GLENX CO-WORKING SPACE MAY 1, 2017
A PUBLIC/PRIVATE PARTNERSHIP MICHAEL LOWE, ALTAI CHULUUN, NICOLE CHRISTIANSON
“Developing scalable and sustainable solutions for economic growth in the Western Slope of Colorado.”
Table of Contents 1. Executive Summary 2. Business Concept 3. Technical Feasibility a. Construction b. Operating Expenses c. Operating Hours d. Member Needs e. Revenue Model f. Legal g. Neighborhood Aesthetic h. Security i. Maintenance j. Community Partnerships k. Community Buy-In 4. Glen-X Team a. Management Team b. Local Partners c. Regional Partners 5. Market & Customers a. Market b. Customer Segmentation c. Marketing Strategy d. Competition e. Differentiation 6. Activities 7. Next Steps 8. Appendices a. Financial Projections b. Corporate Structure (5013c) c. Community Survey Response d. Neutral Employees Data e. Press Sample f. Architectural Drawings (separate attachment) g. Letters of Support (separate attachment)
2
Executive Summary Co-working is often defined as a style of work that involves a shared working environment where diverse groups of freelancers, remote workers, and other independent professionals work together in a shared, communal setting. Harvard Business Review compiled data from a variety of sources examining how workers thrive and discovered that the co-working model has significantly higher levels of satisfaction than traditional work environments. Co-working spaces often include Incubators which focus on start-up businesses and provide next level opportunities for Entrepreneurs to take ideas developed in a co-working environment to market. These spaces have grown dramatically over the last two decades and are now located in virtually every major city in the United States as well as many rural areas. In Colorado alone, there are 27 such spaces, with 9 of them located on the Western Slope. Co-working Spaces/Incubators have become an important economic development tool for communities, both urban and rural. These spaces fill a niche for the growing population of location neutral workers. The Huffington Post estimates that by 2020, 40% of workforce will be independent contractors, freelance, solopreneurs or location neutral employees. These spaces have also had success in generating new businesses by providing a collaborative environment, mentorship, networking and access to investors. For rural communities, these spaces provide an important strategy to support small businesses, grow new businesses, share resources, collaborate and connect with established partners, and access resources normally unavailable to small towns. Glenwood Springs is at a crossroads of economic development. Tourism continues to grow and sustain our community, but there is unclear strategy around how to scale and sustain existing businesses as well as grow new businesses. We feel strongly that Glenwood Springs and the Roaring Fork Valley needs a Co-Working Space/Incubator and that the old Public Library would provide the ideal location for such an endeavor. Currently the only community resource that comes close to this concept is the ‘3rd street Center’ in Carbondale, but it is focused on the Non-profit sector. Colorado Mountain College will soon open ‘The Commons’ which will provide state of the art technology in an attractive space, but will be used primarily to host events, meetings, workshops. Our space will have anchor tenants dedicated to small business development, a flexible membership model, executive education, incubation and cutting edge technology.
3
Business Concept The GlenX Co-Working space is focused on helping local businesses, organizations and individuals innovate by providing an environment of networking, collaboration, education, mentoring and community problem-solving. The space will serve to connect local needs with local, state and national resources through effective use of cutting edge technology and dedicated expertise. The Space will serve as a flexible environment that utilizes some of the best practices from our neighboring Co-working spaces while customizing the environment to best meet the specific needs of the community. The Space will operate at a true public/private partnership and strive to bring together the best resources and talent from public agencies, local businesses as well as the non-profit community to help solve the many challenges we face as a rural community that straddles the fence between tourist destination and blue-collar working town. Once a revenue model is achieved that can sustain expenses, GlenX Space will expand to include an Incubation strategy that will help build new businesses.
Technical Feasibility The project requires a significant investment of Capital to help renovate the old library, provide appropriate furnishing and technology, develop and sustain a marketing/sales effort, as well as identify and hire a small staff to operate the Space. The 90-day grace period provided by the Glenwood City Council has been used to identify feasibility issues that must be addressed for the project to be successful. The following categories address issues raised from both primary and secondary research. Construction: We have an immediate need to cover the significant renovation, furnishings and technology costs of the Co-Working Space. We have an investor who will donate $500k to renovate the space, provide basic furnishing and technology if the Space is set up as a private-public partnership and operates as a 5013c. We anticipate additional construction costs, but have consulted an architect and are confident we can renovate space to a satisfactory level with the allocated funds. Architecture and Interior Design will be attractive inside and out. Renewable energy partners will be explored. Maintenance/Future Building Costs: All expenses associated with the upkeep and expansion of space will come from operating budget.
4
Expenses: We have identified an Executive Director, Grant Writer, Membership Director, Administrative support and part-time Space supervision personnel who are willing to work for free for 3 months until the Space has generated enough revenue to pay a part-time salary. The Operational budget required to run the center will be around $200k and will be mostly salary, but will also include programming expense, a minimal rent and utility expense. Operation Hours: The center will operate under normal business hours of 8am to 5pm Monday-Friday, but will have extended hours during the week from 5pm-10pm for events, meetings and workshops. Weekends will be open from noon-8pm. Full-time members will have access to the space 24/7, but will have strict protocols in place they must follow. No events will be held outside existing hours to honor neighborhood feedback for limited noise after hours. Member Needs: The facility will have multiple conference rooms, computers, videoconferencing equipment, multi-media in addition to a large communal area, breakout rooms, dedicated offices, shared offices and anchor tenant offices for businesses that support small business development. Members will have full access to facilities, but will have to find parking in the 2-story lot 1 block west. Additional parking is available in 9 dedicated spots next to building. We plan to mitigate parking issues by incentivizing bikers and promoting a ride share program. Event parking will be more accessible as all events will be pushed to evening hours. Technology and space support will be available at all times facility is open. Revenue Model: The Co-Working Space is traditionally based on a membership revenue model whereby price scales to usage frequency. Anchor Tenants paying for a dedicated office would comprise $6k-$10k per month based on $500-$1000 office rental. Full-time members would have a dedicated desk at $250 per month which could translate to $4k-$6k per month. Part-time members would pay $150 per month which could total $2k-$4k per month. Drop In users would comprise $3k-$5k per month. (See Appendix A3/4). Additional revenue would be realized from Executive Education workshops, Event Rentals, Mentorship Coaching, On-line Learning Facilitation as well as any eventual revenue from facilitating start-up businesses. Legal: The Co-working space has been set up as a 5013c. (See Appendix C). We have a local attorney and CPA. We will soon have an Executive Management Team along with a Board of Directors which will include representatives from the County, City, Chamber along with local business leaders and major partners. We are working closely with a local Architect/Builder who understands city permits and codes. We are also working with an insurance company to identify the proper insurance coverage.
5
Neighborhood Aesthetic: The exterior of the building will remain largely intact, but certain tasteful touches similar to Carbondale’s 3rd street center will be added. An attractive roof awning, some strategically placed metal or wood finishes with clear clean lines that blends into the existing structure. Attractive signage. Landscaping that may include some wall garden features. Security: We will utilize a popular co-working software and security apparatus for our members. Kisi is a full-scale access control system that is designed for co-working spaces. It is meant for frequent use (couple of hundred openings a day). The supporting software will help manage and monitor space. During normal business hours, we will have a staff person on site to help monitor and manage traffic. Staff will also be on site for special after hour events. Anchor tenants will be the only members who will have 24 hr. access to facility with strict guidelines for use. Community Partnerships: The space will primarily be used to support economic development in Glenwood Springs and Garfield County, but we will integrate programming for Seniors, Veterans and Youth. We will have a dedicated innovation lab that can be utilized by youth and adults alike to prototype new ideas. We will have a program that connects Seniors and Youth with youth providing tech workshops and seniors providing mentoring around business and life skills. The Western Slope Veterans coalition will have a space within GlenX and have dedicated slots for events and executive education. Community buy-in: The Need-Assessment during the last few months have focused largely on how to best serve the Glenwood Community. The neighborhood feedback was almost exclusively around parking, noise and after hours use. As a result, we have backed away from a 24/7 model to typical business hours along with limited afterhour and weekend usage. The difficult parking situation will be moderated by a safe place to store bikes and dedicated space for anchor tenants. Also, moving events to evening hours should help eliminate parking challenges. Parking will be especially difficult in the summer, but the nice weather should encourage more biking. The small business feedback has focused on access to excellent technology; from being able to borrow a laptop to videoconferencing to access to tech expertise. Usage Procedures, Security and Space Management will follow best practices from neighboring co-working spaces. Finally, the local community has expressed an interest in customized workshops around business skills. We intend to partner with Denver University, Colorado Mtn. College, and SBDC (Small Business Development Council) to offer relevant education for rural communities.
6
GlenX Team The Management Team will be led by an Executive Director who will manage facility, finances, growth opportunities and staffing. A Membership Director will be hired to market and sell memberships and ultimately build the primary revenue model. A Grant Writer will be brought on board to pursue local, state and federal funding around rural economic development, youth and senior services, innovation and collaboration. Finally, there will be Support Staff that will include tech support, administrative tasks and site management. A Board of Directors will include representatives from City, County, College and local businesses. The Board will work closely with Management Team and Partners to align GlenX vision with regional economic efforts. Our local partners are Colorado Mountain College, the City of Glenwood Springs, the Glenwood Chamber and Garfield County. We hope to align and support a vision of economic development that brings these important voices to the table and provides a venue for these entities to interface with established and new businesses. In addition, we have the support of local businesses who have committed to becoming anchor tenants. The Colorado Lending Source, Roaring Fork Leadership, Steve Beckley, Robert Macgregor have made commitments to occupy space, provide mentorship and expertise to help grow space. Finally, we have commitments from several established programmers including Jeff Thomas and Doug Flentge to occupy space and provide expertise. Our regional partners include Denver University (DU), Denver Start-up Convention and the Small Business Development Council (SBDC). DU and SBDC will provide Executive Education in areas beyond CMC’s expertise. The DU brand has become the strongest business development brand in the Rocky Mountain states and is excited to use Glenwood Springs to host regional workshops. SBDC is committed to positioning their regional office at the GlenX space and providing the substantial resources to this community. The Denver Start-up Convention will help local Entrepreneurs workshop ideas and connect with Private Equity once those ideas mature. Market & Customers The primary goal of the GlenX Co-Working space is to strategically grow a community of members that are committed to improving small businesses and developing new businesses that scale effectively with the long-term vision of the community. In that capacity, we have used this 90-day grace period to critical elements of the broader Market and potential Customer Base.
7
The Market for co-working is hard to define. There is no data on the value of the larger market probably because these Spaces are closely aligned to sustaining existing business and growing new businesses. There are national brands (franchise model) such as Galvanize and WeWork that show annual revenue between $20-$40mm. Rural co-working spaces such as Proximity in Grand Junction or Elevate in Summit County show between $250k-$2mm. These rural spaces depend on a mix of membership revenue. As a 5013c, we will be able to add grant funding and private donations. Customer Segmentation and membership attraction will focus on the remote worker community with special attention to those business professionals needing satellite office space. We will be open to anybody, but will initially target large local businesses that utilize a remote workforce. We will also target programmers and multi-media experts. The intention is that becoming a member will have the dual benefit of being in a collaborative environment while connecting with potential customers. Finally, we will also target members who are new to the workforce or changing careers. Marketing Strategy will focus on Holistic Marketing which includes a combination of community outreach, local events and tours. We will promote members, implement community software, build on-line member community, use google ad-word display network, stay connected to past members, highlight local amenities, design for collaboration, grow social media, push PR. We will package membership benefits with community partnerships. The Competition in the Roaring Fork Valley is the 3rd street center in Carbondale. They are the only facility that provides discount rent for non-profits, but they still function as a traditional landlord requiring long-term leases. The monthly member option has proven successful in most communities as long as there is a team to manage membership flow. Although there has been much discussion around starting Coworking in the Roaring Fork Valley, there is currently no efforts underway besides our own to establish one. The GlenX model will replicate best practices with our neighboring Co-Working Spaces for scheduling protocols along with a membership revenue model. We will offer similar space options from a simple desk to a number of break-out rooms to a sophisticated video-conferencing room. We will also offer comparable operation personnel from tech support to business mentors. We will differentiate the model through customized Executive Education that will help support small businesses as well new businesses. We will also offer mentorship options that will include, local, regional and national experts depending on need. Our unique public/private partnership will also help distinguish our model by aligning our vision with the larger community vision.
8
Activities Small Business Development will focus on sustaining existing business and growing markets especially in the tourism and hospitality sector. A growing tourism market means more revenue for most businesses. We will offer mentoring, customized business workshops and shared resources to our partner businesses. We will also help facilitate access to capital through our lending partners and investors. Entrepreneur/Incubation will include Education, Mentoring and Networking to help put good ideas in front of Investors. GlenX will act as an Incubator and identify promising ideas and workshop those ideas until they are ready to pitch. Entrepreneurs will also have an opportunity to prototype ideas in GlenX Space. Executive Education will provide Team Building, Leadership Training, Business Development, Marketing Strategies, Data Sciences along with a myriad of customizable modules for a variety of businesses. These classes will be in partnership with CMC, DU and SBDC. Remote Workers will have the opportunity to rent a desk or office while having access to conference rooms, videoconferencing, and a network of professionals. These members can take advantage of any number of classes and events. Seniors will have access to the space during designated times for events, classes and meetings. There will also be mentoring opportunities as well as specific times to mentor young people in exchange for tech help. Veterans will work closely with our Management Team to define a program that best serves Veterans in our community. These programs will include continuing education, workplace opportunities and leadership training. Youth will be a vital part of the GlenX Space as high school students will be actively involved in developing and managing start-up businesses. They will also be used as interns and be strategically placed in work opportunities. Networking and Community Problem-Solving will be dedicated activities for our entire community and will seek to develop alliances with regional, state and national partners as we explore creative solutions to local challenges.
9
Next Steps (SMART Goals)
Specific – Measurable – Attainable – Realistic –Time-Bound •
• •
• • • • • • • •
10
Management Team will be identified, interviewed and hired. Temporary Management team may be established until sufficient operating budget is in place to cover full-time salaries. Training and Site protocols, especially around Security. (JUNE) Continue to pursue Financing to cover Year 1 Operating Expenses. (JUNE) Corporate structure, bank accounts, website and social media accounts have already been established. Continue to work with legal and accounting team to develop necessary documents. Work with IT professionals to establish clear budget. (JUNE) Work with City, Investor, Board and Management team to establish necessary contracts to facilitate Renovation Donation. (JUNE) Identify technology partners to help build out and customize technology tools and programs. (JUNE) Work with Architect, Designer, Builder to design space. (JUNE) Design and Build Space. (JULY and AUG) Develop and Implement Marketing Plan for Membership. (SUMMER 2017) Work with Anchor Tenants to customize space. (SUMMER 2017) Work with City and County to align GlenX space activities with Economic Development Plan. (Ongoing) Work with Colorado Mountain College and Denver University to design and develop Executive Education Curriculum. (Ongoing)
Appendix A1: Profit and Loss Projections Year 1
11
Appendix A2: Profit and Loss Projections Year 2
12
Appendix A3: Profit and Loss Projections Year 3
13
Appendix A4: Assumptions for Financial Projections
Revenue Coworking membership • Drop-in day rate = $20 per day o Max occupancy (250 pp/mo) = $5,000/mo • Part Time rate (shared desk) = $150 per month o Max occupancy (30 Part Time members) = $4,500/mo • Full time rate 24/7 (dedicated desk) = $250 per month o Max occupancy (22 Full Time members) = $5,500/mo • Private office rate = $500-$1,000 per month o Max occupancy (15 offices) = $10,000/mo GOAL by end of year 1 from coworking = 25% occupancy, $6,250/mo GOAL by end of year 2 from coworking = 50% occupancy, $12,500/mo GOAL by end of year 3 from coworking = 90% occupancy, $22,500/mo By Month 12: 25 drop ins, 7 part-time, 6 full-time and 4 offices By Month 24: 75 drop ins, 20 part-time, 12 full-time and 8 offices By Month 36: 140 drop ins, 30 part-time, 18 full-time and 15 offices *Note: rates above are with a discount for mentoring; projections based on lower rate for mentoring requirement (potential revenue could be higher) Cost of Services Proximity Space at 5% of revenue for software, door access, phone app, usage data, terms of service agreement, billing, etc. Expenses -Initial numbers from a Coworking financial model put together by New Work Cities -Each category was reviewed and considered a good estimate for this space -Rent from the City of Glenwood Springs is for $500/mo; towards the following utilities: internet, electricity, trash, phone service and cleaning services -Request for the City to run the “final mile” for fiber into the building
14
Appendix B: Corporate Structure
15
Appendix C: Community Survey
Appendix D: Location Neutral Employee Data
18
Appendix E: Press Sample from Forbes Magazine
Where To Work? The 10 Best Coworking Spaces On Earth Kavi Guppta ,
CONTRIBUTOR
I write about technology and how it impacts workforce transformation. Opinions expressed by Forbes Contributors are their own.
The small but ambitious city of Montrose, Colorado holds the world's #1 coworking space. Image credit: Maplogs. Shared working spaces have certainly blown up over the past few years. Any city vying to stand up a tech or innovation hub has to have coworking spaces for budding entrepreneurs, remote workers, and freelancers. Beyond forgoing conventional office spaces and lengthy lease contracts, coworking spaces offer like-minded individuals a sense of community; a place to learn from others; and valuable networking potential. But where are the best coworking spaces in the world? Leanne Beesley, founder of Coworker, was curious to find out. Coworker is a ratings and reviews platform that contains user generated feedback on over 2,000 coworking spaces across 700 cities throughout the globe. The company recently partnered with Nomad List to power the “where to work� feature for location independent workers who have the flexibility to work from anywhere in the world. Over 3,000 participants submitted their opinions on what made a particular coworking space the best place to work. Founders from each venue were also asked to explain what their spaces contributed to local regions, and still had to be accomplished.
19
Based on those user reviews, here are the top 10 coworking spaces on earth right now: 1. Proximity Space in Montrose, Colorado, USA It’s surprising to see a city like Montrose, Colorado take the top spot on this list. You’d assume that if the #1 spot was going to be in the United States, the prize would go to a major tech hub like New York City, San Francisco, or Austin. “Montrose is on the leading edge of what is possible when a community decides to face the future with intention and innovation," says Proximity Space co-founder Dennis Lankes. “With a gigabit connection and main street frontage, Proximity Space has quickly become an anchor in the evolving downtown ecosphere.” What’s striking is the intentionality of Proximity Space and how the venue hopes to contribute to the broader development of Montrose. The city is a small player with big ambitions. With the right people and vision, Montrose could influence more than how people work. “The problems faced today, specifically in a small market economy, will require solutions built by leaders both in the public and private sectors who are willing to reach for distant goals,” says co-founder Josh Freed. “Affordable and intuitive housing options, focus on the education of our youth, as well as a diverse talent pool, are on the top of our regional initiatives. Connecting communities, leveraging regional strengths and deepening collaborations will be the way forward for our community." For additional press, check out these links and videos: ~Video from Commons on Champa page: https://www.youtube.com/watch?v=zERWBoRvdrg ~Commons on Champa Impact Report: http://www.downtowndenver.com/homepage/23457 ~Details on funding partnerships with Commons: https://www.idadowntown.org/eweb/docs/2015_Awards/DowntownAchievementAwards_Commons_FINAL.pdf ~City of Montrose Downtown Awarded the Governor's Excellence Award for Proximity Space: http://www.cityofmontrose.org/CivicSend/ViewMessage/message?id=8580 ~Proximity Space is one of the top 10 coworking spaces on Earth! wow! https://www.forbes.com/sites/kaviguppta/2016/07/15/where-to-work-the-10-best-coworking-spaceson-earth/#3b832dd35586 ~From Article re Proximity Space: http://www.gjsentinel.com/news/articles/readymade-space-for-startups The partners of Proximity Space say its success is attributable to a supportive community, which includes not just the members who use the space but also local government support that helped financially. The city of Montrose chipped in one-third of the $500,000 bill to renovate the empty storefronts for Proximity Space, according to City Manager Bill Bell, who called the success of the co-working destination a great example of public-private partnership that boosted the economy. Bell said more than 20 jobs have been created from the partnership so far. “A growing number of location-neutral workers are coming to Montrose to enjoy a lifestyle which offers a world-class co-working space in a vibrant downtown setting, surrounded by an abundance of outdoor recreational opportunities,” he said.
~From another article re Proximity Space: http://www.telluridenews.com/the_watch/article_b4061188-5d62-11e5-ab54-cb8a739b6880.html
20