3 Warnings to Flex Operators

Will Kinnear, Founder of FlexSA Service Provider Member HEWN, reflects on how flexible workspace operators can build successfully from the lessons of the last few years.  Will is pictured below co-hosting the Flexible Space Association’s 2023 conference.

 

The Flexible Workspace sector is booming – and long may that continue – but there are lessons to be learned from the last 3 years in particular that will enable operators to continue to thrive and grow.

The Deal

Operators need to know their strategy – and try to stick to it. Are you a business taking a traditional lease? Or, are you looking at a partnership or management agreement? There are pros and cons to both, but the art is in the detail.

Partnership and Management agreements are becoming more commonplace, it is refreshing, as it shows that property owners are understanding the need to provide product and service in partnership with a professional operator. In most cases, we are seeing the initial capital outlay for an operator is vastly reduced from that of a traditional lease deal.

However, as a practitioner who has been providing counsel on these agreements for the majority of their career, I have witnessed some shocking terms and contracts which aren’t favourable to either the operator or owner. What concerns me is the impact and performance of poorly understood partnerships long-term: invest in getting the best advice. It’ll pay dividends.

An operator’s first deal for a property is the most important and sets the tone moving forward. Take care to understand the implications of the financial elements of the deal especially your ability to adapt and provide the services you want to throughout the term of the agreement. The industry is booming, but most importantly take into account the potential for fluctuations in the market – no one predicted the pandemic.

Finally, don’t expect to take all the rewards, share in the glory. The property owner could be the enabler to expansion – better still they’ll do your business development!

Over-growth

In business, we concentrate on growth – but there is something to be said about over-growth. These stark lessons can be learnt from our industry peers, WeWork, who expanded at breakneck speed, didn’t put an emphasis on profitability, with us seeing the very real consequences as we speak.

The operators built to last are those that have taken their time to hone in on their offer – they know exactly who their customers are, what they need and they have a pipeline ready when they expand. The beauty of flexible workspaces is that each operator has its own unique offer, whether it’s stripped back and simple through to high end, hotel-esque hospitality.

By its very nature, flexible workspace has the majority share of flexible users – those that dial up when things are good, and dial down when they need to pull back – but if you can work with these users, they’ll be your customers for the long-term. There are dozens of examples where individuals have started a company and have grown with an operator into bigger spaces across numerous sites.

Likewise, growth is only as successful as the team behind it. Take time to invest in the right people, these are your ambassadors.