Turning the "Coworking Space" Business into Profit

Co-working space has a strong correlation with the development of technology startups. The startup-style way of working is fully offered by co-working space, namely flexibility, no barriers cubicles, adequate facilities, and a contemporary design. This trend "forces" corporations to change their perspective on how to work by overhauling a more modern office design as a suggestion Branding and the potential to support employee retention.

This provokes the players coworking space emerging in Indonesia, not only from the local realm but also from abroad. Its presence is now no longer centered in big cities, instead it has entered the city tier two. Because this business is relatively new, there is still a lot of potential that can be worked on.

The proliferation of players in the segment encourages the presence of associations co-working space Coworking Indonesia was renamed Coworking Indonesia in 2016. The chairman of Coworking Indonesia, Faye Alund, explained that when the association was first established, the number of association members was only 45, now the number has reached around 150. When combined with those who have not joined, it is predicted that the number will be doubled around 300 players.

"The association is holding hands, just giving awareness what's that coworking. 2017 business year coworkingbooming because the governments of various ministries are starting to initiate, [players co-working space] from 2016 around the 75s, then in 2017 to the 180s it [increases because] it responds to the trend," Faye explained to DailySocial.

Since the association was present, players from outside slowly entered Indonesia. Say there is WeWork, blockxnumx, JustCo, Spaces, Avenue8, and many more.

Menurut DSResearch survey last year, 67% of respondents were familiar with co-working space. About 82% of them describe the term as a place to work, while another 55% categorize it as a community gathering place.

Respondents reasoned that they chose to work in a co-working space due to location (79%), facilities (67%), cost (67%), and environment (42%). The factors that need to be provided by the operator coworking space are internet connection (75%), work desk (66%), space meeting (46%), and F&B (30%).

Explicitly, this survey shows that function co-working space in Indonesia as a place of work.

According to Faye, it is important to understand how to translate soft values for sale co-working space, like community platforms, sharing skills, and other non-physical things and turn them into owner-monetizable content co-working space.

How co-working space monetized?

Report The 2nd Global Coworking Survey (2017) made by Deskmag mentions that on average only 40% of players co-working space profit-making world. However, it is stated that 72% of players made a profit after two years of operation.

It is stated that the source of income comes from table rentals (61%), space rentals meeting and event venues (10% each), F&B sales (5%), workshop ticket sales (5%), and virtual office services (3%). Interestingly, a third of respondents said all of the above services are available in packages, at no additional cost.

In Indonesia, players are still looking for a formula as an evaluation material, so there is no success story that can be picked up. Also, no numbers have been revealed by the players yet co-working space as real data.

According to Founder and CEO wellspaces and Grupara Ventures Aryo Ariotedjo, very common for all businesses regardless of the segment, on the loser and the profit. Specifically for co-working space It's hard to say it's a profitable business.

"Because the office market is also falling and price competition is arguably unhealthy, especially from big players," said Aryo.

Therefore, this condition makes it necessary to avoid renting a room in running a business co-working space. Property prices, especially in Jakarta offices, experienced a drastic decline in rental prices. This is to avoid getting caught in a developer contract with a high price, rather than going downhill in the future.

That's why the whole location co-working space managed by Wellspaces is the result of working with developers. "Cooperation with developer is a better choice because there is flexibility to market rents which are felt to continue to fall."

Taking a different strategy, Ngalup, which is located in Malang, entered into a property rental agreement with the developer due to different circumstances.

Digital Marketing Strategist drool M Ariq Surya Nugraha said that his party made an agreement in the form of a property rental agreement for a certain period of time with an agreement on room and place decoration at the beginning of the agreement. "Ngalup really maintains good relations with property owners and stakeholder the rest of us."

Co-Founder and CEO CoHive Jason Lee agrees with the results of the Deskmag survey. He sees that there are still many coworking space players who haven't reached the stage yet economic units, especially since this industry is still new.

Nonetheless, he claims CoHive has reached that stage. Various business verticals have been launched with the aim of meeting the needs of its members. Besides co-working space, also available CoLiving (workspace as well as residence), CoRetail, and Event Space.

"This is a product that addresses the needs of today's companies and employees. We continue to generate innovative opportunities to grow and become profitable startups, while providing opportunities for our members," said Jason.

Meanwhile, according to Faye, the results of the Deskmag survey are likely to also occur in Indonesia. According to him, this percentage will decrease if players only focus on increasing locations and beautifying furniture.

"Only 40% of global players have made a profit, it could be because the focus is still on main just [expanding] more locations, not because the business segment was difficult to make a profit from the start. If the meaning is still like that, until they realize what they should do is fill in coworking with the content that members need, they will not be able to profit," he said.

He argues, a successful business wherever it is, cannot rely on one revenue streams course, it means there must be diversification. Business vertical co-working space it is broad and can be developed depending on the needs of its members, it can touch elements hospitality, F&B, or something else.

"Okay, it's good when we manage to gather people, make collaborations and all that, but get the money how? That's what needs to be repeated. This is what makes business co-working space it so vulnerable."

View players' monetization strategies

Selling memberships to take advantage of the facilities at co-working space is revenue streams reliable main. In determining the calculation of the membership price, according to Faye, there is already an accounting formula that is commonly used when doing business, namely looking at the Cost of Goods Sold (HPP), one of the components in the income statement.

HPP is all direct costs incurred to obtain goods or services sold. In calculating this, the costs that are taken into account include the cost of raw materials, direct labor costs, depreciation of assets, costs overhead, and so forth. The purpose of calculating HPP is to know the amount of costs incurred in the production of goods and services.

"For example, if you want to sell HPP for a membership price of Rp. 100, from this value there must be a calculated margin that is sufficient to cover operational costs. The business always has a certain period of ups and downs, so make sure the business continues running when that happens, don't let operations lose to ."

However, if you position yourself as a startup, the above concept does not always apply. Startups will be more concerned with market acquisition in a fast period of time to pursue business growth. If you want to keep costs down and make a profit, this strategy is not appropriate.

"That's why many fundraising for cross subsidies. It could be selling at a loss in the price of membership to be able to pursue higher growth. If it's stable, then I'll have to look at the business model again."

In Indonesia, the membership price in each co-working space varies greatly. Take for example coworking with 33 locations in Indonesia, Co-Hive, which sells workspaces starting from Rp. 50 thousand per day for Daily Pass, Flexi Desk at Rp. 1 million per month, Dedicated Desk at Rp. 2 million, and Private Office at Rp. 3 million.

Jason explained that CoHive's monetization was driven by location expansion and product innovation stemming from market demand. Not only did they add more products, such as CoLiving, CoRetail, and Event Space, they also expanded into new cities.

"We are starting to enter new cities. Medan, Bali, Yogyakarta, and soon Surabaya this October. Our income comes from those mentioned above, as well as through communities, events, programs, and accelerator activities."

Another local player, Wellspaces also doesn't want to be stuck with selling memberships. Since rebrand became the Freeware Spaces Group earlier this year, a number of business verticals were launched.

The businesses on offer include Wellkitchen (co-kitchen & food market), DWeel (co-living house), Wellhouse (co-residences), Movewell (active community house), Welldefense (self defense & martial arts club), and Wellsociety (members identity & loyalty rewards).

The two players above are classified as big and have been operating for quite a long time. Wellspaces has been around since 2012, while CoHive has been around in 2015.

On a smaller scale, Ngalup provides work desk rentals starting from IDR 50 thousand per three hours, for events IDR 350 thousand per hour, and meeting rooms IDR 200 thousand per hour. Each includes supporting facilities.

In determining the monetization strategy, Ngalup takes an approach product market fit, not far from what normal startups do. Ariq explained co-working space This is classified as a property business, so they consider the property they own and product development that members need.

"Adjusting to the vision that we have set is one of our considerations in determining" unique value proposition from Ngalup itself."

As for Wellspaces, it does not do any additional revenue streams in other respects.

"Of course business model we are quite standard by providing only room. We don't do much additional income like selling coffee," added Aryo.

Jason added, from CoHive's perspective, all coworking space locations managed are the result of collaboration with property developers and building owners. CoHive transforms their assets with beautiful designs, manages their buildings, and collects workspace requests.

One of the tangible forms is that the company cooperates with Keppel Land Indonesia to work on CoLiving at Tower Crest West Vista, West Jakarta.

To maintain a relationship with them, CoHive always starts a conversation by asking them why they are partnering with co-working space. Are they looking for space activation? Are they looking for profit? Or do they want to build a community?

"Based on their answers, we will adapt the solution for them and we update it every month. Because we have established good relationships with many property owners, many consider us their first choice."

As the Founder of Kumpul, Faye admitted that the monetization he chose was selling memberships and renting out space to hold activities. In addition, he strengthens the content by creating various development programs and partnering with accelerators and incubators.

"Everyone's strength is different. I don't really understand where to choose location expansion. So I play more in development and partnership programs, it's more in line with my background. We focus more on building networks and working together existing players."

Kumpul was founded in 2015, now spread across five points in Bali and Jakarta. All Kumpul locations are fully co-operated with property developers, none are owned by themselves.

In maintaining relations with property owners, he admits that there is no specificity. Everything is a business deal only. There is a profit and loss calculation and how the profits are divided.

Interestingly, getting into business co-working space, challenged the founders to learn from scratch again about bookkeeping, calculating COGS, taxes, diversification revenue, etc. The reality is a lot founder strong startup soft skillhis, but his knowledge of administration is less honed.

Click on content according to members' needs

Actually there is nothing wrong with providing space for work because that is the essence of the presence of coworking space. The initial spirit carried co-working space is to encourage the spirit of entrepreneurship.

When it's formed, it happens snowball effect. There is an increasing economic turnaround to various aspects of life. The quality of life of the people can certainly increase. Until there is the term high waves that raise all the boats.

"Coworking space is about productivity, how can you create impact. Encouraging people to create profitable businesses impact, said Faye.

"No problem target audience those who want to be targeted, creative workers, startup founders, or others, it's all about the economic impact provided by the company co-working space as a place to work."

He explained that co-working space can participate in this noble cause. That's why it is necessary to look again at the content offered for each target audience-his. The way to identify it is to always look for solutions to existing problems, just like starting a business in general.

Then make sure whether the solution given is limited to vitamins or antibiotics for the community you want to target. That is what will determine whether people will buy or not.

"If it's just vitamins, people don't necessarily buy them because there are many substitutes. When they can provide them, everyone co-working space must have its own color. Same as coffee shop. It's everywhere now, but each one has its own segment, right?"

He makes an analogy co-working space not much different from the studio gym. No matter where you are, the contents of the gym studio are not much different from competitors. The difference lies in the program content they sell, adapting to the needs of its members, there is a combination with a healthy diet, only building muscle or losing weight.

The same thing happened in co-working space. When members buy the content provided, they certainly have the hope that there will be something to be had after the program is over. Whether it's their business skills can rise from level A to level B and so on.

"So the owner must be able to measure what kind of content members need, in which the program's success can be measured. Until finally someone joins and feels skillit goes up after joining."

He continued, "Just like when you enter the gym, when you leave there there must be an expectation of something, your body will be fitter or something. Even if there is no change, the owner of the gym will want the members to still benefit. Because they need it. feedback to be recounted to others."

From this analogy, it can be concluded that the product co-working space it's not the furniture and all the amenities, but the content that the members need and how the players do co-working space can provide it. When a co-working space can provide it, people will automatically come.

Faye finally tried to translate this understanding for his own business, Kumpul, which is located in Bali. There are three types of content that he offers.

First, the network or connection. Many people think the world is small when they enter an industry. This assumption is not quite right because when it happens, it means that we are stuck in the bubble network we alone. To get out of it and into bubble network other people need super extra effort. But you don't have to be a celebrity or an important person to reach that stage.

Faye said, this can be accommodated by co-working space. The way to do this is to hold networking events. Connecting people with similar interests in one place.

It's not just a get-together. There are also people who need extra insight who were never taught in school to increase their level and capability in doing business.

"How to enter hard skills needed through workshop, buddy system, or something else, so that those who previously knew know very."

Second, as a catalyst. There are people who feel their business is running smoothly, have  good, and no need to open a new network. What he needs is scale up business to grow. The solution can be obtained through co-working space which includes people who are ready to connect and collaborate with each other.

"So we're like melting potnya, what we do is accelerating the serendipity. Lucky coincidences and can happen at any time. That's random very, but the probability is not great. In co-working space can create that."

Future challenges and the role of associations

Industrial travel co-working space in Indonesia is still long. Faye explained, since Coworking Indonesia was inaugurated, every year regularly holds a gathering to update information about the industry.

In the first year, the discussion was more focused on just sharing skills basic business related co-working space. Many of the players are still confused about how to monetize it. Then in terms of legality, what should be prepared. Also explore aspects that need to exist, such as community and collaboration.

Then, in the second year morehighlight to the side partnerships, what it looks like concretely, and how to turn it into a business. Entering the 3rd year, the discussion is more in-depth, co-working space has a function as a platform and ecosystem builder.

"So basically we are the container of all ecosystems entrepreneurship, startups can grow if coworkinghis strengthened before."

On one side, awareness related to coworking space penetration is not yet fully evenly distributed. Ariq views that the solution that can be done is collaboration with various parties. "Education on business models co-working space be one of the best solutions that can be done so that Yago's defensive effort what you want to achieve can be easier."

Jason said the Indonesian market still needs education about the benefits of co-working space, such as flexible services, access to a wider network of businesses and investors, work life balance, and others.

"Therefore, we continue to attend campus events and talkshow public to educate the market about this modern concept. We also continue to create community events to encourage our members to explore new communities."

In closing, Aryo likens co-working space as a school. A graduate or member's results are his or her success metric.