Co-working business The Space to close after falling through cracks in COVID-19 support

Elle Steele and Erin O’Donoghue, co-owners of The Space in Melbourne.

When Erin O’Donoghue and Elle Steele launched their co-working space in 2019, they could never have foreseen that a global pandemic would lead to a government ban working in offices.

But in March 2020, that’s exactly what happened.

The owners of The Space, located in the Melbourne suburb of Brunswick East, are now busy preparing to close the business at the end of the month, having fallen through the cracks of government support programs.

“Obviously, we’re a business built on bringing people together face to face, so COVID-19 hit us hard,” O’Donoghue tells SmartCompany.

A space for freelancers and entrepreneurs 

The Space recorded its most successful month ever in February 2020, just one month before the nation-wide lockdown came into effect in March.

The business catered to freelancers and entrepreneurs, offering a range of plans including full-time memberships at a monthly cost of $400 per month and $35 day passes. 

O’Donoghue and Steele pushed through 2020, assuming that if the business could survive into the New Year, it would be able to recover from the pandemic.

“We kept thinking ‘if we can get through last year, we’ll be ok’. But this year hasn’t really been much better,” O’Donoghue says.

Not only was the co-working space closed throughout Melbourne’s prolonged lockdown last year, continued snap lockdowns in 2021 have deterred customers from returning or taking up new memberships.

“Many of our customers are small business owners and with JobKeeper coming to an end, they are also rebuilding,” O’Donoghue says.

‘We pivoted as much as we could’   

O’Donoghue pivoted the business while public health restrictions played out, hiring out the space for events and as a photography studio.

But when the two-year lease came up for renewal, the business owners had to “take a good hard look” at whether renewing was a good idea.

“We took a step back and thought about how much more emotional and financial investment we were willing to put into the business,” O’Donoghue says.

While it’s a common perception that governments offered a lot of financial support to businesses, many actually fell through the cracks, she adds.

The Space is a non-employing business and doesn’t have a business model that fits into a traditional ASIC category. So she and her business partner missed out on both state and federal government support.

“We’ve been dipping into our savings, relying on our other businesses and the generosity of some of our members, who continued paying memberships even when we were closed,” she says.

Communication is king

The most important part of closing the business down is communication, O’Donoghue explains.

“The main thing for us was making sure that we communicated it to our members in a way that was timely but also sensitive to the fact that their workplace was disappearing,” she says.

With a background in change communications, that process was familiar to O’Donoghue and she gradually informed the landlord and the broader network of people involved in the business.

“It’s one thing to make the decision, but to retell the story again and again is pretty exhausting,” she says.

‘Letting go of a dream’

O’Donoghue says she’s come to terms with the decision to close the business and accepts how governments have implemented public health measures and business support.

“Both of us have worked through the process of letting go of a dream,” she says.

The Space was O’Donoghue and Steele’s second business, so closing it down means they will have more time to devote to other work.

“We’ll go on to focus on our coaching businesses and maybe start other things as well, which we both feel really fortunate about.”

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