There are connections made every day.
That’s what it’s about. It’s not, “Here’s a desk to rent.”
Collaboration, connectivity and community. It’s about being inspired.
That’s what business is about. That’s what the coworking movement is about, actually.
When people compare us to Stark Solutions, which is a local office suite, or they compare us to Regis, it’s odd to me. There’s really no similarity. They are not coworking in the deeper aspect of the term. Coworking is about building relationships.
It’s a very organic, natural way of doing business and people are constantly working together here, whether it’s just asking a question before you send a document, or exchanging services.
Connecting people with ideas and value.
Just before you got here, a girlfriend from college who I haven’t seen since graduation, called me up and said, “I’ve been watching you on Facebook and I have a workshop I want to do.” She lives two hours away in Great Barrington but she wants to have her workshop here because she has been watching us and wants to be a part of the energy we are creating here.
What Kinds of Programs do you have for members and non-members?
For members we have an Intern Program, Member Yoga, our W@tercooler Advantage Program (discount card for downtown shops/services) and the Coworking Visa.
We also have Unemployed Mondays for non-members in which anyone who is in between jobs or recently let go is welcome to come here to use our space and resources at no charge.
You’re doing that more as a service to the community rather than a marketing thing? Was that your intention?
My husband has been half-employed for a year and a half and has made so many friends who are unemployed. This made me realize that I have this awesome space to network and until I’m at capacity it doesn’t cost me anything to have a few more bodies here once a week.
In the end it does benefit me because those people are going to go out and say, “You know what? Something really nice happened to me today.” It’s about being generous. Everybody who is a generous person is going to be that way to another person. Once you have a business, you can do it on a larger scale.
And it makes a real impact.
I think it’s a good decision from a business perspective but also because it’s human and everybody in that situation needs that support. Where are they going to find it? It’s so easy to get depressed and down on yourself when you’re alone in your house and you don’t have a job. Here, you come in and someone says, “Hey, how are you doing today?”
It can inspire you to do something that you really wanted to do for a long time. Or you might say to yourself, “Hey, that person’s an entrepreneur or business owner. Maybe I can do it.”
I enjoy being a catalyst. Or at least one who inspires others to make it happen for themselves.
So you wake up every morning really liking what you do?
Do you have a partner? Who do you talk to about the decisions you make? Your husband?
Yes, for the most part. I’m now in the midst of possibly looking for a coach, somebody who can help guide me. I thought about putting together a small advisory committee.
Or a mastermind. There are other business owners.
I definitely need that because it is like being in a vacuum when you’re a solo-prenuer. My husband has been a huge help.
It’s good to bounce ideas off other business owners.
I have lots of good friends and even here, I’ll turn to some co-workers and say, “I’m thinking about doing this. What do you think?” And again, it’s your instant windshield survey. Actually, we have a new clan that’s meeting every other week called the Command Centre for Serious Shit.
It’s women who are getting together every other week to talk about our own businesses and how to help each other move forward and discuss issues that we might be having that week, that day, that month.
What is the key aspect to running this type of business?
The biggest thing that comes up over and over again is to build the community first. You hear that from every space owner or manager. By building that community and the buzz, you are able to sign on a fair number of members before you open and create a revenue stream that can grow. Six months before I opened, I was already telling my immediate world what I was doing and getting them involved.
How long is that pre-launch buzz? A couple of months?
I’d say at least six months. I created a Facebook page, made up cards, created a video in which I gave a tour of the roughed-out space. I threw a construction party six weeks before opening so people could see how the space would be setup. They could sign up that night at an intro rate if they wanted to.
With coworking there is a bit of a learning curve for some of your potential members. Many people need to be educated first about the model of coworking before they have their “Ah-Ha moment” and realize that it is just what they have been looking for.
So you had a lot of momentum before you opened?
And you had people pre-booked?
Yes. At my opening party, five or six people signed up, all part-timers, but still members. I already had booked my private office. My first full-time member signed up the first week I opened and then I didn’t fill my other five desks until January 1st! I was beginning to wonder if they should remain part of the plan, but now it feels pretty steady.
Would you say that profit comes from the add-ons?
Much of it does. My basic overhead is paid from my 7 full-timers. The part-time members, workshops, event space rental, and mail-only members make up the “overage” that can be applied to other expenses and of course profit.
If someone wanted to be a business owner, do you have any advice?
Make a plan. Have a business plan at the ready, even if it’s non-traditional. It’s very important to define your model, your market, your goals and run the numbers. Have a mission and make sure you apply that mission to every aspect of your business.
You have to stand out and you have to know where you’re going, who you’re marketing to and how you’re going to market to them. It also doesn’t hurt to surrounding yourself with people who can help you.
Why do so many small businesses fail?
I think a lot of it is poor planning.
Or they get into a fantasy and they don’t know the reality?
Yes, or they’re so into their idea that they may not realize that it’s not as big a market as they think it is. It may not be something that everybody is dying to be part of or purchase.
Or scaling? Growth can lead to implosion.
I think sometimes people don’t realize what it really takes to build a business. It’s 24/7. It can be eleven o’clock at night and a work message comes through,- chances are, I’m going to respond to it. You have to be on it all the time and it can’t be, “Damn it, why am I getting this email?” It’s more like, “Yay, somebody’s booking my space. It’s eleven at night, I’m going to let them know it’s fine!”
But does it impinge on your personal life?
A little bit. But we make time for family and fun too. My husband knows who I am so this doesn’t bother him at all. My ten-year-old daughter gets a little upset when I’m always responding to work. So absolutely, I think you need to turn off and give those things that really also matter in your life their just time.
But I think that ultimately what you want to do is in your first year or two you have to do everything, but eventually you get profitable and hire somebody to take care of all those fires.
And then you can go on and build that larger picture. And I think that’s where I am now, really defining how to make W@tercooler into highly efficient operation and then to expand that. Then I can have someone here and I can go off and build others and make it into a defined brand that is replicable.
That’s the key, finding a manager who can really take care of it and then it runs itself.
And a lot of co-working spaces do have a Community Manager or as some call themselves, Director of Happiness. As soon as W@tercooler2 opens, and as long as cloning oneself is not yet possible, I plan to hire a space guru. Deskmag had an article a few months ago that said that 32% of co-working spaces planned to expand in 2012. That’s a lot of expansion. I think that you’re going to see a lot of that over the next few years. All signs point to the notion that Coworking is here to stay. Phew.