You may know already that August 9th is International Coworking Day, celebrating 13 years of coworking, and like us, maybe you’re planning to celebrate it in a BIG way. But did you know that August also boasts International Happiness Happens Month?
It turns out August is a month full of several “days of happiness.” And we were surprised to find out that the days are also applicable to owning and operating a coworking space, though you may not realize at first.
- International Happiness Happens Month. The Secret Society of Happy People (really!) started celebrating happiness with an official “Admit You’re Happy Day” on August 8, 1999. Their members wanted to let the happy feeling linger so they “expanded the celebration” to officially make the party last the entire month and eventually, the entire month of August was renamed “Happiness Happens.”
- International Cat Day, also on August 8th. Celebrated for the first time in 2002, the day pays homage to the most popular pet on the planet. This full 24 hours of veneration of one of humanity’s oldest and most beloved pets may not be on YOUR radar, but it is proven that when a cat purrs it not only tells you that it’s happy but it makes you feel happy too. It’s amazing therapy after a long day at the office. So, roll out the red carpet of catnip for our furry feline friends!
- International Spumoni Day. Spumoni is a wondrous, layered, Italian ice cream dessert which includes cream, fruit, and nuts, and is celebrated on August 21st. Sitting here in NYC melting in the 2018 heat wave, a slice of spumoni right about now would make me ecstatic. (Maybe I’ll name my next kitten Spumoni!)
You must be asking “How can happiness, cats, and spumoni relate to celebrating August 9th as International Coworking Day?” And as an owner of a coworking space, “Why should I even care?”
Keeping people happy on the job is good for companies
More and more companies are paying big money for their teams to use coworking spaces now and then especially if they work from home or have long commutes. It’s proven to keep people happy on the job, and happy employees are more loyal, more committed, more engaged, more engaging, and more productive.
“A thriving workforce means greater engagement of each employee’s physical, cognitive, and emotional energies,” which then spurs the employee’s feelings of happiness and purpose, according to SHRM and Globoforce.
Inc. Magazine drew the following critical idea from the SHRM/Globoforce report: “If companies desire more productive employees who love their jobs (which leads to better business outcomes), they will need to usher in the new era of human and caring workplaces.”
What does this mean for coworking space owners?
Can a coworking space owner actually exploit this human capital management trend? Absolutely. Not only can you ride the wave to more profits but you will find that as firms get creative in helping make their employees happy, the coworking industry can use some clever metrics to increase profitability.
So as our humble contribution to celebrating International Coworking Day 2018, we take a look at how to do a happy dance at the end of every month — not only during August.
Paying for the right to use latent assets is typical today 2018
Everyone is monetizing something latent (think AirBnB and Turo). And if we are not paying to use a latent asset, we are paying to not own something (think Netflix or Rent the Runway). That bookshelf full of DVD’s are latent assets as you are not watching them 24/7, so why buy them when you can pay to watch only when you want to watch? On-Demand usage is the underlying concept behind latent asset maximization.
Owners can take advantage of on-demand usage
As owners/operators of coworking spaces, it is key to proactively identify, plan for and tap into an optimal blend of sustainable and creative revenue streams to not only survive but to thrive. Owners of coworking spaces can use companies’ needs to generate top-line revenue with their physical assets.
Robert Cross’ classic definition of revenue maximization is: “Sell the right space at the right price at the right time to the right customer.” We have to look in depth at the real cost of sale when analyzing revenues. The Holy Grail (Robert Cross’ classic definition kicked up a notch) is getting the most money possible from the end user while simultaneously ensuring one has the lowest acquisition cost. Leading Revenue Management Experts globally refer to this approach as smart revenue strategy.
This sounds great. How do we do it?
Rather than reinventing the wheel, let’s look at smart revenue strategies from other industries like restaurants and hotels, and explore how to use both Hospitality and Airline Revenue Management theories at a coworking company.
How do we measure revenue?
Cornell Hospitality uses some amazingly simple KPI’s for anyone studying the financial aspects of the hotel and restaurant sector.
- Revenue per available seat-hour (RevPASH) for the food and beverage outlets
- Revenue per available square foot (RevPASF) for function or meeting rooms
Interestingly, RevPASH and RevPASF are both calculated by day an/or by day part (in the case of function space) or hour of day (in the case of restaurants). We can do the same in Coworking.
Optimizing coworking per available seat-hour
Most NYC coworking spaces (including ours) sell a day pass for a hot desk for $25. At 8 hours, that’s $3.12/hr. Don’t forget commissions and credit card fees (cost of acquisition)! Our net on that sale is about $21. Using RevPASH, a hot desk day pass generates $2.62/hr (net).
This means that for each empty hot desk, we lose $21 per day of potential revenue. So if we have on average 2 desks empty a day, when we fill these perishable assets we can easily add almost $1,000/month in net revenue. (And some months of the year, four desks a month can be sold easily — doubling the monthly incremental income to around $2,000.)
Case Study: Airline Industry
To ensure future success, airlines work with a revenue management solution focused on revenue per customer and revenue per seat. Their management approach must be robust as they need accurate, real-time information in an easy-to-consume format to improve sales and customer-centricity strategies while overcoming competitive influences in the marketplace.
The systems today provide performance enhancements for both sides, both operational and internal productivity improvements for its employees. Everything they do must support airline’s path to realizing total revenue optimization. This strategy leads to increased customer satisfaction by promoting a seamless passenger journey.
Applying airline metrics to coworking
While flying is not always a seamless journey, there are some key parallels in the revenue generation side of the discussion as they rely on systems that provide real time dashboards of performance and pickup to best ensure every seat is full every flight. Airlines know the cost of their very perishable asset.
Case Study: Hotel Industry
Hotels know revenue per available square foot (RevPASF) comes down to generating more revenue out of the same space. “Hotels own a physical asset 365 days a year,” said Bill Carroll of Cornell’s School of Hotel Administration, “and they need to maximize revenue for every square centimeter 24 hours a day.” That’s why many hotel lobbies began to rent space to Starbucks and FedEx. They are able to monetize a latent asset (empty floor space)!
Applying hotel metrics to coworking
Given our industry’s deep desire to make as much revenue from our space asset(s) as possible, and that we live in a world where we can use an app to buy what we want, when we want, and only pay for how much we want. Coworking spaces the best way to exploit Happiness Happens Month is to happily take the incremental revenue this opportunity represents.
Making money by renting out an unused asset is just like consuming someone else’s latent or perishable asset (guest bedroom via AirBnB etc.) It makes a lot of sense and a lot of money for a lot of people.
Enjoy this August, aka International Happiness Happens Month. Assuming many of you reading this are melting in the crazy heat, let us offer you a sweet slice of iced Spumoni! Make your latent and perishable asset bookable with no acquisition costs and celebrate International Coworking Day. As owners/operators you’ll be purring with pleasure as you discover a great way to help your financials do the ultimate happy dance at months’ end.