During MCO, many SMEs from different industries were suffering. Though certain SMEs were still able to gain some income during MCO and during the whole pandemic, co-working spaces were one of the businesses that were hit hard since every employee or employer had to work from home, co-working spaces were not needed during MCO.
We managed to get in touch with 4 coworking spaces to learn more about how were they trying to cope during MCO:
- Sung, Founder of Nomad Malaysia
- Johnny, Founder of Herserlef
- Marissa, Community Manager of UnionSPACE
- Albert, Co-Founder of Nestspace
Certain industries were still able to make some revenue online. But this is not the case for rental spaces such as co-working spaces, fitness centres, and those in the travel industry.
In this article, we cover co-working spaces as they share their struggles and strategies used to keep the business afloat.
With Close To Zero Revenue, The Struggle To Manage Cash Flow Was Tough
Core Revenue Streams Completely Cut Off
Some of the co-working spaces such as Herserlef rely on daily walk-ins. Since their aim is to provide affordable spaces, there were no advanced payments or monthly subscriptions. Johnny from Herserlef shared on how they run their co-working space differently than others.
“Our crowd consists of freelancers, students and office workers; working away from the office. We don’t do any monthly subscription and kept the pricing low so it is more affordable and accessible to all that need our space,” Johnny shared.
Nomad Malaysia also has a similar concept, with the idea of providing an affordable space for business owners, students and freelancers. Sung from Nomad Malaysia, also mentioned around 80% are regular customers, while the other 20% would be random walk-ins. He also shared that they did not do any refunds for those that have paid just before MCO started.
Maintaining Cash Flow
Just like most of the other businesses, the rental and utilities was not something that they could not avoid.
Since most of the co-working spaces had to pay rent despite having their main revenue streams come from renting spaces and events, there were several strategies used to overcome this challenge.
For Herserlef, they had to prioritize which bills to pay and negotiated with their suppliers.
Thankfully, the suppliers and landlords were able to help with their financial struggles by cooperating with them.
“Fortunately, our landlord is kind enough to reduce our rent for April and May. Our suppliers assured us to continue our transaction after we are ready,” Johnny said.
UnionSPACE, on the other hand, provided a special rental arrangement service for those that are interested to rent their equipment to maintain their cash flow, while also working out a solution with their suppliers.
“Our company has offered a special rental arrangement to our community members as well as negotiated with suppliers on an agreeable repayment plan over a period of time,” said Marissa from UnionSPACE.
UnionSPACE also plans to broaden their revenue streams after MCO, such as photo or video shoot studios, as well as storage facilities.
Despite having multiple setbacks financially, they managed to sustain their business while also maintaining a good relationship with their suppliers and customers.
A Co-working Space Isn’t Just A Place To Work, It’s A Whole Community
The support received by each of these co-working spaces from their customers has helped them tremendously.
Herserlef even considered closing down their business, but their customers helped them to hold on. “The thought of closing this business crossed our mind but our customers’ support quickly convinced us that this struggle is worth it. We believe in our community and as a whole, we can bounce back once again,” Johnny reveals.
As for UnionSPACE, they usually would host a community lunch or dinner to celebrate special festivals in Malaysia. Due to MCO, they couldn’t do it during Hari Raya. Instead, they sent each of the members a special buka puasa set!
Aside from worrying about how to maintain their business, they were also worried whether their members are doing alright at home.
“We also wanted to make sure our team and community members were doing well from home and thus personally messaging, checking in with them frequently as well as organising “chat & drink” and weekly sharing of newsletter regarding the latest beneficial online webinars helps to care & support them during MCO,” Marissa shared.
WFH (Work-From-Home) Will Only Be Temporary
Some businesses have asked all of their employees to work from home for the rest of the year, especially since it has become a permanent option.
Though some people may find it comfortable to work at home and got used to the environment, eventually these people will want a change of atmosphere, which was agreed by Marissa.
“It is very human to yearn for being apart of a community and once in a while work in space with other people which increases creativity and productivity in comparison to working from home every day,” she shared with us.
Albert from Nestspace also agreed that working from home will not last. “I believe work from home is temporary, once it is over, office demand will increase again.”
Working from home isn’t something that everyone is able to do since it takes self-discipline to really be productive at the comfort of your own home. This also relates to how for some, their home is a place to relax, and a certain few would prefer to keep work and their home separate, Johnny shared. “Herserlef aims to be a home away from home.”
The Future Of Co-working Spaces
With most businesses unable to cope with maintaining their cash flow especially start-ups, they will probably reduce their budget by resorting to co-working spaces and save money rental wise. Thus, there will be an increase in demand for companies renting co-working spaces.
With the rise of online businesses, this would be a good opportunity for coworking spaces to cater to these type of businesses or company as some of these businesses have already contacted Union Space to relocate their team and shop to sell via a physical store or online channels.
“UnionSPACE is designed to provide workspaces to people or companies at more flexible lease plans, affordable rates and minimal overheads,” Marissa shared.
This would be the case for the majority of the co-working spaces. Hence, there will probably be an increase in demand once COVID-19 subsides.
If you’re interested in any of these co-working spaces, feel free to check out their contact details below!