Growth Vs Efficiency: Finding The Right Balance for Coworking Space Success

In the dynamic world of flexible workspaces, finding the right balance between growth and efficiency is essential for success.

How do you find that sweet spot?

This blog post delves into insights from industry experts shared during a recent panel discussion from FlexWorld Series 2024, offering valuable guidance for flexible workspace operators.

The panel featured Johnny Rosenblatt, co-founder of Spacemade, Jamie Russo, host of the Everything Coworking Podcast, Triona O’Neill, Director of Operations at Serendipity Labs, Samantha Kenney, CMO at OfficeRnD, and Radoslav Enchev, senior product manager at OfficeRnD.

The experts shared their strategies and personal experiences in optimizing efficiency without sacrificing growth.

Let’s jump right in.

Understanding Efficiency and Growth

Efficiency

Efficiency in the context of flexible workspaces can be categorized into three main areas:

1. Revenue Efficiency: Maximizing income from available resources.
2. Employment Efficiency: Optimizing staff productivity and satisfaction.
3. Footprint Optimization: Using space effectively to maximize occupancy and user experience.

Revenue efficiency involves generating maximum income from each square foot and each member.

This can be achieved through strategic pricing, upselling services, and optimizing membership plans to suit various needs.

Employment efficiency focuses on ensuring that staff are not only productive but also satisfied, as happy employees are more likely to contribute positively to the business.

Footprint optimization is about making the most of available space, balancing between private offices, dedicated desks, and communal areas to create an appealing and functional environment.

Growth

Growth involves expanding the number of spaces, increasing membership, and enhancing service offerings. However, growth must be managed carefully to avoid compromising efficiency.

Expansion can include opening new locations, increasing the capacity of existing ones, or diversifying services offered to meet changing market demands.

While growth brings opportunities for increased revenue and market presence, it also introduces challenges related to maintaining the quality of service, managing larger teams, and ensuring that operational efficiencies scale with the business.

Key Metrics for Optimization

To grow and remain efficient, operators should focus on several key metrics:

• Occupancy Rates: Track the percentage of space utilized at any given time. High occupancy rates indicate effective use of space, but they must be balanced to avoid overcrowding.
• Revenue per Member: Measure the average income generated per member. This metric helps understand each member’s financial contribution and make informed pricing decisions.
• Net Member Gain: Calculate the difference between new memberships and cancellations. Positive net gain indicates growth, while negative trends need addressing to retain members.
• Sales Activity: Monitor the number of viewings, inquiries, and contracts at various stages. Active sales funnels signify strong demand and effective marketing.
• Website Traffic and Conversions: Measure digital engagement and conversion rates from tours to memberships. This helps in assessing the effectiveness of online marketing efforts.
• Member Retention and Satisfaction: Use metrics like Net Promoter Score (NPS) to gauge member happiness and loyalty. High retention and satisfaction levels are critical for long-term stability.

Balancing Efficiency and Growth

So, how do you actually balance efficiency and growth?

Johnny Rosenblatt emphasized the importance of transparency with landlord partners and detailed tracking of key metrics.

For example, Spacemade shares real-time data with partners, ensuring alignment and optimizing performance. This transparency extends to sales activity, contracted revenue, and average desk rates, providing a clear picture of performance and areas for improvement.

Jamie Russo highlighted the tension between hospitality and profitability. She suggested that revenue per square foot is a critical metric, although it can sometimes conflict with creating a desirable member experience.

Disciplined metric tracking is essential for maintaining efficiency. She also stressed that while maximizing revenue per square foot is important, it should not come at the expense of the member experience, as satisfied members are more likely to stay longer and refer others.

For Triona O’Neill, focusing on member retention and satisfaction is crucial, using NPS to gauge success. Serendipity Labs ensures high retention rates and long-term stability by prioritizing member experience and leveraging technology to streamline processes.

Creating a welcoming and supportive community is very important, as happy members are more likely to remain loyal and contribute to a positive atmosphere.

Effective Marketing Strategies

Community Building and Referrals

Triona stressed the value of community building through local partnerships and events. Serendipity Labs hosts events to foster connections. This enhances their brand and attracts new members through word-of-mouth.

And according to a recent survey, word of mouth is the primary method through which coworking spaces attract members. Learn more here. These events help build a strong community and serve as networking opportunities for members, adding value to their membership.

Always-On Digital Marketing

Johnny discussed Spacemade’s always-on digital marketing approach, including Google Ads, Instagram Ads, and LinkedIn campaigns. Continuous digital presence helps maintain visibility and drive inquiries.

He shared a successful example of a billboard campaign targeting local commuters, which significantly boosted inquiries and conversions. The key is maintaining consistent and engaging content that resonates with the target audience, ensuring a steady flow of potential members.

Experimentation and Tracking

Jamie Russo emphasized the importance of experimenting with different marketing strategies and tracking results. Different markets may require varied approaches, making it essential to test and measure effectiveness.

She also noted that maintaining a strong online presence is crucial, especially in competitive markets. This involves paid advertising, content marketing, social media engagement, and search engine optimization (SEO).

Advice for Scaling Operations

Embrace Technology

Triona O’Neill advised leveraging technology to streamline processes and enhance member experience. This plays an important role in Serendipity Labs’ success.

Efficient systems are crucial for scaling operations without compromising service quality.

Technology can automate routine tasks, provide valuable insights through data analytics, and improve communication both within the team and with members.

Simplify Business Models

A simple business model that meets customer needs while allowing for scalable processes is essential.

Complexity can hinder growth, so maintaining a straightforward approach is key. This involves clear and concise service offerings, straightforward pricing models, and flexible membership plans that can be easily managed and scaled.

Hire Startup-Minded People

Based on experience, Johnny Rosenblatt recommended hiring individuals with a startup mentality—those willing to take on multiple roles and drive growth from the ground up.

This mindset is crucial for creating a strong foundation for scaling operations. Employees with a startup mentality are typically more adaptable, innovative, and committed to the company’s success. This is vital during the growth phase.

Be Calculated and Intentional

Jamie Russo advised being cautious about reverse engineering what works for others, as it might not be sustainable. Instead, focus on calculated risks and have a clear plan for scaling.

She suggested seeking advice from experienced professionals and being conservative with expenses until the business is ready to support additional overhead.

It’s important to understand the unique needs and context of your business rather than blindly following trends.

In Conclusion

Balancing growth and efficiency in the flexible workspace industry requires a strategic approach, leveraging data, technology, and a strong team. By prioritizing member experience and being intentional with expansion efforts, operators can achieve sustainable growth and operational excellence.

The insights shared by our panel provide a valuable roadmap for navigating this complex landscape.

By focusing on key metrics, implementing effective marketing strategies, and making strategic hires, operators can create thriving, efficient workspaces that cater to the evolving needs of their members.

For more insights from the FlexWorld Series 2024 conference, we strongly suggest watching all the panels here.