The 3 Facets to Shared Workspace Revenue Management
To keep your workspace financially sound and to ensure growth, it’s vital to manage your workspace revenue effectively and consistently. The flexible and dynamic nature of products, memberships, and services of a shared workspace often lead to complex billing and invoicing. Even cash collection and growth projection become difficult without the right financial management in place. Without an effective process, managing your workspace revenue can be difficult.
Early evaluation of your space, workspace revenue goals, and pricing tactics will set you up for success. Comprehensive reporting capabilities are essential across all facets of your business – from sales and marketing to operations and down to finance. High-level and granular reporting on how your workspace is performing is essential to grow and scale a workspace business from one to multiple sites. Below we outline what we consider the three components of managing your shared workspace revenue with your eye on growth.
Money Management to Grow a Workspace
Get your workspace ducks in a row. Understanding your daily finances and how they position you for growth depends on the math you’ve done on square footage, budget, and occupancy.
When it comes to your budget, occupancy and future occupancy are critical numbers. Forecasting your occupancy rate, revenue per square foot or workstation is key as it relates to revenue and projecting the value of your monthly transactions.
Breaking down how you’ll distribute and price your products and space assets will give you clarity on what your budget, total revenue potential, break-even, and subsequent profitability numbers are.
As a solid baseline, workspace operators must prioritize bolstering recurring revenue. Monthly rent from private offices and recurring license agreements generally account for 80% of revenue, while the remaining 20% is attributed to services such as meeting and conference rooms, IT, telecoms services and other ad-hoc amenity charges. Tracking this income is essential to predicting growth.
Financial Tasks for Workspace Growth
Diligence with routine financial tasks will put you on a straight road to positive cash flow and future growth. For starters, it’s critical your customers pay on time. Leverage smart workspace management technology to establish automatic and recurring direct debit/ACH or credit card payments for your tenants and members. E-payments facilitate cash collection, especially when managing a high volume of customers.
Clearly communicate at onboarding and stipulate in your workspace handbook what payment terms are, how much latitude is given for late payments and escalation in the event rent is not received. Establish a notice period for missed payments and be prepared to follow through with cutting off service or deactivating door access control for those in default of payment.
For those operating a shared workspace from leased space, making rent is a top priority and therefore so is your cash flow. Attempt to coordinate tenant payments with your lease payments for easier cash flow management.
Essential Workspace Revenue Reporting for Growth
Once you’ve achieved your break-even point your team can start focusing on tracking your workspace revenue and executing your growth strategy. Shared workspace reporting is essential to get both a granular and high-level view of how your workspace is performing. Key reports will help you gauge when to start making your expansion moves.
Workspace management software that integrates license agreements with billing and payments enables operators with more comprehensive reporting capabilities and a tighter grip on their finances. Your revenue number is top priority, along with tracking and delivering committed revenue to accurately project what your income stream will be at any point down the line.
Comparing future committed income and occupancy against your budget and plan gives you visibility into future profitability. Identify the gaps you need to fill and act in the short- term to meet your expansion goals.
Next up in our shared workpace financial series, we’re serving up the top 10 reports to keep you on track for growth.
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