A recession is said to commence when an economy faces a downturn in its GDP for two consecutive quarters. Along with GDP, employment, income, retail sales, and manufacturing get affected too. As suggested by a research firm, the global recession is imminent, with a near hundred percent possibility. And since it’s implied that every economic activity will be affected, the economy around coworking spaces is also expected to be roped in the aftermath. This makes it imperative for investors to think about building a recession-proof coworking space.
Coworking spaces saw a dramatic increase in their numbers worldwide after the pandemic. Having suffered severe damage during the pandemic, the industry saw a silver lining with the corporate world adjusting to the work-from-home culture. Now that the recession is approaching, the industry is bracing itself again for impact. This article will discuss the multi-faceted aspects of how coworking spaces can survive the imminent global recession.
Impact of Recession on Coworking Spaces
Coworking spaces have always relied on working professionals as their primary customers. These spaces serve a community of freelancers, professionals, entrepreneurs, creatives, artists, and students. The reliance of this industry on the number of people employed in an economy brings it directly under the line of fire. Given the global recession, all economies and their sectors can be impacted, which is also true for coworking spaces.
And as much as this industry stands to lose during the upcoming recession, there’s a silver lining. During an economic downturn, various individuals opt to start their own businesses after losing their jobs. In addition, companies will be looking for cheaper working space alternatives for their operations after downsizing.
The self-employed individuals and companies with a downsized number of employees stand to form a significant revenue stream for coworking spaces during the recession. To attract these customers and stand tall amid competition, coworking spaces can upgrade and make a few changes to their operations.
Can You Make Your Coworking Space Recession-Proof?
It is, in fact, possible to make your coworking space recession-proof, but to what degree depends on your planning. During the recession, many remote workers, the primary customers, stand to lose their jobs. As a result, coworking spaces also lose their customers.
However, coworking spaces can use this as an opportunity to help remote workers transition to their new way of life, whether freelancing or starting up their own ventures. This will help them retain their customers and maintain a steady income stream. The following steps will enable you to adopt the changes:
Save as much as possible
Saving starts earlier than when you need it for. Bracing for the impacts of the recession means that owners need to bring different financial strategies into function. In coworking spaces, there can be various instances where you can save money and invest in the basics to keep the scene going. You could also start charging a little for the amenities you provide for free.
Expand the membership options
Keep your options open and stay relevant during an economic crisis. Diversifying the options you provide for memberships to your customers can help draw them in. Moreover, you know what happens to most working people during a recession. Offering them a flexible regime of memberships not only helps you keep your business afloat but also offers relief to people trying to make it on their own.
Focus on what your community has to offer
If your community of remote workers is loyal to your coworking space and its services, they will be enticed to make it work for you. Focusing inwardly on your community and providing value for them is a wise step. If your customers think they still benefit from the community or your services, they would consider resuming the membership.
Renegotiate lease terms
Focusing on your square footage can land you in trouble when there are fewer customers using your services during a recession. Instead, the focus should be on saving rent. Renegotiate your lease term with your renter while renewing. Ask them to lower your rent during the economic downturn in exchange for an increase in the lease term. So if they’ve been charging you $17 per square foot on a one-year lease agreement, your renter can settle for $15 or $14 per square foot on a five-year lease.
Also read: How to optimize your coworking space?
Rope in job-seekers with a mental health program
Remember when we talked about creating value for your customers? Coming up with solutions for the increasing mental health issues among job seekers during that time can help them and keep them coming back to you. Besides the mental health care program, you can also offer several mentor programs on upskilling and start-up motivations.
Coworking space owners can fortify their business plans in order to survive the upcoming recession. To achieve that, have a foolproof action plan in hand and stick to it. You can follow the steps mentioned above to sketch an effective plan and use it to your benefit.