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Compare the price of coworking to traditional office

Compare the price of coworking to traditional office

Head to the bottom of this piece for a glossary of office space terms.

A common question in commercial real estate is, how does coworking compare to office space? In some ways, they aren’t that different. But in many ways, they are nothing alike. This can make it difficult to compare an office lease to a coworking plan.

Elements of a commercial office lease

Comparing the price of coworking spaces to traditional office space can appear complicated. Frankly, just understanding a conventional office lease can be challenging enough. The following is a guide to understanding how a coworking membership might compare to a traditional office lease for small businesses or startups.

When it comes to a traditional office lease, there are several different types. Typically, people don’t know how much office space costs. Most commercial office spaces have a lease rate discussed as price per foot per year. Beyond this, there can be a few different ways to figure the extra tenant expenses. The most important thing to realize about leasing an office space is that there will be costs above the base rent. One of the most typical leases is a triple net lease, shown often as NNN. Another common type is a gross lease. You might also find an absolute net lease, full-service lease, or modified gross. All of these options act differently and present expenses differently to renters. Ultimately, all of this means it is essential to understand your all-in cost to lease traditional office space.

Traditional office space will present costs on a per square foot basis. The price you pay for rent will vary vastly depending on the quality of space you are renting. On the basic level, you’ll see office space referenced as class A, B, and C. Even within these classes, the quality of space can vary widely. In the Omaha office market, office rental rates may vary from as low as $10 per square foot to prices over $30 per square foot. In larger markets, rates are much higher.

Your cost of traditional office space will be higher than your per square foot rate. Depending on the type of lease, you’ll also be responsible for taxes, insurance, common area maintenance, utilities, and other building-related expenses.

Base Rent

The first question to ask is, what is base rent? Base rent is a per square foot rate annually. For example, a rent of $12 per square foot is $1 per square foot per month. If you’re renting a 1,000 square foot office space at $12 per square foot, you’ll be paying $12,000 annually, or $1,000 per month. Often, this rental rate is called base rent. But, there is almost always more to pay above your base rent. We won’t explore every type of lease, but we’ll show you the most common types of office leases.

Triple Net Lease

A triple net lease usually appears as NNN. It stands for the net, net, net. The “nets” in a triple net lease are real estate taxes, building insurance, and maintenance. This is often expressed as a per square foot fee annually, just like base rent. For example, if a 1,000 square foot space has triple nets of $8 per square foot, then you would pay $8,0000 annually. Often, a tenant will not have the whole building. So you will typically see language in a lease around your “pro-rata share” of expenses. This means your share of the costs based on the percentage of the building you’re leasing. 

There are key things triple nets do not include like utilities, preventative maintenance, liability insurance, and repairs to something within your space.

Gross Lease

A gross lease includes many of the additional expenses we previously discussed. A gross lease will often include the base rent, as well as things like taxes, maintenance, and building insurance. Sometimes a gross lease will even include utilities. This type of rental can make costs much more predictable for tenants. For example, a gross rent of $20 per square foot on a 1,000 square foot space would cost $20,000 annually. That would be $1,666 per month. 

Still, even with a gross lease, there can be additional expenses. Sometimes they do not include utilities. They may not include other types of maintenance like pest control, window washing, or repairs to toilets and clogged sinks.

All-In Cost for Office

No matter the type of commercial lease you end up with, you’ll want to understand your “all-in cost” for the office space. This involves your base rent, NNN expenses, maintenance costs, repair costs, utilities, and any other monthly expenses for the use of the space. While a base rent might be $12 per square foot, it could be that all costs are $23 per square foot. On a 1,000 square foot space, this means rent might be $12,000 per year, but the all-in costs are $23,000 per year. There are online calculators that can help with these calculations.

Capital expenses for office space

Beyond your expenses for renting office space, you’ll need to consider your capital expenditures for the new space. For example, will you need new furniture for the workspace? Office furniture for open office spaces can easily cost $1,500 per person. How about art? You may also need audio and video equipment. Many people don’t consider the cost of business internet when setting up an office, which is much more expensive than home internet packages. All of these expenses can add up to thousands and thousands of upfront capital costs and ongoing expenses.

Is office space a liability?

Finally, small business owners need to realize that office space is a liability on their balance sheet. A five-year lease on terms like we outlined above could count as a liability of over $100,000. This lease debt can affect a business’s ability to get loans for operating the company. A personal guarantee is often required as well, meaning business owners must commit to paying the lease themselves should their business not work out. These can be significant liabilities, even with a smaller commercial office space. 

The total cost of office space

All of this information should be defined to understand the total cost of office space. The base rent of a workspace is typically the most readily available number, but office space costs more than the base rent. It’s essential to add up all the monthly expenses, figure all the capital costs, and consider how the lease liability will affect your company.

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How coworking memberships work

Coworking is any flexible office space with shared amenities. When it comes to coworking space, you will most often encounter a fixed cost with little or no fees charged in addition. Coworking spaces typically charge a membership fee, not a lease rate. This means there is no liability on your balance sheet and often no personal guarantee. A coworking membership will typically include all triple-net type expenses and maintenance fees. Your one membership expense will cover the pest control, repairs, management, taxes, insurance, and other items that you’ll be responsible for on a commercial lease.

What does a coworking space include?

Different coworking spaces provide various types of office amenities. When comparing them, it’s a good idea to learn about which are provided and which are not. It’s important when comparing offices of any kind to understand all of the added benefits and how these might help you. Some coworking amenities may save you money, like the fast internet or included furniture. Other office perks might assist you in recruiting talent like location, culture, or fitness center access. 

Identify limitations on the amenities and access

While coworking spaces provide several amenities, that doesn’t mean they are unlimited. Some are only available for an extra expense. One space may offer memberships with a few hours of conference room space, while another may provide unlimited conference room reservations. Some coworking spaces charge for parking, while others have free parking available. Identify which amenities are an extra expense, which have limitations, and which are unlimited. These can make a massive difference in the overall cost.

Additionally, be sure to ask about access to the space. Many coworking offices are 24/7, but some are not. Some only provide access during business hours. These questions should also include guest policies. Most coworking spaces will allow guests, but not all. Some allow guests at any time, while some may only allow guests during business hours.

Shorter membership terms and flexible space

The flexibility of coworking means your membership term will likely be far less than a commercial lease. For many young companies or growing startups, this can be very helpful. Membership terms are often as short as month-to-month and as long as 12-months. Coworking spaces allow you to treat office space like just in time inventory. You can access the space you need when you need it and nothing more.

For example, you may plan to grow by five employees over the next twelve months. Perhaps you hope to grow by fifteen employees over the next three years. With a commercial lease, you’d need to plan for this and rent far more space than you need now to accommodate this future growth. In a coworking space, you can add desks or offices as you grow. Pay only for what your team needs now, and add spaces as you add team members. This can save thousands of dollars in wasted space early on.

A summary of how to compare office and coworking

Finding the right space for your team is an important decision. There is, of course, no one right solution for everyone. Commercial spaces are the right option for a lot of companies. Coworking spaces provide exceptional value for many as well. Ultimately, you need to understand two things: what is the net cost of each option and what is the unique value.

Be sure you’ve identified the costs of each and understand how much your monthly expense will be. Consider the critical factors like the length of the lease, location, parking, access, and how much liability you’ll have. Finally, consider the unique values each can provide, such as a space that will help you recruit talent.

Example Comparison

Let’s look at an example from Populus Coworking versus a traditional Omaha office space for a startup company with six people.

Traditional Office

Rent: $16 PSF
NNN: $6 PSF
Utilities: $2 PSF
Cleaning: $2 PSF
Total for a 1,500 SF office: $3,125
Gym Memberships: $240/mo
Internet: $200/mo
Coffee and snacks: $75/mo
Furniture lease: $350/mo
Parking: $200/mo
— Total: $4,190 per month

Populus Coworking
All Included: $2,600 per month

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Glossary of Office Space Terms

Agent: Real estate agents are trained to handle commercial real estate transactions. They must do so, though, with the guidance of a broker.

Base Rent: This is what you pay for the use of commercial office space.

Broker: A real estate broker is licensed and trained to handle commercial real estate transactions. They assist owners, renters, sellers, and buyers.

Build to Suit: An arrangement in which the building owner will take the responsibility of building the space the tenant requires.

Class-A Office: Typically the nicest, and often most expensive, office space. Generally, this space will be newer, though not always. You will often find clients like law firms, banks, or consulting firms in these types of spaces.

Class-B Office: This is the majority of the space on the market. We might call this “middle market” type of office space. It can range from relatively nice to lower-end spaces.

Class-C Office: This would be the low end of the market. This space is often either not very nice, or in a very challenging location. Approach this type of cautiously, though it does have its uses and benefits.

Common Area: Any piece of an office building that would be shared amongst all tenants or uses. This might include things like entryways, lobbies, or hallways.

Gross: In a lease, this typically means your covering all or most expenses in the gross payment. For example, if your rent amount is referenced ‘gross’ this means it includes things such as takes, insurance, and maintenance.

Square Foot: Typical commercial space is measured and referenced by its area in square feet. That is, one square foot would be a square of one foot on each side.

Tenant Improvement Allowance (TI): This is an amount of money that a building owner will provide to the tenant. It is used to rework the office space to fit the tenant needs. This can be paid back in a number of ways. This is typically provided as a number of dollars per square foot.

Triple Nets (NNN): These stand for the net, net, net. In this type of lease, the renter is responsible for taxes, insurance, and maintenance (the three nets) on top of their base rent.

Utilities: These expenses will include things water, electricity, gas, and trash. These are often individually metered per tenant or suite within an office space. If they are not, they will be averaged out for the building based on your square footage use. If you use 10% of the building you pay 10% of utilities. Meters per space is much more ideal when controlling costs.

White Box: when space is stripped down and provided as a “blank slate” it is often called a white box. The term comes from the fact that the space will often be painted a base white and is essentially an empty box.

Disclaimer: This article is intended to help business owners make more informed decisions in regards to the topic; however, please contact an attorney for legal advice and an accountant for tax advice. Populus makes no representation as a legal advisor or tax advisor.

LEARN MORE ABOUT OUR SPACE RIGHT HERE

Guide to Finding Angel Investors in Omaha

Guide to Finding Angel Investors in Omaha

Raising capital isn’t easy. Raising your first round of capital can easily be the most difficult, especially for those who haven’t raised with previous companies. For many founders, raising money can become a full-time job. It takes time to build the pitch, format spreadsheets, and then attend meetings upon meetings. This is, of course, on top of actually running your company. Sound exhausting? It can be. But for most founders, that’s how the game is played.

This guide should help if you’re struggling to find angel investors in Omaha or around Nebraska.  A word of caution, though, before we begin. Never lose focus on business development. Every hour spent hunting for investors is an hour you could’ve spent acquiring more business which makes finding investment a lot easier. The more traction you have, the more success you’ll have with investors.

If you have traction, monthly recovering revenue, and a clear acquisition channel identified then finding an investor to take you to the next step is a great idea. This article is written to help guide founders looking for investors in Omaha. This doesn’t mean that the strategies we show in this article can’t be applied to other cities, states, or even countries.

What is an Angel Investor?

An angel investor is a wealthy individual who invests in startups typically in the seed, Series A and Series B funding.

Wait, What is Seed or Series Funding?

Seed stage funding is generally considered to be your first official round of investment. It typically comes after the initial investment by the founder(s) and their friends or family. Series A funding would come after your Seed funding and is typically reserved for companies with clear products, marketings, and paths forward.

In Omaha, and around Nebraska, things work a bit different than on the coast. A Seed round of funding in Omaha might be as little as $50,000 and typically not more than $1.5 million. This can often be done with local accredited investors. In Nebraska, a series A is often over $1 million but less than $5 million. Investment rounds of this size typically require the involvement of regional and national investors.

What is an accredited investor and the requirements?

An accredited investor is an individual or business who can engage in securities that are not registered with the SEC.

Securities need to be registered with the SEC in order to be offered for investment. However, there are exemptions under Rule 506 of Regulation D. Accredited individuals can invest in opportunities like a startup if they meet certain criteria.

Accredited Investment Requirements

  • $200,000 in annual income for the past 2 years
  • $300,000 in annual joint income for the past 2 years
  • Net worth or joint net worth over $1,000,000
    • Primary residence does not count

Other unique exemptions for Accredited Investors

  • Trusts with total assets over $5,000,000
  • Any entity in which all of the equity owners are accredited investors.

When should you look for an Angel investor?

Once the founders are heavily invested and you’ve identified product-market fit, you’re probably ready for Angel investors.

Here’s our checklist for when you should raise money:

  • Found a potential acquisition strategy and channel
  • Acquiring customers faster than you can deliver product or features
  • Have a solid customer foundation with little churn
  • Achieved product-market fit
  • You need capital for a large purchase i.e office space/building

Remember, raising money can also be framed as selling pieces of your company at a discount to a future value. That is, your plan is for your company to be worth more someday and you’re selling it now for less money. You should raise capital when you need capital, but not before and only if the need is beyond your capacity. You want to keep as much of your company as possible for as long as possible, don’t be too eager to give it away.

Essentially, the only reason you should get investment money is to scale your business to the next point faster. For example, if you’ve proven to have a low customer acquisition cost within a certain channel and it has a healthy profit margin, then it’s a great idea to raise capital to capitalize on the opportunity. Capital should help you turn the flywheel faster, not build the flywheel.

Another reason to raise capital is if you’re adding revenue at a rapid rate and you can’t hire fast enough. There are a few options, either slow down or raise capital to buy all the extra infrastructure you need to support this rapid growth. If you don’t then your company will spiral out of control and crash. Too much too fast will break things. But don’t overlook the opportunity to slow down and finance with cash from sales.

“It may seem premature, but you need to be thinking of your exit from the moment you accept capital, because at that moment, you’ve made an explicit agreement with an investor that he or she will eventually be able to gain liquidity.” – Neil Blumenthal

Only take money when you’re on the offense.

Seed capital isn’t typically enough money to pay the founders a salary. If you’re looking for seed capital to extend your runway, you’re headed straight for burned bridges. If you’re a brand new founder with little to no experience then don’t get funding until you’ve completed the following checklist.

Related: Omaha Startup Press for 2019

Checklist for Startups Raising Money

Before you go out and apply for investment it’s best that you are prepared. Too many first time founders attempt to raise capital when they’re not ready. Here is an investor checklist for new startup founders trying to raise funding:

  • Pitch Deck (Keep it under 20 slides)
  • Cap Table
  • Team
  • Key Performance Indicators (KPI’s)
  • Exit Strategy
  • Type of funding (Equity, Convertible Notes, Venture Debt, etc)
  • Acquisition Strategy

Helpful KPI’s for raising money

Startups that track these KPI’s will have a significantly easier time securing capital. Even better, you’ll get genuine feedback from investors on how to improve certain KPI’s.

  • Customer Acquisition Cost
  • Cost Per Lead
  • Daily Active Users
  • Weekly Active Users
  • Monthly Active Users
  • Customer Lifetime Value
  • Operating Margin
  • Burn Rate
  • Churn

Apply to Angel Groups in Omaha

One of the best ways to secure capital for your early-stage startup is through Angel Groups.

Nebraska Angels

Nebraska Angels is a group of 60 active angel investors. They’ve invested over 26 million into startups. The angel group also has great resources throughout their site to help prepare founders for raising capital. Nebraska Angels typically invest in startups that need funding between $100,000 to $1,000,000. The funding should provide 12 to 24 months of runway. Check out Nebraska Angels “before applying” page to get more information.

Treetop Ventures

Treetop Ventures has a track record of companies of great early investments including a top Omaha startup Sojern. Sojern has brought investment players now alongside Treetop Ventures like the $7.5 billion powerhouse Northwest Venture Partners. One of the best things about Treetop is its transparency. They show you their bad bets, missed bets, and overall success.

Related: Why People Hate Offices and Don’t Like Their Jobs

Prairie Ventures

Prairie Ventures is a diverse investment fund based in Omaha with interests in a number of verticals. The fund has a few success exits already, and a number of unique equity investments like United Republic Bank, which was acquired. They’ve also found a number of successes in healthcare. You can read more about their investment criteria on their website here.

Invest Nebraska

Invest Nebraska is active in the Omaha market, and across the state. Their mission is to build a better future by investing in companies, developing high growth infrastructure, and attracting out-of-state capital to Nebraska. They’ve invested in over 50 companies including some of Omaha’s rising early-stage startups. Their portfolio includes Omaha Leverage RX, TAGG, OpsCompass, and Crumb. You can read all about their investment criteria, including FAQ’s and what to expect, on their website.

Find Accredited Angel Investors using LinkedIn Sales Navigator

Sometimes, the best route to raising early money is working directly with individual accredited investors. Raising new capital should be viewed like prospecting new business. If you’re unable to get new business then there’s a high chance that you will not be able to close a funding round. The same sales principles will be applied to prospecting accredited investors. The prospecting channel that we will use will be LinkedIn. In order to do this a subscription to Sales Navigator will be needed. Luckily, there is a 30-day free trial so this is the perfect use of building out your investor network. Here is our step by step guide:

Step 1: Identify your search criteria

The most important step in finding investors is knowing who to look for. Angel Investors are typically very wealthy individuals, so connecting with folks who aren’t wealthy is a waste of time for this specific exercise. Before you proceed, you should write down as much information as possible about the ideal person you’re trying to target. Build a persona of your ideal investor.

Here is an example:

LocationOmaha, Nebraska
TitleOwner
IndustryTelecommunications
Previous ExperienceManaging Director
Key WordsInvestor, Angel, Marketing

Let’s say I run a telecommunications startup. Then I would want the person or firm investing in me to also have experience inside telecommunications. This would increase the value of the investment tremendously. Treat the investor as a strategic partner and not so much as someone who gives you money. The right investor should provide you introductions, guidance, and help you solve or prevent problems in your space before they become critical.

Step 2: Find Individuals in your Criteria with Sales Navigator

In Sales Navigator, click on search by keyword or phrase. For the first try, search by the keyword “Angel Investor” and then filter by location “Omaha Nebraska.”

Here are the results:

There are a total of 262 results for people who live in Omaha and have the word Angel Investor. Now, this doesn’t mean that every person in that criteria is an Angel Investor, but this is a great start.

When saving these leads, always start off with those who have posted on their LinkedIn within the last 30 days. Those are the most responsive people in the industry. Here is a checklist of prioritizing which potential angel investors to prioritize.

  1. Shared Connections
  2. Years in Role and Company
  3. Activity on LinkedIn

The next step of the guide is to save potential angel investor profiles to your “lead list”.

Step 3: Save Angel Investor Profiles to Lead List

If you haven’t created a lead list then you should do that now. It takes less than two seconds. Just click on the save button next to the person’s profile.

Step 4: Contact shared connections

Once you’ve successfully saved everyone you want to reach out to it’s time to go through the list and contact the shared connections. The reason you want to start off with shared contacts first is that they’re the ones who most likely have had some sort of contact with the angel investor. A warm introduction almost always works better than a cold intro.

Step 5: Cold Connections

Maybe your shared connections don’t actually know a potential investor well and can’t provide you with an intro. If this is the case, then I recommend reaching out cold. If you don’t ask, it’s always a “no”. Also, remember you have about 50 words to get your point across, so take the time to write and rewrite your message. This cold intro message matters. It should be brief, practical, straight forward, and actionable. Here’s an example of a cold message, or email to use.

Hey {FirstName}! My name is {name} and I’m the Founder of {Company}. We’re currently raising capital for an Angel round and I’m specifically looking for potential investors with experience in the {industry or market you share}. Do you have an interest in Angel opportunities?  Below, you’ll find a link to your pitch deck and website. If you’d like to explore things in more detail, please let me know and we’ll schedule a call or meeting.

{Link to pitch deck via something like Dropbox}
{Link to website}

An important note, if you have investors already that you think this person may know you should also include this in your message. For example, “we’re raising $250k and we’ve closed $100k with Amy Smith and Sally Sue.”

The more personalized the connection request and or the email the higher the chance that they will accept and respond.

At the end of the day, it is a numbers game and the more you practice, test, and optimize the better the results you’ll get. There’s nothing special about getting meetings whether its for sales or raising capital. The prospecting, pitch, and the close process is very similar.

Step 6: Follow-up

People are busy, especially if they run their own company or advise others. Just like sales, follow-ups are extremely critical for success. Here’s a list of reasons why someone didn’t respond.

  • Email got buried in email inbox
  • Accidentally deleted email
  • Forgot to respond back to you
  • Email received wasn’t compelling enough

When you follow up, always bring new information or value. Never simply “circle back” on a message. Follow up with a new pitch piece, an announcement of a new investor, or inclusion of additional information that other investors have asked you to share. For example, “Hi, John, other investors have been asking me to include more detail on our cap table so I wanted to be sure you had that as well.”

Use Angellist to find active Angel Investors in Omaha

Angellist is a startups best friend. It’s a hub where you can go to find competitors, jobs, employees, investors, and potential prospects. We will be focusing on finding investors through Angellist. You can find a link to Omaha’s investor page here. You may want to find some of these investors on LinkedIn and work the investor prospecting process above.

Investors out of state interested in Omaha

There are many reasons why you should go outside of the city to look for capital. The Omaha investment community is not nearly as robust or mature as other larger markets. Local investors are great, if not ideal, for early rounds but you may need to pursue other options. If your business venture has a valuable model and a clear customer acquisition strategy there is no reason to avoid investors from outside the city or even the state. Once the investment is successfully secured, you could always explore state-sponsored grant options as a way to extend your runway.

Nebraska Innovation Fund Prototype Grants

Another overlooked way to get funding is through grants. The Nebraska Prototype Grant matches investments up to $150,000. The payout is done in disbursements so it’s not a lump sum of cash. The funds can only be used to cover certain eligible categories such as employees. For more information on the Nebraska Prototype fund or if you want to apply then you can go here.

Conclusion

In our guide to finding angel investors in Omaha, we covered when you should raise capital, what angel investors are, when you should raise capital, and some investor prospecting strategies that will help you secure funding or at least find new business in the process! Check out our office spaces in Omaha for teams of 2-20 if you’re ready to have a space to call your own. Populus is built for growing companies like yours.

Related: List of Coworking Spaces in Omaha

Unique Benefits of Shared Office Space

Unique Benefits of Shared Office Space

Shared office space, often referred to as coworking, has its roots in Silicon Valley. It started with a bunch of startup employees looking for a way to share the enormous expense of an office. The concept was brought to the mass market by the billion-dollar startup company WeWork.

Since its inception, shared office space has grown and evolved. While it may have once been simple coworking for young entrepreneurs, the benefits of shared office space have been adopted by organizations of all sizes. Small businesses and corporations around the world have come to realize the many perks and efficiencies to shared space. Let’s take a look at a few of these advantages.

No Debt Liability

There are many advantages that shared office space can provide when it comes to work itself, but we often overlook a key financial advantage for small businesses. When an organization signs a lease for 3,5, or even 7 years they now have a huge liability on the balance sheet. When a small business needs to take out a line of credit or loan with the bank, the liability of that lease will be a major consideration.

Most coworking spaces require short term commitments, sometimes as little as one month. With these short term memberships, small business owners do not need to carry the financial liability of a lease. This can preserve the financial margin for debt that might be used for equipment, working capital, and other types of expansion.

Shared office space helps small businesses stay leaner and avoid the hit of a large asset or debt liability.

Truly Valuable Networking

Shared office space provides networking opportunities that are very unique. While meetups and events provide a few days or hours of opportunity to connect with new people, coworking spaces provide daily opportunities to connect with like-minded businesses. In a shared office space, you have the opportunity to meet many different types of for-profit and non-profit companies.

There can be significant advantages for large companies to join shared workspaces for this very reason. Coworking spaces can provide an easier way for small businesses and entrepreneurs to interact with your large organization. Establishing a small presence in a shared office space can be a great marketing tool for any company with a focus on small business clients.

Recruiting Great Talent

It’s tough to get the best talent. One thing great talent is looking for these days is flexible working environments and added amenities. Shared office spaces allow small businesses to offer top amenities and flexibility. Few small organizations can afford to offer things like fitness centers, beer on tap, local coffee, or historic working spaces on their own. But in a shared environment, all of these amenities become viable.

Shared office spaces are a significant tool for companies of all sizes when it comes to bringing in the best talent. Event larger organizations can use coworking spaces to establish remote teams in more hip and trending spaces. The top developers may not want to work in a corporate America cubical, but they are happy to work in a local coworking space.

Diversity

Shared offices spaces are a mix of people, ideas, concepts, and thoughts. This diversity can be a huge advantage or coworking members. Many businesses suffer from a lack of diversity. Not simply diverse skin colors, but a diversity of thought and concepts.

In a shared office space, ideas flow around the physical network of people. There are different backgrounds, ages, and life experiences. All of these unique perspectives play into the unique advantage of a shared office. There are few other places where businesses can bounce ideas off of multiple people who spend their time doing something completely different.


Shared Office Is Unique

A coworking space is not right for everyone. There are, of course, tradeoffs from a more traditional office environment. It’s likely to have less privacy in a shared space. There may be a bit more noise and distraction. Not every types of business or team will be a great fit for a coworking space. Still, companies of all sizes should consider the very unique benefits that shared office space has to offer them like diversity, recruiting advantages, valuable networking, the reduction of financial liabilities.

Why people hate offices and don’t like their jobs

Why people hate offices and don’t like their jobs

People hate their jobs and workspaces. In fact, a full 66% of the American workforce claims to be disengaged at work. Yikes. But today’s business leaders didn’t sit around and do nothing. They took note and responded with the more “fun and collaborative” open office plan. And how is that working out?


Is Open Office Killing Us?

“Open-plan offices kill productivity, according to science,” reads a recent Inc Magazine headline. “Open office plans are as bad as you thought,” a Washington Post headline reads. So apparently that plan isn’t helpful either. But more importantly, people trying to fix this problem of engagement at work are missing the critical point. The solution isn’t about open or closed office; it’s about flexible office space. Flexibility is the future. I’ll explain why very shortly, but let’s take a brief look at the world we live in first.

Our work is changing because our world has irrevocably changed. We can’t assume that technology and the shift to knowledge work isn’t fundamentally upending the way people engage a physical workspace. Every 12 to 18 months, computers double their capability. That means in just 6 years computers will be about 32 times more advanced than they are right now. Wowza. The amount of technological advancement that happened in 2001 happens every 30 seconds today according to research by The Emerging Future. We can no longer approach work from the same industrial mindset we’ve used for well over 100 years. Maybe that’s where the disconnect is happening?


Don’t You Want Off the “Assembly Line” too?

When I read headlines about “productivity levels” in the office, I think of Henry Ford and his assembly line. It conjures this idea of continued optimization to be an efficient “assembly line” for work. The traditional thinking goes that increasing the bottom line can only be done by reducing costs and increasing efficiencies of people. But what if our work was no longer just about increasing efficiencies? What if technology took the place of efficient work, leaving humans to solve creative challenges and tackle innovative ideas? In this scenario, work is about influence, collaboration, flexibility, and inspiration.

A recent Fidelity research report found, “better quality of work life is worth a $7,600 pay cut for millennials.” The challenge we need to recognize is not the open or closed office plan as much as a breakdown in the way companies want employees to operate. Much of the work done today is not about cranking out widgets at ever increasing rates. Today, projects require sprints of focused work and times of deep collaboration. Employees require creative collaboration across functional teams at certain moments and isolated focus at others. The future of work is not an open office or closed office; it’s flexible workspace that is dynamic to an individual’s needs. We need space that can adjust to the shifting environment and innovative challenges employees tackle today. We must eliminate the horrible breakdown between the work employees must do that space they must do it within.

“Be more collaborative, here is your high walled cubicle.” “Think deeply, here is your seat in this loud open office environment.” Do we see the irony?

This isn’t about an age or a generation or a certain style. This is about a changing world that requires different types of work than our real estate has been serving over the past century.

Your physical space has a significant impact on your work. Those that see collaborative office plans only through a lens of reducing productivity are missing half of the equation. People are stressed at work today because their space doesn’t line up with the work they are asked to do. You can’t give people an open and collaborative space while asking them to do rote work with great efficiency. That will cause all kinds of frustration. The environment has to align with the required output.

“In a world where money is no longer the primary motivating factor for employees, focusing on the employee experience is the most promising competitive advantage that organizations can create,” writes Jacob Morgan, the author of, “The Future of Work.”Creative problem solving isn’t about efficiencies between 9 AM and 5 PM. Would you sacrifice 10% efficiency for a 30% increase in talent retention or a more robust culture? How valuable are creative solutions to your greatest challenges? These things may be more powerful today for some businesses than simply increasing productivity by 3.7%.

Office space needs to reflect not only the work that you do but the way that you do that work. It needs to indicate the kind of people you want to attract and partner with. Though an open office plan or a shared workspace may slightly decrease productivity in a certain sense, it may substantially increase the type of talent that you can attract and retain as a company. Certain kinds of talent may be more attracted to a different kind of office plan than something that is segmented and walled off.

We need flexible spaces that adjust to our work, not people that adjust to our space.

Can’t Office Be A Simple Subscription?

So what is the solution? I’m experimenting with this new idea of “space as a service.” The concept I’m launching here in Omaha is called Populus. Today, software as a service (SAAS) has taken over most of the products we use. A flexible product that lives in the cloud, which is constantly updated and rented on a monthly fee instead purchased outright. For those that can remember, this has not always been the case. At one time you purchased Microsoft Windows on a CD ROM and you owned it. Then, when a new version launched a few years later, you purchased it again. Today, I pay $10 or $15 per month for many services that are constantly being tweaked and updated. Netflix, Dropbox, Dollar Shave Club, or Stitch Fix are just a few of these products as a service. Why shouldn’t the workspace in which we spend a third of our life operate the same? At our current rate of change, it will likely be only a year or two (maybe less) until the needs of the space change again. Shouldn’t your office environment constantly adjust to these needs in a flexible way?

Today, I believe people need access to a flexible and inspired space for which they pay monthly and receive a fully featured office as a consistently updated service. Some of their work may require focused time in a private office. Some of their work may require collaborating with other companies and networking. Sometimes their work may require hosting large groups. Their work may happen overnight or on the weekends. How do we give individuals and small businesses access to space that serves them in each of these roles? I hope to solve this problem of flexible space as a service with Populus.

The idea that research has debunked open office space isn’t wrong, but it is missing the point. Open and flexible office space is not about the industrial revolution mindset of increasing productivity by a percentage point. Flexible office space, a more collaborative type of workspace, is about culture and knowledge work. It’s about a space that can respond to different kinds of work needs. It’s about attracting and retaining the right type of talent. Your workspace should reflect the way you work. That’s why we’re building the future of work at Populus.

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