finances

"Mo’ Money, Mo’ Problems"

What a difference a year makes. When I wrote last year about DoES Liverpool’s finances we were celebrating six years in business, we had ten thousand pounds in our bank account and were expecting to make a profit for the year. We were also in something of a precarious position regarding our lease in the Gostins Building and were considering a move that could be a great opportunity but would also be a bigger outlay. We also seemed to find ourselves in a real downturn in terms of desks being rented and were unsure of whether we could get ourselves out of that hole. So, where are we now?

Well, unless you’ve been hiding under a rock you should know that we *did* take the great opportunity and have moved into a fantastic space in the newly christened Fabric District. To make this possible we had to make sure we would have some new tenants. It turns out that there was at least a couple of people that would have loved to move in with us if it wasn’t for the awful state of the Gostins building! We also made friends with Find Out Digital, very interesting people who are setting up Liverpool’s first dedicated space for user experience testing and who agreed to rent an entire room from us. The space we took was mostly a stripped back shell in an old industrial building so it required some investment to get it laid out in a way that would work best for us. It felt good that we had managed to save up £10k over the previous years meaning that we could make the minimum of the necessary changes to the layout using our own money. To make the space truly great was going to take more money and that’s where you all came in. Our amazing community managed to raise £5000 in a matter of weeks and took us to a grand total of £7580 in less than a month!

A short refit later and we’re reaching the stars and rolling in money! Well.. not quite. This being the real world there has been complications. We’re waiting for the VOA to survey the newly split up building to enable the council to charge each tenant business rates separately and that has meant some expense for us. We’ve also had to consider whether to install sound proofing under our floors which has slowed us installing carpets. Not to mention the fact that we’re now responsible for a bigger space and have to deal with cleaning our own toilets, getting our bins emptied and various other chores and expenses which we just didn’t have to worry about in the old space.

That said, we’re not doing badly. Everybody that comes into the space loves it and seems to think we’ve done a great job with the layout, allowing workshop users and desk users to mingle a lot more, and providing much bigger spaces to work from, whilst still offering the best public workshop facilities in the city. Our lovely big events room is starting to prove popular, we’ve had Chase Johnson-Lynch in twice a week over the summer delivering courses on Scene Directing and Online Radio Production and we’re getting regular bookings from people wanting to use the room. We’ve also had more new people coming in, trying us out, and loving what we have to offer.

As far as regular anticipated income is concerned we’re currently hovering around the break-even point so we definitely need more people coming in. Whether that’s booking the events room, signing up one of our monthly plans, or even just popping in for a hot desk day from time to time it all helps. There’s still things we need to do to get the space just how we want it (did I mention carpets?!), also with the increased maintenance required by the bigger space we’d really like to get to the point where we can employ more staff, potentially even having a member of staff working 9-5 every day. We can only do that if we get more people coming in and using our services though so spread the word!

Let’s get into some more numbers. Last time I started with a table of our accounts showing profit and loss and suggested that though we’d made a loss the previous year we were expecting to make a profit in the year that had just ended – 2016-2017. As you’ll see below once the accountant crunched the numbers properly that was correct and we actually made a profit of a few thousand pounds. Though our income had actually dropped, we had become eligible for business rates relief as a small business so our outgoings had also dropped.

Financial Year Income Outgoings Profit/Loss
2016-2017 £35,349 £31,840 £3,448
2015-2016 £38,314 £39,219 £-905
2014-2015 £34,770 £31,730 £3,040
2013-2014 £28,757 £27,755 £1,002
2012-2013 £29,146 £24,455 £4,691
2011-2012 £20,771 £17,104 £3,667

We made a profit again, go us!

For this year just finished, 2017-2018, it’s obviously been an investment year. All of that money we had in the bank has been put towards renovating our new space. FreeAgent is saying we’ve made about £42,000 over the year but overall will have made a loss of almost £10k which.. is entirely unsurprising. I’ll repeat that IANAA (I am not an accountant) so the exact figures that show up in our official accounts may be different, for instance £42k would appear to be our highest turnover so far, but then FreeAgent reports we made £43k in the 2015-2016 year. FreeAgent and our accountant use different criteria to judge which accounting period transactions can show up in so things tend to come out a little differently.

Last year the finances looked great but the income didn’t look so great. Fortunately this year it’s mostly the other way around, here’s the graph of permanent desk income (I’ve had to make it total income rather than number of desks due to the way it’s dealing with the member discounts):

Permanent Desks 07/2017 – 06/2018

As you can see we managed to halt the downward slope and have managed to get things going mostly in the right direction. I’ve chopped that graph off in June so that it matches last year’s but we have had another sign up since then.

Last year I mentioned that Workshop membership had had an upturn and that has continued over the last year and since we’ve moved into our new space:

Workshop Membership 07/2017 – 06/2018

We also introduced a new thing in the past year of “Flexidesk” allowing people who know they’ll want to be in multiple times over the course of a month, whilst not quite requiring a full permanent desk, the option to pay a regular monthly payment and then not worry about exactly how many days or hours they’re using up. This is basically the office equivalent of the workshop membership that we’ve always had. The take-up for that has only really started since we’ve moved but this option is starting to prove popular too.

Last year I showed some graphs of our income distribution too. I’ve improved them for this year so that they span the accounting years. This means we don’t have the first and last of the bars only covering half a year. One problem with these graphs is they only work with income that is the result of an invoice so they will miss many of the cash payments that we take without a corresponding invoice (they just get listed in petty cash). Next year I’d quite like to improve the graph so that this is taken into account, I might have done it this year but I’m already very late with this blog post so I’m going to have to leave it! I definitely think it’s making a larger difference in the graph for this year, partly because the crowdfunding income isn’t showing up, but given we made £42,000 in the year and the graph below stops around £29,000 there’s still another 6 left out (I’m glad to say around £2,000 of that appears to be Friends of DoES!). Anyway, on to the graphs:

Income categorised, as a percentage, 2011-2018

I’m largely including this graph because I did last year and because splitting by financial year should improve it a little. You can see that the proportion of our income from permanent desk has dropped a good bit, other things staying reasonably stable although we pretty much didn’t manage to make anything from event hire. You do see some new entrants on the right with the brownish bar being the sublet room rental and the thin orange being the Flexidesk, hopefully that’ll show up more this year!

Income categorised, 2011-2018

This graph is a bit more stark! Really I’m tempted to include some of this year’s numbers so that you don’t get too nervous! I’m glad to say though that things have definitely improved somewhat. Comparing this graph with last year’s that used calendar years it’s quite interesting to note a few changes, for instance that we took quite a lot of money from event funding in that first year. This also increases the amount that we took in from hot desk days in that first financial year, so while that apparently took a little while, it did start to take off even in those early days.

Again for completeness I’ll take out the permanent desks so that you can see the breakdown of other income a bit better:

Income categorised, no permanent desks, 2011-2018

Again not too many surprises here. One thing I haven’t mentioned much so far is our registered business address or mailbox service. This has continued to be successful and is certainly something that makes sense for DoES to continue with. It’s interesting that we have very little event funding and no event hire. With our lovely new event room becoming so popular that’s definitely going to change in next year’s graphs.

So… our seventh year was definitely eventful and as we plough through our eighth year in operation I’m glad to say we’re going from strength to strength. I sometimes think back to our old home in Gostins and imagine what people must have thought when they (you?) came in the door. If you had heard something of us before arriving you may have been surprised when you turned up to a slightly shabby office space in a slightly grotty building. We always had grand plans for what DoES Liverpool could and should be but it was difficult to reflect this in the Gostins building. I really feel that our new home in The Tapestry is a much better reflection of our aspirations and should really help to make sure that we’re taken more seriously in the future.

I was looking back at the blog post for our first birthday just now and came across this as the end:

Thank you to everyone who has helped and supported DoES Liverpool over the past year, we couldn’t do it without you, literally. DoES Liverpool’s services are paid for solely from people paying for our services, our running costs are not subsidised at all. So thanks to all of you friends, hot deskers, permies, workshop members, event sponsors, interns and everyone who has been involved in our events over the past year; here’s to great things in the future and hope to see you in DoES Liverpool soon!

This is as true now as it was then. So if you want to see us continue for another 7 years please do support us in whatever way you can! Whether that’s by paying for our services, becoming a Friend of DoES, or simply spreading the word.

One more thing that may interest some people reading this. A vacancy has opened up in our building, so if you are a larger business that wouldn’t fit into the space we have but would really like to be DoES adjacent – get in touch and we’ll pass your details onto Jason Abbott our landlord. In total there’s around 3500 square foot of space available across 3 areas with the potential to split, and there’s some lovely neighbours with some great equipment just upstairs 😊

Main room in DoES Liverpool combining coworking and workshop.

"Money and ting"

Continuing our “DoES wants to move” season… we should probably start again with some background. DoES Liverpool was incorporated, after a few months of discussion, on the 10th June 2011. To speed things up we ended up asking an accountant to set up the company for us, as a result we ended up with a Community Interest Company limited by shares, with our articles of association declaring that we will operate as a non-profit. As it turns out we may have been better off setting the company up as “limited by guarantee”, we even suspect that this contributed to us being denied rates relief by the council, so we’re going to look into changing this probably as part of the general “move” process.

So, we’re a “not for profit”, does that mean we have to make a loss every year? Surely that means we’ll go out of business?! Actually no, the important thing is that any profit generated is reinvested in the company and the community rather than taken out by shareholders (which is why it would be easier if we didn’t actually have shareholders!) In fact DoES Liverpool was a profitable company from the start, with no real capital invested – just a small director’s loan which was quickly paid back – we really had no choice to survive any other way.

Until the most recent financial year that accounts have been prepared for DoES Liverpool has made a profit each and every year. That financial year we had to start paying business rates, including some that were back-dated, so it wasn’t a big surprise there was a small loss. We ended the year with plenty of money in the bank

Financial Year Income Outgoings Profit/Loss
2015-2016 £38,314 £39,219 £-905
2014-2015 £34,770 £31,730 £3,040
2013-2014 £28,757 £27,755 £1,002
2012-2013 £29,146 £24,455 £4,691
2011-2012 £20,771 £17,104 £3,667

(Note that IANAA – I Am Not An Accountant, I’ll do my best with the figures in this post but there’s a decent chance I’ll make mistakes)

FreeAgent is also reporting we’ve made £37,394 in our last year that ended 30th June 2017 and should make a profit, it doesn’t offset for deposits we’re holding so that might drop but looks like we held our own.

So it looks like we’re doing pretty well going from nothing to quickly reaching around £40k/year. Really though DoES isn’t trying to make vast sums of money, all we need is to pay the rent and to have enough money to buy useful equipment like 3D printers and laser cutters. In fact the rise in income was matched by a rise in outgoings so that would have been around the time we took on the separate workshop (and kitchen) and then Dinky, our events room.

Unfortunately, while our accounts paint a fairly rosy picture, our income has been dropping over the last 12 months hence our recent pushes to get more people. Hold onto your hats, as here’s a graph of permanent desk invoicing over the last 12 months:

Permanent Desks 07/2016 – 06/2017

We’ve seen rises and falls before, an especially big one a few years ago that we did manage to pull ourselves out of as you’ll see in this graph:

Permanent Desks 2011-2017

Permanent desks have always been our main source of income. In some ways they’re the easiest things for us to sell as they make the biggest impact on our finances, but they also result in bigger problems when people decide to move on. Here’s a graph showing our income broken down into categories:

Income categorised, as a percentage, 2011-2017

That makes it quite clear how much of our income comes from permanent desks. We’ve always had the hot desk and workshop membership options. Hot desking has always been popular but has never reached the levels of the permanent desks for proportion of income. Workshop membership wasn’t so popular initially but has more recently seen an upturn.

Taking out the permanent desks gives a richer break-down:

Income categorised, no permanent desks, 2011-2017

Bearing in mind that permanent desks have always provided over 60% of our revenue it’s still interesting to dig down into the other categories. Our first six months in 2011 actually seem to have involved a lot of funding for events. This isn’t a big surprise, we were excited to have a new space so we ran a BarCamp and probably a few other events. We were also being given money to support Maker Nights which certainly helped in those early days. It’s actually a shame we’re not running events so often these days so hopefully that’s something we’ll look at more in the new space.

It looks like hot desks have become a smaller proportion of our income and, workshop membership seems to be growing. You start to see our registered address mailbox service creeping in too in the recent years. While hot desks may be a smaller proportion they’re still a large part of our income as you can see from the following similar graphs which aren’t scaled to percentages.

Income categorised, no permanent desks, 2011-2017

Income categorised, no permanent desks, 2011-2017

These do show that our hot desk income seems to be dropping, this is something we have perhaps noticed but not taken quite as much notice of as we should. If we’d picked up on it earlier it could have been a warning sign towards the more recent drop off of permanent desks. What reasons might there be for this? Well there’s definitely a lot more competition for hot-desks and flexible lets in the city now compared to 6 years ago. Few of these spaces offer the same community feel you get in DoES but some do, and just the number of people offering similar services can make it tricky for DoES to stand out. We’re well aware that our current space isn’t the most aesthetically appealing but there was little scope for improving it in the building we’re currently in. Our new home will allow us to much improve our co-working offering, both in terms of the services we offer and improving the feel of the space, so we’re confident we can turn this around.

What’s probably not shown so well on that graph is that some of the hot desk visits will actually be people using the workshop. We’re definitely seeing the workshop getting regular use, especially on the two laser cutters but also on the other equipment like the 3D printers.

What else can we do? Well offering new types of service is one thing. The registered address service that we introduced just a few years ago is going well and is bringing in increasing amounts. Similarly the “Friends of DoES” option that came about because Francis Irving decided he wanted to help fund DoES but didn’t need any of the specific paid-for services we had at the time has also helped (unfortunately it doesn’t show up well in the graphs, it will be spread across Funding & Other due to the ways the payments come in). We can also look at bringing in more revenue from hosting events and meetings, our existing events room – Dinky – is quite rarely busy during the day so there’s a lot of scope for doing more with this. If you have an idea of a service DoES should be offering let us know.

We’ve also mentioned in the past about bringing whole companies in to DoES Liverpool, that’s still an option if we can find companies that are interested and would be a good fit with the DoES community. While this would have a bigger impact on our finances, similar to the permanent desks it also gives us a bigger dependency as losing that single client will cause a big drop in our income. One to be careful of but something we’re definitely considering (get in touch if you’d like to move in with us!)

So there you have it, DoES Liverpool is a company that has grown from nothing into a wonderful large community and a mostly profitable Community Interest Company. We’ve had some difficult times but we’ve managed to make our way out of them in the past and we’re quite sure we can do it again.

I actually began writing this blog post not long after promising it back in March and things have moved on a lot since then. While we’ve had the news that our building has definitely been sold and we have a more urgent need to move, we’ve also been able to find a great new home and are in the final stages of finalising that. In the next few weeks and months you can expect more blog posts with updates both on the new space and also on changes we might be making to our offerings to support it. I’m very excited for what the future holds and I hope you are too!


If you are interested in moving a small company in to DoES Liverpool or you would like to run an event in our delightful events room (named Dinky, after the toy cars born in Liverpool!) then simply send an email over to hello@doesliverpool.com. If you want to use the workshop or hot desk then you can mostly just turn up, although you’re quite welcome to fire an email over first. To use the laser cutters you will need to book a slot, and have an induction first.

If you just want to give DoES money to help us make this happen then that’s always an option too! We always appreciate our Friends who donate £9/month by standing order or via PayPal.

 

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