Building Cococo – #3 – Pivot!

Rookie Mistakes

I’m used to building software products. It’s pretty easy, you make a very basic product, start promoting it, and if there is traction you improve it based on users’ feedback. The “idea → product” span is very short.

Apparently, this is not how it works with physical businesses, I learned that the hard way. How hard? redo-the-all-thing hard. I was rushing the process with the architect, didn’t go too much into detail, and didn’t realize I was going into something that would cost and require more time and money than I was aiming for.

Unplanned costs

Not gonna bother you with too many details, but there were so many costs I didn’t take into count. Taxes, permits, power transformers, posts, a “soil investigation test” for fuck sake, and many more. While I was focusing on the construction costs and planning the building based on my budget, I started finding out about additional ones only during the process. They kept adding up, making things 30% more expensive, and that was before even started building.

Design and build process

Another mistake was not understanding the importance of being well-planned in a building process. I didn’t go too much into detail, like what exactly will we serve in the Cafe – does it require a stove? toaster? fridge? How many tables exactly can we fit in how many SQM?, or what type of generator will we need to keep the A/C on during a brownout?

This info can’t be found “on the go”, but needs to be deeply integrated into the architectural plan, otherwise, it will be too late and costly to fix. Might sound very obvious to many, but I thought it’s just something we would start and adjust as we go, I was in a rush to start, just like pushing a new software product to the market.

Time for decision

At least I realized it on time. kind of. The engineers already approved my plan for the 3-story building, with a Coliving at the bottom and a Coworking space on the top. But seeing the costs adding up and the bureaucracy  involved, I had to stop it all, and rethink what I’m doing.

The options

I made a list of my options, with pros and cons. I couldn’t stand the costs by myself anymore in the current situation. I needed to decide between keeping the same plan by getting external funds, making a new smaller plan (No Coliving), or canceling.

A quick look at my revenue plan will guarantee that the right thing to do, business-wise, is to ask for capital from investors/banks. The data (even though only prediction) shows a very promising ROI, mostly due to the fact that it’s serving high-paying customers in a low-operation costs location. More money will for sure give me the leverage I need, and help me to go stronger and quicker to the market.

But at the same time, what’s the point of doing a passion-project if I have investors to please?

The final decision

I had to go back to my Ikigai, why am I even doing this? It’s a passion project that combines things I love and am good at. Bringing a big investor in will very likely hurt my freedom and add stress, and that’s not what I signed up for. In all the simulations I did, even in the brightest forecasts, this Coworking space will definitely have a smaller ROI than making another software product. This project is about doing what I like in a place I love.

Giving up the Coliving? that hurts. I truly believe in this model. But while focusing on my main offers, a place to live is still something I can outsource. There are many hostels/apartments in the area, and I’ll try to work out a deal with some of them, already started a new platform for that.

Building only a Coworking space is not what I planned, but as long as I can keep my most important offers – Space for remote workers to be productive and connect, I’m going for it.

Here we go again - but better

After taking the direction, I did my best not to fuck up again. This time I took everything into consideration, and with my very patient architect – we planned a smaller and smarter place.

Total costs

Instead of my rough estimations of costs, I made this time a huge database of all the costs, but, all of them. From extension cords to insurance, This gave the final number I have left for construction. Of course, there will be some changes on the go, but I’m as ready as possible.

Revenue plan and assets

The changes obviously affected every aspect of the business. I was happy to find out that the revenue plan actually wasn’t hurt badly, actually, when reducing the running costs of a Coliving the profitability is higher.  On the contrary, without Coliving, it will probably be harder to create a strong customer base, but I believe I’ll be able to overcome that.

The other big change is to the Business plan and marketing assets. Without Coliving, the value I offer changes, my competitors are not the same, and so should my branding and marketing plan. More work? yup, but that’s part of the game.

Doubling down on community

During all these changes, I managed to keep growing my strongest and most important asset – the digital nomad community in Siargao. We are growing, and I am getting to know and work next to so many interesting people. That is one of the biggest reasons I keep going for CoCoCo without a doubt (well, almost lol). Lately, an average of 20 people are attending the Community events, and I get very good feedback from those who participate.

Now, without a Coliving space, which is one of the best ways to help people connect, I will need to make sure I do the right things to create a strong, healthy community around CoCoCo.

Progress Report

The main things I did and learned since the last post.

Actions

💪🏾 Added Coworking days to the Community events

💪🏾 Signed a contract with a graphic designer, time for a brand identity

💪🏾 Built a new marketplace for long-term stays in Siargao

💪🏾 Made a contract and a timeline with the contractor, planning to finish the construction by Nov 2023

Lessons learned

💡 Building a physical business requires very detailed planning ahead

💡 There is no blueprint for all the costs involved. Always prepare for more.

💡 Talk to people who have done it before you.