How BHIVE aims to keep coworking spaces relevant in the time of COVID-19
The rapid spread of COVID-19 resulted in swift action from employers who allowed and encouraged their employees to work from home. However, this had a very damaging impact on the real-estate industry, especially for those who provide coworking spaces.
The situation seems grim for the coworking industry with empty spaces and declining revenues, but a Bengaluru-headquartered coworking startup hopes to emerge stronger from this crisis.
BHIVE Workspace Co-founder Shesh Paplikar, in a conversation with YourStory Founder and CEO Shradha Sharma, said, “I call this a ‘newer normal’, and operating in this environment is like being a battlefield but I am still okay.”
Ever since the pandemic started to spread, the BHIVE team realised what was going to come next, and that it had to face a new challenge every day – be it from customers, vendors, landlords, or employees. As Shesh puts it, “It is not easy to deal with so many stakeholders.”
COVID-19 bought the coworking space industry to a grinding halt as prior to the pandemic new companies were coming up unfailingly.
However, a lot more effort goes into making a coworking business run; it's not just a matter of renting out space. Many other critical things have to be provided by a coworking company, including interiors, leased lines, housekeeping staff, security...the list goes on.
“We tell startups that we have freed up their cash flow as they do not have any fixed costs locked in for five years,” Shesh says.
Watch the video interaction here:
This coworking startup now has 10 properties under its fold with around 200 client contracts. Ever since the lockdown came into effect on March 25, many BHIVE clients stopped making payments; some even cancelled contracts.
“It has not been easy for us to waive charges and wait to collect later. Our revenues dropped significantly but our workload increased,” Shesh says.
This led to multiple conversations for BHIVE’s team - with the landlords, clients, and vendors as everything was interlinked. The coworking startup had to make all these stakeholders understand that nobody stands to gain from this pandemic and everybody would have to share the pain.
Dealing with fixed costs
The key concern for BHIVE was that it had certain fixed costs that could not be wished away. They spoke to the landlords to negotiate the rents and made them understand that if their property was vacant, they stood to lose.
BHIVE was fortunate that some of their MNC clients with long-term contracts paid their dues in full. On the other hand, some smaller companies just defaulted on their payments.
To get out of this situation, BHIVE had to co-opt with others and Shesh connected with other coworking companies, which resulted in forming the Indian Workspace Association.
Shesh puts it very starkly, “If we cannot fight the landlord, then we will die.”
So the association stated its stand to the landlords and negotiations began on how they would pay the dues. This was finalised, based on a combination of waivers and deferments. During this process, BHIVE saw many of its employees taking voluntary pay cuts; some vendors agreed to certain renegotiations.
An eye on the office space
COVID-19 has changed things in the industry and the office space is something that needs to be watched. Shesh believes companies will need to rethink on how they will own their office space.
“In an uncertain environment, flexible models make a lot of sense,” he says.
In such a case, BHIVE’s fortunes may start turning for the good. According to Shesh, there is enough space available at their workspaces, and they have taken all the necessary measures from a safety and security point of view so that people are comfortable to return to the office.
“There is nothing like meeting people in person, and remember, an organisation’s culture cannot be built in isolation.”
Edited by Kanishk Singh