147. SBA Loans for Coworking Spaces
Resources Mentioned in this Podcast:
Everything Coworking Featured Resources:
Masterclass: 3 Behind-the-Scenes Secrets to Opening a Coworking Space
Creative Coworking Partnerships: How to negotiate and structure management agreements from the landlord and operator perspective
Transcription
147. SBA Loans for Coworking Spaces
00:00:01 welcome everyone, I'm jumping in here before my usual episode intro to share an opportunity with you. This is for those of you that are working on opening a Coworking space. Many of us think that we will see unprecedented demand for flexible office space over the next year. So if you are in front of that, I am excited for you.
00:00:42 I know for my experience working with dozens of operators to launch their spaces that it is very common to get a bit stuck trying to develop your pro for MMA, one that you feel confident using to move forward. You use your pro format to confirm to yourself that this is the right project for you to pursue, and you also need it for things like securing funding and working with your team of experts to design a successful coworking business that meets your financial goals. So I am hosting a Coworking Pro form a workshop on April 30th for pre launch Coworking space operators So this is not for those of us already up and running trying to get through the next couple of months.
00:01:25 This is for those that are in the planning stage. The full workshop details what will cover what you get out of the workshop are at www dot everything coworking dot com forward slash pro for MMA All one word p R o F o R M A If you are considering registering for the Coworking startup school, which I'm also going to open shortly because I know many of you are seeing the opportunity that's out there and want to get rolling, So I'm gonna open that back up shortly after the workshop. But if you want to do the workshop to validate your intention to move forward than your workshop fee will be credited to the Coworking startup school program.
00:02:10 So you won't be paying for both if you I want to do both in order to validate your pro form are any worker you know, sort of the financial vision that you have so you can do the startup, do the workshop and then roll that into the Coworking startup school, which will then give you step by step support as you design your coworking business. So full details on the workshop at www dot everything coworking dot com Ford slash pro for MMA Welcome. I have with me two special guests today. Hassan Merge John and Amanda Luan Hassan is the CEO of Spear Male.
00:02:50 Although he's here today to talk about his support of folks in the industry getting S B A loans. He also has started his own Coworking spaces will get the updates on all of those things in a throughout our conversation. And then Amanda is co founder and CEO of Bamboo. Detroit. And Amanda just secured a nest, be a loan to buy a building and move into a bigger space. So I can't wait to hear the story. Thank you for joining me, Amanda and Hassan. Thanks for having us.
00:03:23 Yeah. Thank you. Yeah. And Hassan is freshly returned from Australia, so he's a little jet lag, so we'll give him a little bit of way. So I'd love to hear a little bit about both of you before we kind of dive into our detailed questions. Amanda, why don't you start? So you I just checked out your Lincoln. We have only met over email. So tell me you have a varied background. You have a lot going on. He launched this coworking space, um,
00:03:59 and are now the proud owner of commercial building and are going Teoh open a new space to give us kind of give us the background. Get us up to speed. Sure. Um so bamboo. We started in August 2013 prior to starting bamboo. I worked at and start up advertising agency for a couple of years and then freelance, so I never really thought of myself as a small business owner, even though I was freelancing for a little while. But I knew that painting of working from home. I met a couple friends who actually had the idea to start a cork in space.
00:04:34 Wasn't my original idea. They were like, somebody should do this. Hinted. Yeah, really? Actually, in down 100 trait. This was 2013. There wasn't a Coworking space concept yet. I old Detroit is definitely an emerging market. We have a ton of information happening, an investment downtown. And so it even at at that time we opened, people didn't know what Coworking waas they were just coming through to see what it looked like. They had turned about other cities. Um, it was interesting,
00:05:03 but we totally bootstrapped it and have been growing slowly and intentionally over the past few years since then. And we're now about 20 25,000 square feet downtown and are very dedicated to take a unique approach to programming. Inactivating are spaces were very passionate about building community through program, as our region is very spread out. Much Detroit. So for us, we wanted to be a local regional leader, which inspired us to open a second location. Well, doing that being half of our building downtown, we found a great spot.
00:05:38 We were gonna be the sole tenant in it. And the numbers kind of inspired us says you're running different models to look at purchasing. The build league also helps that I have a partner who is comes from a family history of real estate development and so that definitely seem is the strength of our sous well. But at that time, the landlord actually wasn't even considering it. They were looking for, at least, and so we kind of lucked out and were able to secure that building. Uh, as we get more into the details by and safe,
00:06:10 then discovered that Estero, uh, did and work. Although it was a little challenging, it's a coworking. Operators he secured that way said the building was not for sale. But when you were running the numbers, you thought wouldn't it be better if we owned the building? Yeah, it was actually very high. So where we're going is downtown real oak For those who might be listening who are familiar with the region, so and in many cities, the dot hundreds start to go up. And I think working can play a unique role in making space for affordable in the right,
00:06:40 um, niche communities. And so the rate was actually really high. It was more expensive than what we're paying downtown. And then we ran some rates for securing a mortgage and thought we can actually probably saved money and build equity if we purchase the building. It's a really cool, funky start building that's been in the family for decades. They used to run a furniture store there, so it was retail changing its commercial. Um, they moved on the street, so there's some money. And I think they also felt that our contribution to bring some foot traffic to that area building up small businesses would be a good fit for that community.
00:07:18 So we're actually officially announcing it, right? Probably right around the time of this podcast. So we're very excited about that on. It's definitely going to be a whole new journey. Going from one location to to thank you for all your resource is as an industry leader, cause I do. You listen to all of them and look for those specific topics. They're very, very helpful. Awesome. Well, I'm glad you're here and sharing your story because I know this will be helpful. Teoh folks that are listening.
00:07:45 So, Amanda, before we switch to Hassan, who does bamboo have kind of, ah, specific community that you serve. Tell us about the role that you play in in the community. Yeah, we definitely feel we have an entrepreneurial spirit and we have a lot of startups in Detroit, so we tend to say we're best for small teams and individuals, especially if your team under 10 for our office design and up everything and our culture is very real. So tons of small businesses, small start ups,
00:08:17 uh, founders and company is that tends to be more our focus. Although now we're starting to see Corporates dip their toes a little bit inner space on and we lean towards technology. But we're also very diverse and inclusive, which could be a whole nother topic that were you down in Detroit being a primarily African American city and they actually are in one of the only African American, one of the few African American on buildings downtown. We have about, uh, 50 or 60% people. Colors were very open and tigers to all kinds of people and industries.
00:08:51 I think the best way for me to think about it a small teams and individuals. So I'm curious about commercial real estate in downtown Detroit because at one point, not hard to get into. I would guess when you first started pretty low lease rates, but also a challenge for you because you have to really, really sell the community aspect because it probably was not hard for people to get their own space. Is that true? In August of 2013 when we started, there was no type of shared space in downtown.
00:09:25 And even though there are a lot of options, a lot of mark built out, so you have to invest a lot of crime. Yeah, so that was a challenge. Another chance at one of the dominant landlords is a billionaire invested heavily in building these really nice buildings and so kind of ads. We've evolved having to compete, um, in ways that we can best compete with those buildings. But the readiness of the space was a challenge. That was definitely convenience. We could provide. Yeah, we totally trapped.
00:09:55 Though we started, we actually didn't sign a lease in our first base. For the first few months, we convinced our partners dad to let us test out the concept. Almost a pop up. Yeah, We borrowed $5000 got a Kia furniture and paint and just started doing events and building some traction with the community. Um loves doing it that way because we were able to build something now that I think really resonates with the Detroit community. And even as we go toe open royal Oh, we look to dio community engagement and adjust our product as best as we can for that neighborhood,
00:10:31 which I think helps make it a good fit overall for everybody. Yeah, but to your point, I mean, they always say, like you, you learn as you dio. But with Coworking, it's sort of hard because it's expensive to test unless you do. I love the pop up story and that, you know, if you had maybe a bit of a unique opportunity to do that but for other people who can figure it out because it's hard to really know what people want And what are they going to use and what do they value and who's gonna use the space until you Until,
00:11:02 yeah, participation we were mobile bails on and below a music studio. So people that come and actually try it Yeah, but, you know, we it was low risk to that landlord who That floor had been empty for almost a decade. And it was just walking distance from all the new developments happening, and so on edge of where a lot of investment waas. But I think that would be a way to maybe, you know, test out your ideas. You may not have the best spot or you may not feel like it's nicest building.
00:11:33 But if you can build something and get that community going, um, you can build off before you start with. And then I think one of the challenges today, this last thing I'll say before we jumped Hassan is this and you probably feel this a little bit with your new spaces competing with. You know what's happening in the industry today, which is very different from 2013. You have folks. I visited a couple spaces last week and, you know, one of the build outs we thought was probably 200 bucks a foot,
00:12:04 which is an investment and hard to compete with in terms of, you know, price per square foot. So if you can be confident that you can build a community that will engage people for less than $200 a square foot than it's great to validate that ahead of time. Yeah, in the way we think about it is we're not trying to be the we work of the world. Uh, sorry, Bill. That's not going to be the most premium. Yeah, Our market is a little more Midwestern like that on Earth.
00:12:32 I just want an affordable space for a nice design. I don't feel homey in it. And that's kind of our target person to I love it. Okay, Hassan, tell us. It's so I can have dragged you into this. You have a varied background, but I love how helpful you are, Teoh doing the you know s B A loan. So tell us how you fit into the coworking world. The eso again. Thanks for having me, Jamie. And I guess you and I go way back.
00:13:03 When? When I first met you, you just move to the very on anything? Yeah. Was it the Bay Area from Chicago?
00:13:10 And then you have the inner space, and you still, you know, I guess you're still involved in inner space and down along toe.
00:13:16 Yeah. Okay. Yeah, I remember the back then When the cork industry in 2010 was well, when you say I opened the coworking space,
00:13:27 everybody gives you the stair I What is this? What are you doing? I don't understand. And the challenge was that we had to do a lot of education.
00:13:35 So So going back to how it all started. My background really varies. I've done so many different things from agriculture.
00:13:44 Chicken farming, Teoh. Gosh, uh, commercial real estate with economic, you name it. So I've been involved in technology for 15 years.
00:13:54 Background goes working with my space and a few other tech companies a Bay area be British Columbia and even down here in in the Los Angeles Greater area.
00:14:05 So So from that and having this old, diverse background that I have, I decided to move to San Francisco and thinking,
00:14:15 you know, I was done with technology and moved on and wanted to go on my own again. Eso looked up an article found,
00:14:23 Oh, this is a kind of a great idea where they have, you know, desks and communities.
00:14:28 So I did open my first tiny coworking space in San Francisco and, uh, opened that up. These terms was great,
00:14:37 the market was just and rebounding, just starting to not even rebound you just This was flat, basically from the 2008 problems,
00:14:47 then quickly grew to a second location and then, from there on rent started to go up. And that's when the idea of OK,
00:14:57 well, there's must be something that can happen, and we can do to grow the business before doing before doing that.
00:15:06 Waas Basically, I need to scale the co working in space. How do I scale it? We know that we have walls and we have real estate,
00:15:18 physical real estate that we have desks. So how much you can grow this you have. It's a fine I find that thing.
00:15:24 You have square footage and you have You have to do the math and the math has to work Now even if the mob does not work and it did not work,
00:15:32 I did not care anymore because I know I have this You know, we were talking about scalability. How can you scale to a infinite number of customers without utilising must real estate?
00:15:45 So the idea of the virtual male boss came about Usually that was six months, right after I started this.
00:15:53 Because really, the 1st 6 months we were struggling. I was struggling. I am. You know,
00:15:58 as you know, I don't have any partners. I've always done business. I started on my own,
00:16:02 I jumping on my own and then deal with it as it comes along. So So apparently this started to grow again sphere meal when it started with the first company that did this.
00:16:15 So we had to do a lot of education around what is virtual male walks. People were reluctant how to use this.
00:16:21 I don't want to give up my information. And what about my mail? Somebody's going to open it.
00:16:26 So when we first started this, it was literally for ourselves not to really open it up to other co working spaces again.
00:16:34 I always think about business and how you can scale this business massively and quickly. So again started reaching out to you,
00:16:42 Jamie. I started reaching out Teoh next space. Back then they would take the time. The, you know,
00:16:49 the Big An upcoming was inner space. You and then was next base and a few others. They quickly kind of the mind said that I have was from you.
00:16:58 And next base was Oh, no, this is something We can really see it happening and coming. So thank you for that in the beginning,
00:17:05 and I really appreciate it. The support in the beginning and you guys use our system. So that's the only way for us to scale.
00:17:12 So we lowered the price is really down the rock bottom just to ah, scale this. So it opened up during that process.
00:17:21 I also was growing. Now the co working spaces decided. Okay, well, I'm not gonna get into these terms.
00:17:27 And I don't want to be held by the landlord's. I'd rather own it and be the owner of the Building End and Lord Express.
00:17:34 You know, the Searchie few avenues and thought, Well, s p a is it would model. The challenge was,
00:17:41 and I'm sure Amanda went through it and she and I talked on the phone about how, how kind of to go around and really educate the S b a around.
00:17:52 How did they really should understand that? Really, This is not at least landlord tenant relationship. It's always been it's a member based.
00:18:01 You have a ah person wants to wants the service. The service that you're providing is basically workspace at the workspace is a service because your ah full service platform,
00:18:13 including the community, including all the bells and whistles that you're giving to them, plus the mail service and the virtual office service.
00:18:22 So my challenge was okay. We had to present a case to them, and we did. And and I think I don't know.
00:18:31 Who else did SB A before us? I'm sure there are. I don't know. But if you do know,
00:18:36 please let me know. Um, we got this big, big space was was in Santa Rosa, Sonoma County,
00:18:47 and in the back of in the back of that building, there was a big build land behind it.
00:18:54 And it's the same seller he said, Well, we have that land in the back. Ah, I said,
00:19:00 Well, I don't know, Let me check. Then I go back and talk Well, I said to myself,
00:19:04 OK, I think we need a parking space for the coworking space. So we made a case that also we need a parking space for their customers who come in and work every day.
00:19:15 So we were even successful to get that. So we got the good in the front, and then we got the box space,
00:19:21 which is another 7000 square sheet. So the front was 7000 land. I'm talking about land right down,
00:19:27 so on the 7000 in the back is about 7500 or so. So you're talking about 16. 15.
00:19:35 16,000 altogether, um, we opened up this face and then right from then I saw the next building,
00:19:44 which I really wanted to buy before this one. And I go back a couple months later saying, Well,
00:19:51 we need another location. Well, that's not That's impossible. You can't do something like that. It's just so quick.
00:19:57 And I said, Okay, what? We can ideally present the case and show you that we can do this because we felt very quickly and now we're full and we need more space.
00:20:07 So we presented that. We said, OK, now we're full. We need to we need another space and,
00:20:12 you know, again was successful of getting that moving. However, I do want to mention that that building,
00:20:18 When I took it, it was distressed. It was completely a complete. And I'm basically vacant building for many,
00:20:27 many years, and nobody even wanted to touch it. I picked up that building and I said, Well,
00:20:33 okay, we need construction loans as well on top. So the S B A also provides that what you can do is you can get the building.
00:20:41 Not only that, but if you really want to do a build out. You can also get a known now on top of the actual loan that you get.
00:20:48 So So there is an opportunity that known only that. But you can do build Alyssa's while Amanda back to you.
00:20:56 So talk a little bit about kind of the evolution of your space. And you were looking for Is it additional space for a second location?
00:21:05 Second location. So we have one inside the city of Detroit. This would work. Got it. Okay,
00:21:11 it will be a first suburban location. So nearby spent 15 20 minutes away in a city that has a built up downtown.
00:21:19 Um, And for us, like I said, it was the numbers make sense and my business partner having a real estate that called his bank and s,
00:21:31 um is there a pathway to this? So being that we were small, we didn't have tons of capital and they said yes.
00:21:38 What's UNESCO? Hello, your women owned, Which helps in the mid one sense that there are a lot of job creation restrictions and those can get waved.
00:21:48 I know in Coworking Warren an interesting space where we personally not create that money Traves. Most locations probably have 123 or four managers.
00:21:58 Uh, but we create environments that create jobs, right? And so they just thought this will be a perfect fit for a partner.
00:22:06 Will do an SDA loan will connect you to the number one ask a loan provider in the whole state and has been on the stuff we realized.
00:22:13 And I wish I would notice in the beginning that I think coworking a still model that the government seems to be understanding,
00:22:21 were those who we worked with him on the process, and they tend to look at it as passive real estate income.
00:22:27 You cannot get a mess day alone for passive really massive. They even loved community managers or property managers,
00:22:33 which was interesting. But to me, it's a customer service role. And, uh, so it was a challenge,
00:22:39 because I don't think we on our application. We did. We didn't know. We would have to have to explain all of this.
00:22:45 We have assumed local working subscription model here's membership agreements, And so, uh, we hit a bump in the road,
00:22:54 and we were as we dug into it, I think what we're doing research on Lee. Six or seven coworking spaces to date have gone Estela.
00:23:01 So it you're talking about an industry that's burgeoning and growing, and a financing platform that I think is still catching up in understanding for a sure yes way.
00:23:14 Didn't we reached out to several people who have gotten those clowns assigned being one of them and thinks the owner of the Benjamin's Desk company also back?
00:23:22 What if you're so that one very, very helpful and you know we didn't give up. We kept going and kept going that comport than explaining our model on explaining our model.
00:23:31 And we were kind of ready for the holidays that we got it approved. And so I'm sure they'll be other bumps in the road.
00:23:37 But for anyone listening and he's thinking about the Estela, you need to have a great banks that understand your model and wants to go to bat for you,
00:23:45 and you need Teoh explain it. The model very, very clearly from the beginning that a subscription based,
00:23:53 um and that you are not passive income and assume that whoever you may be talking to you maybe just not be familiar with our industry at all,
00:24:01 and that that was how I would approach it. Um and so we're very, very grateful for all the help.
00:24:07 And that's what I love about this code cast in this community. And Hassan is that I think we are naturally collaborative people and I think people,
00:24:15 and if you want to help each other succeed and it was great to be able to lean on a few folks and call kind of on this like Don blessed wire,
00:24:25 How do we How did we do that? Thank you so much. Was that of Jamie for big breasts?
00:24:32 That's what we're here for. You know, it's as the as the saying goes. You know, the rising tide lifts all boats,
00:24:39 so it always I always go by that moto Amanda, Did you end up getting alone from the original bank?
00:24:47 The bank that you approached originally, or did you have to change lenders? We did. So we worked with a credit,
00:24:53 and they're still remain my answer. We got a 50 40 ton loan. Eso they partner with the estate to come in and approved at the 10%.
00:25:03 That is also the equity that we brought to the table. OK, Which we did also have an investor come in to help support us.
00:25:10 Well, but I'm excited about it because I think being the solo tenant, it just made sense. We contribute in full control of the history.
00:25:18 Um, it feels kind of weird that one location. We don't own the building when we do, but I think it's OK.
00:25:24 And like our models evolving and for me, I find I find this an issue to be very fulfilling.
00:25:29 And if you can figure out how to make it profitable and your own style of twist, I think it could be a really fun to dio Are you optimistic about the profitability of the new space given your building ownership?
00:25:46 Yeah, So we're pretty confident it's a good location and that's something to you. I think I don't know about everyone else,
00:25:52 but sometimes we're constantly especially downtown. After we opened and moved out of that 2000 square foot space and grew to a current location,
00:26:00 we work moved literally next door to us and open to big buildings. So we're constantly compared to that.
00:26:06 But I think that that's one thing that a U. S independent coworking operator. You know, the nitty gritty of this block is gonna work better than that block.
00:26:13 And we're meeting and engaging. Attend meeting numbers. Ah, weekly to see What is it? Until we're finding out that that city actually might be more about space and sort of interesting alteration or more meeting space?
00:26:26 Because it's got a developed Russian and bar scene, but not much office space. And there is a competitors regis here by 100% full.
00:26:34 And so we we kind of our approach is to look at all these other markets signs, but then actually,
00:26:38 get out of hell, boots on the ground and talk to people. And those are things that those bigger providers are probably going to grass.
00:26:45 So I'm just leveraging all over strengths that we have and will make sure it successful. Yeah, Amanda,
00:26:53 I'm curious. So you have a business partner who has some real estate background and that probably played a role in terms of kind of kick starting and you like,
00:27:04 even considering that option? What would you tell someone who has zero real estate background and no partner with that capability?
00:27:15 Ah, great question. I don't know if I could have done it out My business. Carter. I really lean on him heavily or one having he had that bank relationship built on.
00:27:26 Yeah, you know, his father hasn't Mortensen us, and it's a mentor advisor. I do everything leading up people who are mentors and advisers.
00:27:34 That's another challenge. I kind and our industries that your small team people listening, might be wine or we have We're basically team before growing to a team of six or eight.
00:27:44 Uh, that's a lot. And so I just try to leave on all kinds of expert advice and,
00:27:50 you know, be open to the partner to partners can be helped hold specially library in some sense of capital or expertise.
00:27:57 And the way we framed it was interesting. As we were talking to different investors, people wanted a piece of the business or just the building just in the way we structured.
00:28:05 It was we're just going to the building for now because I personally just don't want to take out a much capital on the operational side until we get to a certain point that maybe we want my scale.
00:28:16 Uh, and that's just my own personal interests. But that is all up to you and whoever's listening.
00:28:23 But I would say Fine an expert, find a mentor and advise their time. Someone who's done it and it could be different in Detroit were very collaborative here.
00:28:31 So people are willing to help. And you may side something that helps you get some next level you didn't realize.
00:28:39 Yeah, Hassan, how would you answer that question with regards to you'd never, I assume Had you ever purchased commercial real estate before you decided to go by your building?
00:28:53 Uh, yeah. I was involved in commercial real estate, but it was overseas. It wasn't. It wasn't here in the US,
00:29:01 of course, the structures and everything is different. But the general idea is the same. And I guess I would I go back to There's nothing impossible.
00:29:11 Everything is most women. You have to You have to. And I always say, this is you have to always understand and educate yourself more of how to find Ah,
00:29:21 Where to do things were even find the right connections to help you just was. Another was saying regarding having a partner that who is expert in the industry and That would really help.
00:29:33 So So, going back, going back now in the US I did not have any any background here.
00:29:39 Um, the general idea is essentially the same, but still different. But the way, the way I got my experience,
00:29:49 it is through releasing and from leasing from lander to land or to landlord. Then I understood that. OK,
00:29:57 well, you know, they're doing it. There must be. You know what? I know? I understand.
00:30:02 What? How they're doing it. So I can do do the same and become, you know, and I don't hear in the in in the U.
00:30:08 S. Uh, like I said, you know, in overseas, um, I've done that a lot and many,
00:30:16 many years and through through the family history. So the background comes from family? Yes. Cure. I'm curious.
00:30:24 Um, has on since you've done this a few times. And Amanda, you mentioned it. What sort of evidence does the s B a need about them,
00:30:33 you know, around the model to understand what you're trying to dio yeah. Mentioned, you know, membership agreements and yeah,
00:30:41 so, you know, as mentioned, you know, it cannot be a passive income. It has to.
00:30:46 It has to be an active income and also a membership. A so landlord tenant relationship would not work.
00:30:54 You cannot treat it as OK. Well, I'm gonna Blufgan attendant, and I'm gonna leave you. Can I really have to be involved in this business and be in a day to day basis now?
00:31:03 Not only offering desks, but really, it's a membership. So So other than people coming in and wanting using the space for the as a work space,
00:31:14 you can offer them different surfaces included as a bundle over separate. The technology aspect of it is also a result.
00:31:22 It does also help. For example, one of the situations that you can do. You can maybe open up,
00:31:29 that they care within that. And that's a service saying that not only were offered in the desk space but moms and pops who have their Children and they don't want to work from home.
00:31:38 They want okay, But we offered that they care, said this within, and that helps. Now the requirement is you only have to occupy as a business and s b a loan to be approved.
00:31:51 It's not only the things that I just had just mentioned. But you minimum. You have to occupy a 51% off the building.
00:31:58 Now, today's so anything, anything less it would not qualify. So you do have to have that you can actually.
00:32:06 Next. So basically the situation I had I had, you know, headdress of his next door. And I want to keep them.
00:32:13 And I didn't want to utilize the whole building. Teoh, I can't take a couple of them. And I was making also passive income.
00:32:19 But then the activity is happening and the major is 51%. So you need that. Even if let's say you want to get a space and it doesn't have that 51%.
00:32:29 But there may be some you can cut off from your tenants next door and your landlord. Now you can always say okay,
00:32:37 I'll pay you whatever. I need some wall space from you and I'm gonna knock it off. Take it and make that my 51% to work out.
00:32:45 So you can do that. Perfect. And asan any other I know you've helped other operators see this process.
00:32:54 I mean, what is it just basically explaining the model is it. You know, I know a couple of people have said you've gotten on the phone,
00:33:02 you know, with them with their lenders. Are you Are you just other voice of the industry, like,
00:33:07 sort of reinforcing that. This is right. So So what? What really is? Yes, I did work with others.
00:33:15 Um, And on I'm happy leaving you get on the phone with their banker, and I don't mind doing that and help them hoping Just help the back.
00:33:25 Understand what exactly this is. The other thing is, you really have to also incorporate other service and not to sell.
00:33:33 You know, our service is this future male, and most, you know, the ones I helped I've never been,
00:33:37 you know, after that saying, Oh, welcome uses now. But I would love to have their business course,
00:33:42 but you know, if not, that's that's not the issue of issues that okay, you need to offer that service.
00:33:47 Also, as far as a virtual mailbox, mailbox service is if you can open up a cafe on the side.
00:33:54 Do that absolutely. Just like the model. Um I know kobo in San Francisco. What a great space.
00:34:02 You walk in And they had this cafe on the left side. And that's completely changes the model and completely completely put you in a place like,
00:34:10 immediately without a thought. That interest down. OK, so, yes, I'm happy. Teoh, Help!
00:34:16 Like I said, I'd be happy to help Whomever needs help with that, explaining them all. I'm explained that.
00:34:21 Okay, What? We've done it. And this is the case that we present it and they should be able to do it.
00:34:28 That's the box. Needs to understand. How did they look at meeting room and event space? Does that help were the Yeah,
00:34:35 so? So the model would be hourly based in re membership based you again. You cannot say that.
00:34:43 Okay, this is at least term for X months. You just say this is a membership. And us,
00:34:48 the members just like a ginger Jim. You're a gym. You can play monkey. You can pay yearly in advance.
00:34:54 You can pay. You know, even you can say subscription for two years. But you have to have that subscription.
00:35:00 The event space definitely helps. And the meeting room? You renting a a conference room by the hour.
00:35:06 So that's the workspace. As a service. We go back to that term IQ, and we change.
00:35:11 And the service term is is a really key here and offering on top of it other capability, tautology capability as far as digital,
00:35:22 male and virtual. And all that stuff with the subscription on talk, then yes, definitely. Yeah.
00:35:30 Amanda, it looks like I'm just on your website. It looks like you already have a pretty significant amount of event space.
00:35:36 Yeah, we dio and we will the new location Teoh. But I think just like is that said,
00:35:41 explaining subscription model explaining the different levels of service and that people can come in by the hour of the day.
00:35:50 We want to start to show all different kinds of membership agreements for each level, like technically legally are not a landlord.
00:35:59 You're in a membership agreement. And explaining that to French Asia is helpful as well. It helped that we had a good maker that cared really wanted to see it passed.
00:36:08 And he was even surprised at the challenge explaining the model. And, you know, I think more and more folks kind of carving the halfway.
00:36:17 Hopefully more castle. We'll start to get into the ecosystem here, I wonder. I know it's not very clearly connected,
00:36:25 but I wonder if the fact that the government is going to start using, you know, the G s a,
00:36:30 uh, R p that's out will help in any way. Hopefully, that would be, Yeah. I mean,
00:36:37 again, I'm sure it's very disjointed. But the fact that you know the government will be working out of co working spaces at some point.
00:36:44 Maybe they'll kind of, you know, start to put the pieces of the puzzle together. He had a couple of the loans I gotta prove her franchises.
00:36:51 And our baker said that those were good science. To think is a model that helps, you know,
00:36:56 create more. OK, Yeah. And also, I'm sure you've seen the article that liquid space. Yeah,
00:37:03 I've seen that article that got the government's once a moment. That was just kind of quite interesting. I actually just received it today from somebody.
00:37:10 Yeah, there that the r p I think went out. I don't know. There was a call a while ago and be a liquid.
00:37:16 Today's is pretty uniquely positioned to kind of leverage of the platform, but I just love that the government is is thinking that way.
00:37:23 And salsa. Yeah, I think that'll that'll be some good. Um, so, Amanda, I'm curious.
00:37:31 What are some of the challenges that are on your mind As you prepare Teoh, open a second location.
00:37:38 Great question. Uh, system and timing abstains, and one challenge about bootstrapping is you start, we ate and you just keep evolving.
00:37:48 And so you're gonna vote is going back to fixing? Yeah. Says if you had that capital up front and then making sure if I'm really,
00:37:57 really, really solid community managers I'm very excited The way we bottle that we do have some capital to help us launch in operationally.
00:38:04 And we're working really hard to find two great people too long for this. In the beginning was me.
00:38:11 And then it was me and two part timers announced me into full timers and so that it also takes a little straight up with me to make sure I can focus more high level of future locations and refreshing your whole brand.
00:38:23 So I understand. You know, the direction we're heading into next, all of those things on my mind.
00:38:29 Yeah, right. And the branding piece you got. You need to have the headspace that get out of sort of the operational pieces in order to be able to get to those more strategic,
00:38:39 uh, efforts. Um, you know, the community manager piece makes me laugh. I kept thinking,
00:38:44 like whoever thinks this is passive income should interview a community manager and Teoh. I understand. It could be a very busy,
00:38:54 demanding job for sure, Absolutely. I mean, there are a lot of, like, really rewarding aspects of that role,
00:39:03 but also demanding. There's no question that it's that it's not passive secret. I think we've discovered maybe I would be curious to know that if you work in the restaurant industry,
00:39:15 you are a great foot for us is you know how to serve people with a smile and care about all the details,
00:39:21 making sure everything is clean and perfect. Both myself in my main manager definitely spent several years waiting tables,
00:39:28 and I feel like that's like a little secret that we found totally. That's funny, although I've had this conversation.
00:39:36 Michael Everts, you. He's actually with office are indie now, but he co founded a co working space,
00:39:42 and he was saying the challenge of the role is like when you were a waiter. You're, like,
00:39:45 always on. And that's just kind of how you operate. But when you're a co working space manager,
00:39:51 you're sometimes at your computer. And then sometimes you the waiter again. And then sometimes, you know,
00:39:55 it's just like this constant shift of like being totally on and then trying to get some stuff done. So that's a challenging aspect to But I was I did my share of waiting tables,
00:40:07 and I I think I agree with you. It's that Yeah, that mindset is transferrable. Yeah, I love it.
00:40:15 Totally. Um, what else should we talk about? It's on. What? We're here. Um,
00:40:22 yeah, well, I mean, uh, like I said, if anyone needs help with with s p a happy Teoh,
00:40:30 jump in and help. And as faras wth e the technology side of ah, virtual male in virtual mailbox,
00:40:38 we have been growing steadily. And what really the nice thing about this is really helps help spaces scale,
00:40:46 scale and and get that subscription with with an income that whether they utilize it and get mail or no,
00:40:54 you can always increase your subscription to a level share more about how the software actually works. So So,
00:41:04 Yes. So basically what we do the software of the way it works is Hosmer can sign up to any location without partner locations.
00:41:13 And they get that address instead of processing that manually so automatically, we generated address to them and then after generating that address,
00:41:21 they would receive the mail to you. And then the communication would happen between, uh, that space and the end use of the administrator.
00:41:29 So So the way it works is if they get mail, they can. You can actually notify them through the application without sending them an email or text.
00:41:39 And they would request back again to you meeting a, uh, for your scan it forward. It,
00:41:45 ah, shredded all this process of the male cycle that we help you with. And the system does,
00:41:51 you know, help you with that. And then you keep their portrayal of all the information. On top of that,
00:41:57 what we have is live answering service in cloud phone numbers. So you would you would basically a customer can get a live answering service that we are turned with 1/3 party company and we're utilizing crimes we on with that and the cloud numbers,
00:42:13 which are actually automated numbers. So anybody convey, basically by a phone number. They're residing in New York,
00:42:20 wanting a Detroit number as long as they come through your space and by that number through your space, then you basically we wholesale that number to you.
00:42:30 And then you would actually retail it. Doctor with a customer at a price that really competes with retail.
00:42:38 Other retail companies like cross Hopper cells that also, but it does compete with them as well, so are compatible to their prices.
00:42:46 Oh, or other companies that you would want to. So so it's not only basically male back and forth,
00:42:52 but the generation on top. So you make it leads through us as well. Eso the math is very simple.
00:42:59 If you do have 40 I always say, If you do have even 100 customers, you know, if you were selling that $40 a month at 4000 month,
00:43:10 easy to make to be provided with pay for a lot of things and you can grow that infinitely. Basically,
00:43:17 you would not really tie to any real estate space. That's interesting. You say that because one of our most popular memberships is a virtual membership.
00:43:27 I think a lot of people dressed up town, huh? Start and they grow with us and sometimes even upgrade to knock quis or desk after being approached.
00:43:36 Remember for a while once in a while, get questions but nervous. It's not Asim to Ban kind of capping the male membership because it's so popular.
00:43:46 It's becoming a little bit of a pain on the sure, Really interesting. Yeah, and I don't know,
00:43:51 maybe it's our market. And I think it could also be tied that our community building cause I get access to all our friends.
00:43:57 Start a bundle that all together? Yeah, that's great. Flexible service. Absolutely. It is great.
00:44:05 And the other thing is, the end user would have that experience of And I'm sure, Jamie, you guys been using this for many,
00:44:12 many years and the product has evolved so much. Yeah, a sense. Um, the nice thing about is the experience that the end user your your member would get.
00:44:22 And the other aspect of this is really rewatch the space to grow, meaning that conversion if you want them to convert and go back and become a full time member.
00:44:31 And that's the key. Yes, that's great. But also think of it this way. If they do cancel.
00:44:37 But they do still want to maintain. And on this with you, you will still have that customer tied in with you the whole time,
00:44:43 whether they are a full time or part time and the emotional aspect of it is not there. So meeting when they walk into a space,
00:44:52 they may think, Oh, well, I don't know about the color of the wall about that. But with the virtual platform,
00:44:56 there is no the only sensitive people become sensitive to two things is price. The second thing is the address.
00:45:03 That's it. Yeah, I can see that. Uh huh. Yeah, I've been on a bit of ah virtual mail bandwagon here recently because I think it's an underutilized offering.
00:45:16 So, Amanda, it's interesting and e mean it is true that, you know, sort of downtown addresses air,
00:45:21 probably more highly sought after. So it's good that you're taking advantage of that. Um, it's actually where it sort of came up when we moved to this out for that 1st 2000 square foot space.
00:45:33 We had a razor rate slightly, and so our thought was, Well, let's test out a more forceful membership.
00:45:39 Call it virtual and people. A little tests. We had no idea that it would be successful. And I'm really glad that because you're just kind of a blend of community membership slash you can have an address here,
00:45:52 which is nice. Yeah, And you could always hire a high school kid to come in once a day and manage the male.
00:45:58 That's what some people do when things go already. Yeah, totally out of control, out of control.
00:46:05 But it can also be a nice margin. I was just talking Teoh has on I don't know if you know,
00:46:10 flip powered of work, sweets. He's in Dallas and he said, You know, they've been doing this for a long time,
00:46:16 but virtual male is 15 to 20% of their revenue, and the margin on it, you know, is even greater than that.
00:46:26 So it's a big part of their business. But he said, you know, be patient. It takes It takes time to develop it and to grow.
00:46:34 But his locations mean He reminded me that Dallas is very sort of spread out, so I called it suburban.
00:46:40 He's like it's not really suburban. He's not a downtown like core business district like Amanda is. So not about getting there.
00:46:48 Yeah, it does take time for it, for it to grow. And the margins are are really,
00:46:53 really great. And it's just how you also price it not to over prices and not to drop it down to a price where it become really non people do not see value into it.
00:47:04 And I've seen some, some ah spaces that really they dropped the price to a point where you stop making any more money,
00:47:12 and the idea for them was okay. We want to get customers while you're going to get them. But the work that you're going to do,
00:47:17 handling that customer is going to cost you more than that. And then you end up really using money without realizing you are so so you've got to be really careful how to prices.
00:47:26 We do help those spaces, you know, finding the rights, right price. And also they have the flexibility to change it whenever they see there is okay.
00:47:35 well, there's demand. There's little demand depending on in the area, the who's ever next to you and all that.
00:47:43 So I focus always been since we started the Coworking, and now we are moving on to the retail sector as well.
00:47:51 The demand is there is growth there, but it's a completely different different market, although is serviced while understeer male.
00:47:59 But when you go into the website looking up the location, you it actually differentiate and says this is a co working space and that sort of detail shipping store interest.
00:48:08 And we purposely put that in the search so that I really when you buy it, you don't wanna say,
00:48:14 Well, I am enter space and I am at X because we offer all kinds of things were not a store,
00:48:20 but really has to really have that depreciate. Er, because stores also have a lot of benefits, they do offer for those customers who really solely focused on shipping Male.
00:48:31 Yeah, and receiving now. Yeah, yeah, just a different different offering. Different segment that. Yep.
00:48:39 Well, thank you both for sharing your stories and for talking a little bit about the SB a process.
00:48:45 I think any nuggets that people can get on how to be successful in that effort. I mean, Amanda,
00:48:51 to your I don't think I realized it was quite such a low number of men on that process. So hopefully your story will inspire folks to give it some thought and,
00:49:03 um, and confined some resource is I'll, uh, Tagi both in the show notes. So if people want to find you,
00:49:08 they can can connect and get some support. If they're going through the process. Definitely. And if anybody's in Detroit,
00:49:15 please weigh the host. You? Yeah. Best of luck expanding your presence and working on the new space.
00:49:25 I'm sure that will start to get pretty crazy pretty soon. So, um but well worth it. And this time next year you'll be in two locations and And who knows what After that?
00:49:37 Yeah. Awesome. Hasan, thank you again for sharing your experience and for joining us today. Thank you.
00:49:45 Thanks for having me
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