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How Coworking Spaces Are Navigating Through the Coronavirus Crisis

St. Oberholz: A Berlin coworking space during the first phase of the corona crisis.

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No one is currently able to reliably predict how long and severe the Covid19-related restrictions will be. Coworking spaces are experiencing the same issues as many other companies. Although there is currently a lack of planning security, quick solutions are needed that go beyond the current situation. In this article you will find an overview of the initial measures coworking spaces are taking, a wider analysis of the present and an outlook for the future.

The response to the pandemic is temporarily changing the competitive conditions, as well as the overall market conditions, and significantly damaging coworking spaces. In the first phase of the crisis, most are relying on concepts that many other companies are currently using. When revenue is in danger of disappearing,

(1) Sources of income are secured,
(2) Expenses are reduced,
(3) Business models are adapted,

as far as this is possible in each case.

(1) Securing income to the utmost in the first phase of the crisis

For coworking spaces, this means keeping as many members as possible while resisting requests for discounts, at least as long as the own rental costs cannot be reduced.

Reminding members that coworking spaces have to pay their own fixed costs should be readily accepted. After all, almost everyone is in the same boat. Although the shared problem may make it easier to sympathise with each other, it will hardly prevent cancellations.

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This article only deals with responses that coworking spaces have made in their own businesses. The actions listed here were discussed by operators in online conferences organised by the GCUC and GCF. The list is by no means exhaustive, nor does it reflect the full range of measures and their potential effectiveness. Further online events can be found here

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In order to secure their business, many coworking spaces help members by providing information about external support services from which the members' businesses can benefit, such as those provided by the government.

They can also offer rooms that are no longer used or have been cancelled during this crisis as temporary downgrades or upgrades to existing members. Both options avoid direct price discounts. If possible, they should be based on costs that are low or cannot be reduced in the short term.

Downgrades help members reduce their costs, but it does mean they receive a reduced service. For example, by giving them smaller offices for fewer staff, they can reduce their expenses, at least in the short term. This option is particularly suitable for long-term contracts.

If existing rental costs drive members into insolvency, long-term contracts hardly bring any benefits. Failure to pay the membership fees can only result in a successful court case in the distant future, if at all. In particular, operators of small coworking spaces are in a good position to assess whether and how badly their members are affected by the crisis and to accommodate them on a case-by-case basis.

Upgrades offer members more services for the same price. This option is particularly suitable for short-term contracts. If they currently need more working space due to physical distancing rules, offer them rooms that are currently available anyway, such as event rooms, free of charge.

During a total lockdown and severe spatial restrictions, upgrades and downgrades are often of little use.

Some coworking spaces have paused contracts for the duration of a lockdown, which encourages less direct cancellations by members. They offer free days for the time when spaces could not be accessed, or vouchers for the remaining term of the contract when members want to cancel early. All three options facilitate a possible return of members when the most severe restrictions are removed, either because the contracts have not been cancelled, or because members have already paid for the vouchers or free day quotas.

Many operators actively speak to members about the current situation, providing them with regular updates from the coworking space and promoting their (new) online channels more intensively for members, though those channels are recommended even when there’s no crisis.

In addition, many offer “at home memberships" or “virtual coworking” conferences at specific times to connect members with each other and the space. Irrespective of economic considerations, they support each other on an emotional level.

“Virtual coworking” is particularly suitable during the period of initial reorientation as it helps to network members in the home office during lockdown. Nevertheless, there is currently no indication of its suitability as a long-term alternative source of income. Most coworking spaces are offering the service as a temporary substitute without any additional costs. This way, at least the general demand for the service can be tested. However, it does have to compete with numerous other existing online communities.

Alternative income sources can be found in crowdfunding campaigns, which are partially based on vouchers with slightly cheaper prepayments. This option promises to be mutually beneficial as long as you can offer the services at a later date, e.g. memberships or event rooms.

Inform potential customers about possible risks or guarantee repayments if certain targets are not met. Many crowdfunding campaigns offer such a possibility. In addition, avoiding insolvency is currently a popular goal to communicate. You can also offer support options that only provide symbolic or very simple compensatory measures.

Even with all the measures discussed so far, many coworking spaces will hardly be able to maintain their current revenue in the first phase of this crisis - as long as fundamental freedom rights are suspended, and other severe restrictions are applied to slow the spread of the coronavirus.

For this reason, many governments launch state aid programmes for the economy. Where grants or low-cost loans are available, many companies, including coworking spaces and their members, apply for them.

If suitable aid programmes are lacking, coworking spaces join together in interest groups. Or they should consider doing so to ensure they do not miss out on any economic aid.

At the moment, awareness of your space does not necessarily lead to income. However, it will become an important currency once everything reopens. Storytelling is one way to be perceived by a wider audience. 

The current situation is providing many stories that others can identify with or offer orientation. Those stories can be told by your members, subject to their consent of course. Developing and distributing common products or services with members in response to the crisis are another way of achieving awareness. The general concept behind is called… coworking.

▶︎ Next page: (2) Reducing expenses

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(1) Securing income,
(2) Reducing expenses
(3) Adapting business models,
(4) Simple Outlook

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