We have a space!

by Marc ~ August 20, 2010

Time for another long overdue (and just plain long!) update. This time there is something big to report.

A few weeks ago I partnered with two others and we purchased a 235 square metre space in a converted warehouse in Richmond (pictured). It is almost everything I wanted – great location, exposed brick walls, timber floorboards, high ceilings, and a combination of open space and meeting rooms. There was only one requirement which wasn’t quite met, but I’ll get back to that in a moment.

If you want to see some photos of the space (when it was still occupied by the previous tenant) you can see them at six8bromham.com. That site includes images and video of the layout we are planning. As you will see on the site, the working title for the space is Six8 Bromham, based on the address which is Suite 6, 8 Bromham Place, Richmond.

Since we purchased the property, and in the lead-up to taking possession on 1 September, we have been doing a few things. I have spent time thinking about the structure for the entities involved (which vehicle owns the property, collects fees, owns the furniture, etc). We’ve almost settled on a structure we are happy with.

We also got lucky when we found the previous tenant was looking to update all of their furniture as part of their move to a new office, so we were able to pick-up well over half of the furniture we need for a very reasonable price. Almost all of the furniture included in the gallery images at six8bromham.com is now ours.

One thing that was a big part of my initial vision was a decent games/entertainment area, and even before we finalised the purchase of all of that furniture we had bought a brand new Lord of the Rings Limited Edition pinball machine. That will be the pride and joy of our entertainment area, and will be accompanied by couches and bean bags, a 50 inch plasma, and games consoles. This will play a part in achieving my goal of creating a space that members will want to go to each day even if they don’t have much work to do, and in turn by just being there will hopefully lead to opportunities for work that they wouldn’t have found at home.

So back to the one thing that I mentioned that didn’t quite meet my plans, and that is the overall size of the space. My initial goal was a space of around 400 square metres, with room for up to 40 people on any day, whereas this space is smaller at 235 square metres. In terms of workspaces, we have a small area near the entrance for up to eight people (previously used as a reception area), plus a mezzanine level with desk spaces for about eight to ten. We also have room for a shared table on the mezzanine floor for another four or five people to work for shorter periods, or which could be used as a casual meeting space. Finally, back on the main floor, we have a boardroom with a ten-seat board table, and a smaller meeting room with a table suitable for up to eight.

Why is the size an issue? Without going into too much detail, when looking at the economics of a coworking space the two largest expenses are the cost of the premises (rent or interest) and the cost to run the space (whether measured in dollars or owner’s time). The cost of the premises is linked directly to revenue, in that if you double the size of the space you have the potential to take in twice as many members and double the revenue. However, there is less link between the administration cost and revenue because it doesn’t take, for example, twice as much time to run a space for thirty people as for fifteen.

For these reasons, smaller spaces have greater issues in creating a sustainable business model. Sure, a smaller space is lower risk so far as attracting enough members to fill the space is concerned, and the lower rent or interest means less potential for loss if your member numbers fall short of expectations. However, it means the per person admin cost is almost guaranteed to be higher (or time commitment per member), and you therefore need to charge each member more to break-even, all other things being equal.

So how have we chosen to address this?

Luckily we already have quite a few friends keen on taking a desk. We have decided that (at least initially) we will work on a model that doesn’t involve a lot of administration, so will only include members that we know well and are happy to give 24 hour access and a key, and will not have casuals or drop-ins. We will encourage members to help find new members until we reach break-even, and to keep costs low will ask that everyone help out by taking on a task or two themselves.

Does this fit the “traditional” coworking model? Possibly not, because it is invitation only and doesn’t fit with the ideal of openness that most coworking spaces strive for. Initially this troubled me, until I came to the conclusion that coworking is still a new idea in itself and is succeeding by breaking the rules on what a normal workspace looks like. So creating something which suits us and not feeling bound to follow the models that work for other people is not only acceptable, but absolutely the right thing to do for us.

What about the future? This invitation-only model is just to get us started. We are still very open to making this into something bigger. I am also playing with ideas for a private business club that will be based around our workspace (our “clubhouse”) and will involve social and educational events, an online community, collaboration on new business ventures, knowledge sharing, business idea brainstorming, critiques of each others’ businesses, networking opportunities, etc.

So this is only the start. Please don’t let any of this stop you from getting in touch with me to talk about our plans, or coworking in general. I’m passionate about what we are doing and love to talk about it, share our ideas, and learn from others. I’ve met some great people that first contacted me via this site, several of whom are now involved in the formation of new coworking spaces around Melbourne, and I continue to value the contact I have with them regarding the future of coworking in Melbourne.

Thanks for stopping by and, if you’re reading this, for making it this far through such a long post!

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