a single source, nothing corroborates it

Ask your members to fund the expansion

Put the plan and the numbers in front of the people who use the thing, and some of them will offer to lend you the money before you have finished asking. Take the cash as a loan and refuse to convert it into a partnership, because money on its own is the wrong qualification for a partner.

The method

1. 01

   When you need capital to expand, put the plan in front of your customers and ask what they think, because some of them will volunteer to lend you the money.

2. 02

   Refuse to convert a customer's loan into an equity stake when the only thing they are contributing is cash, because money by itself is the wrong reason to make someone a partner.

3. 03

   Expand when your waiting list is filling faster than you can clear it, rather than on a forecast.

4. 04

   If you borrow from your own customers, take a few big loans rather than many small ones, because servicing dozens of repayment schedules costs more than the extra money is worth.

What it returned

• 4,500

  The move to a 4,500 square foot Indy Hall cost about $45,000, funded by roughly $15,000 of retained profit and a $30,000 loan from a member who offered after the growth plan was shared. Break-even took about 5 months, repayments began inside 12, and the loan was on course to clear within 36.

• $30,000

  Hillman weighed taking the member's $30,000 as an investment with a partnership attached and turned it down, while stressing it was not a judgement on the person.

• Since the previous September Indy Hall had queued applicants for both its full time and its lite tier, and that queue kept lengthening rather than draining, while basic memberships carried on selling.

• Hillman said Indy Hall was not set up to accept investments, kept loan terms open, and preferred fewer larger loans because of the accounting overhead on the payouts.

Sources

• How Much Does It Cost To Start A Coworking SpaceAlex Hillman · dangerouslyawesome.com · 2) How much does it cost to open a coworking space · 2012-01-01
• Not a Joke: Indy Hall v3.0 - The Future of Indy HallAlex Hillman · dangerouslyawesome.com · The Reason(s) · 2012-04-01