As I sit here in Starbucks drinking my coconut milk latte with a shot of cinnamon, like a typical edge millennial, I can't help but reflect on my journey building The Co-Creative and inevitably Co-Space. It was at that point I decided the time was perfect to write this post about why you need a decent runway to get a business off the ground. I fear the title of this post would be better suited as a book but i’m no where near ready for that so this will have to do. I should warn you my spelling is likely terrible. The content is what I aim to deliver and not the grammar behind it.
When myself and Oliver first developed the concept of a co-working space focused around creativity, we looked at what it would really take to get off the ground. We had read all the business books, closely looked at our target audience and validated product market fit. We built out a business plan, not because we needed one, but to keep us on track as we built our start-up. We knew it wouldn't be easy, but one thing we didn’t bank on was just how hard those early days would be.
In our business plan we built in a top level 5 years P&L (profit & loss) and then a more detailed 3 years cashflow forecast. The figures looked good and healthy. At an average occupancy we would generate a healthy % of revenue against our business overheads and associated costs. We pulled all this data together and came to a figure it would take as a cash injection to get the business off the ground.
We then mapped out the steps to go from concept to launch and begin working our way through what seemed like a mountain of tasks. We always kept each other accountable and aware of what we were both doing. I think this is vital in any business. I’ve seen so many founders focus on the wrong things through lack of communication with one another. I think its also key to define everyones roles from day one and ensure everyone understands what their objectives, targets and even KPI’s are to move the business forward as a whole.
I’m a huge believer that the most important thing you can do in any situation is to mitigate risk and reduce your downside. I live life by this and won’t proceed without doing my own HASSOP on any situation or even business model. We did a HASSOP on The Co-Creative from day one and have reviewed this every few months since launch. If you’re not familiar with a HASSOP let me explain. As you may or may not already know, in a previous life I used to be an engineer. A HASSOP is a standard engineering practice carried out at the start of any next project, and subsequently throughout the projects lifecycle. What you do is create a list of everything that could go wrong. Every minor detail, every major detail, and every other detail in-between no matter how small or insignificant. Then you put a process, system or procedure in place to prevent each issue from ever accusing. Whilst we might not have procedures in place at this time in our business, we always look at every pit fall and how we can protect our downside. We ask the hard questions: What if we never achieve product market fit? What if our customers don’t want our idea? What is we run out of cash? Only once we have answered all these question do we feel that the risks have been protected and reduced well enough for us to move forward.
One of the biggest ways we reduced our risk was to sign up members before launching and committing ourself to some rather substantial cost outlays. Only once we had achieved a certain % of sign ups, in this case 40% occupancy, we proceeded knowing that we had just reduced risk substantially.
Anyway, back to the point of this post. We launched. We finally had our concept out there after months of fit out works, creating and implementing business systems and marketing. We knew it would take us a good few months to recover some of the more larger business costs and another good few months to get to a stage where we would break even and then begin to cover our building overheads and other business outgoings. Now I can sit here today happy and excited because we made it. We travelled through the tunnel and were now in a great position with the business, but I must stress that in those early days, in those first 6 months, we didn’t see a glimpse of the light and even began to doubt it was there. We marketed like hell, we did everything to reduce our overheads and costs but still months after month we were losing money. Theres a saying, that business is like a roller coaster moving back and forth from the highs of “Oh yes we’re doing great’ to the lows of “Oh no were not going to make it”. We lived this saying for first 4-6 months. We sat in the office until 3:00am in the morning for days in a row trying to figure what we could do different. We brainstormed lots of ideas for ways to just cover our overheads.
We knew we had a great offering but we were targeting the wrong market. We decided to review our target market and found that small businesses were going to cheaper options in the area. We couldn’t compete with the subsidised costs from other local workspaces so we decided to reach out and work in collaboration rather than in competition.
Since pivoting we’ve been able to de-risk the business, cover our overheads and start to create a healthy bottom line. We’re now taken all this data and learning to create a hybrid model for our business moving forward and developed a great business model for Co-Space.
If we hadn’t built a decent runway into our business model we wouldn't have been able to take off and inevitably create a powerful concept to take our business forward. We learn't that the moment things look darkest is when you’re just around the corner from stepping into the light. It won’t be easy, it won’t be anything like you planned, it will involve more long sleepless nights that you’d ever think possible and it will take blood, sweat and plenty of tears, but it will 110% be worth it.
“Nothing in the world is worth having or worth doing unless it means effort, pain, difficulty… I have never in my life envied a human being who led an easy life. I have envied a great many people who led difficult lives and led them well.” ― Theodore Roosevelt
Since launching The Co-Creative myself and Oliver have realised what we like and dislike. That’s why I’m pushing forward with a new business Co-Space and Oliver is focusing on building this own start-up in an area of interest to him. Find out more at www.co-space.co.uk.