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Contingency planning for COVID lockdowns this winter

Updated: Jul 8, 2023

We consider how coworking flexibility can be very important, especially in emergency situations like lockdowns or lock-outs due to pandemic, crime scenes, earthquakes or floods.

in 2020, many organisations found themselves in lockdown and a dire situation, unable to trade, with income down by half or worse, with staff working from home or with no work. Businesses had difficult meetings with their banks and creditors to pay bills and keep staff on.

Many small businesses succumbed and many more relied on the government wage subsidy to make it through. The killer symptom of COVID-19 for business, was high fixed costs (those that must be paid each month and become problematic to cash-flow in down-turns). And the biggest fixed cost for most is their office lease, with many locked into paying for a building they couldn't occupy. Even those with newer leases and equitable sharing of the lockdown pain, most were paying at least 50% of their rental.

Now, nobody knows what the future will hold, but everyone can be sure that their business needs will continue to change or perhaps reverse 180 degrees - who knew pivoting was even a thing?

So why is an office lease so problematic? A typical small office lease has a fixed term, usually three to six years, but new grade-A fit-outs can be up to ten years. Leases reflect a time when business had a place and a fair lease balanced the rights and needs of the tenant with those of the landlord. Today, businesses need to be more agile, more connected to their customers and represented by their brand identity and brand promise, not by bricks and mortar.

And you, or someone who knows you well (like your bank) will be required to guarantee payment of your lease even if your business should fold, and this may end up costing you or them, upfront or down the track - see the further reading for why this can be like a noose around your neck.

The modern alternative, shared work spaces usually have monthly agreements, and no fixed term lease or guarantees are required. You simply pay monthly as you go, although some minimums can apply. This instantly turns your biggest fixed cost into a variable cost, one that you and your business needs control.

Then with recent trends towards flexible working practices (accelerated by lockdown experiences globally), your staff will be wanting to work from home at least part week, but you still need a suitable workspace so teams can meet together and with customers.

So why pay for an office that's half empty most of the time? Many coworking spaces allow you to desk-share between your staff, so for example a sixteen person company could share an eight desk office (there may be a hot-desk fee for this, so check each provider's terms and conditions).

And a serviced office set-up for supporting remote working may serve your office needs better, having the latest "plug-and-play" video-conferencing equipment optimised for those Zoom and Teams meetings and dedicated video conferencing suites and / or private phone booths.

The best shared spaces offer a mix of serviced offices and coworking desks available, so you only pay for the amount of space your organisation needs. As you grow (or contract) you can simply change your office space paying only for what you use.

So if your lease is ending and you would like to convert your biggest fixed cost into a variable cost (one you can flex up or down as your circumstances change), check our comprehensive guide to find the right space for your needs or give us a call to find out more:

For further reading see:

Disasters that can befall a small business from inflexible office leases

Or how a long lease can effectively make you indentured to your landlord

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