That low percentage may be explainable based on the relative newness of many individual spaces, but it’s still not fabulous news for space owners, members and friends of the movement. So DeskMag isn’t just reporting the problem but offering solutions as well, recently listing 10 ways spaces can become more profitable. Some of their more original or more crowd-pleasing ideas include:

Rent your space to members and non-members.  The principle is simple: Use what you already have. Regardless of whether a coworker or not, allow ‘outsiders’– locals or city-based groups, for example – to rent out the whole or part of a space for private events, inviting them to become a member of the community. This would introduce the concept of coworking to a wider audience, increase the size of your community, and make good use of an existing space and infrastructure without adding any big red numbers to your monthly budget.

Initiate a credit system. Much like a pre-paid phone card, and possibly attached to a Visa card, coworkers can be given the option of purchasing credits in advance for future — though not necessarily time-specific — use. (One possible model could be 1 Credit = 1 desk-hour; 10 credits = 1 conference room hour). One advantage of a credit system is the ability to alter the price of credits quickly and easily, and being able to forecast a portion of your impermanent traffic.

Free beer. Free anything is a crowd-pleaser, free beer even more so. Providing beer, which could be donated by a producer, alongside coffee and other soft beverages would lubricate conversation and get creative juices flowing.

Work together with headhunters or human resource personnel of big companies. While this could be an effective way to help individuals or freelancers in a space to sell their skills, caution should be employed to refrain from ‘selling’ members. If referrals could be worked with on an operator’s own terms, the integrity of independent membership could be retained while the attractiveness of a space enhanced.

Work with the city council or state departments to create workshops.  The idea was offered in light of a coworking-government partnership in Bilbao, where the Department of Employment hosted workshops for unemployed individuals from creative industries. The program, lasting for six months, did not derive any profit, though did help to boost membership numbers.

Check out the complete list for the remaining ideas and more details on the suggestions above. Of course, DeskMag isn’t the only voice in the coworking community pondering how more spaces can break even. Space owners themselves are getting creative with ideas like regional passes and matching members with interns from local universities to drum up more interest.

The authors of Working in the UnOffice: A Guide to Coworking interviewed many owners about their experiences for their book, asking them about the finances of their spaces. As co-author Genevieve DeGuzman explained, “one in every five coworking spaces has closed its doors, according to studies done by Emergent Research,” but many owners told her about their innovative their efforts to avoid this fate.

“Some ideas touted around include everything from experimenting with membership models (testing the optimum ratio of open desks to private offices) as well as exploring more unconventional practices like private and public sponsorships and franchising,” she said, offering examples:

Gangplank in Arizona is doing interesting things. They are a no-fee model, meaning they don’t charge people to use the space. Instead they rely on “anchor companies” that take on operational responsibility — managing the space and making sure it keeps its doors open as a business. They shoulder the responsibility and the space doesn’t have to hire staff.

They also get sponsorships for internet access and work out contracts with local government for deals on real estate and electricity. At their two new locations in Avondale and Tucson they told us that the local government donated the use of buildings where the space will be housed.

Hive at 55, a space in NYC, is part of the city’s overall urban economic development program to promote its media and technology industries. It received a city grant from the New York City Economic Development Corporation, and partners with Pace University, the Freelancers Union, GuruLoft, Girl in Tech, the Hatchery, and others.

Will coworking spaces need to embrace partner- and sponsorships to become profitable?

Image courtesy of Flickr user Deborah Fitchett.

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Asymco's chart of Apple's cash hoard following the company's Q3 2011 earnings

Here’s what some of the most vocal are saying about what Apple should do with its mound of cash.

• Bernstein Research analyst Toni Sacconaghi in the Wall Street Journal called it ”a level of cash that’s preposterous by any metric.” He says Apple should either buy back shares of its stock or issue a dividend.
• Over at Fortune, Philip Elmer-DeWitt argues against such a movie and warns “don’t be fooled” by those Wall Street analysts howling about Apple paying a dividend. “What these men want done is for Apple to give the money to ‘the stockholders,’” he writes. “What they don’t say is that they are the stockholders. Institutions own more than 70% of Apple’s shares and would be the primary beneficiaries of any buyback or dividend.”
• Daily Finance suggested Apple could buy a company with its hoard of cash. DF didn’t suggest any company in particular should be targeted. But it did point out that “[w]ith a market cap in excess of $360 billion, it could easily use its stock as currency” to make an even larger acquisition.
• Other eyebrow-raising suggestions thrown out there include Apple getting into the TV or gaming business, or snapping up Facebook, Hulu, or Netflix.

If the past is a predictor of the future, Apple is likely to do nothing drastic. This is not the first time the company has come under fire for its conservative spending ways. At a shareholder meeting last year, Jobs was peppered with questions regarding his plans for the money (he joked he was going to “throw a toga party” with it) but he answered very directly about how Apple think about its cash on hand: namely that it provides “security and flexibility.”

“When you take risks, it’s like jumping up in the air, and it’s nice to know the ground will be there when you land,” he said at the time. “We run our company conservatively from a financial point of view because you never know what opportunity is around the corner … We’re very fortunate that if we needed to acquire something we could write a check for it and not have to borrow money.”

With the ongoing war in the mobile industry over intellectual property taking place right now, that attitude is proving awfully prescient. Earlier this month Apple was able to put down $2.6 billion as part of a consortium that bought Nortel’s mobile patent portfolio, an amount that’s relatively tiny compared with the rest of the cash Apple’s got stashed away.

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In his report, Anmuth writes that he believes YouTube will begin contributing positively to Google’s EPS in 2010, projecting that the business unit will generate $700 million in revenue, representing 55 percent growth year-over-year. (Not mentioned is that this implies the business unit generated about $450 million in sales in 2009.) That comes from increased usage by viewers, as Anmuth notes that the total number of YouTube’s videos viewed grew 139 percent to 12.2 billion in November and unique visitors grew 32 percent year-over-year to 129 million.

Despite questions arising about YouTube’s profitability and the costs related to running the site last year — with one analyst estimating that the unit could lose as much as $470 million in 2009 (though others refuted that number) — Google has been relatively pleased with the trajectory that YouTube has been on, at least publicly.

Last summer on Google’s second quarter conference call, Google CFO Patrick Pichette said YouTube would be “very profitable” in the “not too distant future.” And on the company’s third-quarter call, Pichette noted that the company was “monetizing more than a billion video views every week on YouTube.” Google posts earnings again next week, so we’ll see if the company has any update on YouTube profitability then.

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ClusterShot earns revenue from selling annual Pro subscriptions, which cost $20 and provide users with their own personal photo store. So how did ClusterShot achieve profitability just eight months after it launched last November? I spoke with Silverorange CEO Dan James to learn about the company’s recipe for success.

If there are enough squeaky wheels, maybe you can build a business to provide the grease: The idea for ClusterShot was born when Silverorange employees got fed up with unsuccessfully trying to sell their photos on sites like iStock and Shutterstock. Such sites have strict photo requirements, James explained, which makes it hard for non-professional photographers to get their images added to their inventory. So Silverorange decided to build a site on which anyone could upload and sell any photo they wish.

When it comes to creating a web marketplace, make failure an option: Silverorange didn’t stop focusing on the core of its business — web development — to create ClusterShot, but built it in its spare time and gave it only as much attention as was absolutely necessary. ClusterShot’s success, after all, depends on whether people are willing to pay for photos on the site, so rather than risking everything on a service it didn’t really need to build, the company took a methodical approach.

No one gets it right the first time around, and true entrepreneurs are prepared to readjust: Silverorange made two mistakes with ClusterShot. First, it underestimated the number of photos users were going to import, and was forced to completely rebuild the site’s image processing system within the first month once it was clear that the average new user’s upload time was a full two days. (ClusterShot can now import thousands of images per day; some 350,000 photos currently reside there.) The second mistake was design-related — Silverorange originally used a light background and font color on the site, which didn’t make the photos pop. So it changed the background to a deeper color.

The inmates can’t run the asylum, so pick a leader: ClusterShot was originally a group-directed project, but it lacked focus. So James decided to apply the model that Silverorange employs when it’s developing a site for a client, whereby one staff member is assigned to represent the client and take the lead during the design and development process.

You got this far listening to squeaky wheels, but don’t let individual complaints drive your business: At first, Silverorange would focus on making changes to the site based on individual user feedback, which resulted in what James described as “some hastily made features that really only satisfied one user.” It now pools and ranks user requests and makes changes to ClusterShot based on such aggregated feedback instead.

Note: Silverorange designed the current version of the GigaOM site.

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The longer I continue this practice, the more I’m coming to appreciate it. Here’s why it pays to track.

#1: It helps with finding the “time sucks.”

You might realize after tracking your time for a while that certain types of projects are less profitable than others. For instance, if you’re a ghostwriter, you might make considerably more writing blog entries than in-depth white papers. If so, you can adjust your pricing or service offerings to compensate.

You might also find that a particular client is more demanding of your time than others, and as a result, you might decide to drop him, charge him more going forward, or change your work habits in order to be more efficient.

#2: It helps with staying on track.

I currently have a very specific goal to keep me on track — work four paid hours per day. I can quickly glance at my time sheet for a given day and see if I’m anywhere near that goal. If I’m not, I know I need to concentrate on acquiring new projects. The more consistent you can be about hitting your own daily goal, the more consistent your income and work load will be.

#3: It helps with being more realistic.

As I mentioned, my goal is four paid hours of work per day. I realized recently that reaching my much lofty income goal would take much more time. In reality, lead generation, administrative tasks, and communications make it impossible to focus exclusively on paid work, so I had to adjust my income goal to match my available time.

Also, you might estimate that you’re working much more or less than you really are. Having a detailed time log shows just how much you’re actually devoting to your business. If you left the corporate world in order to have more flexibility and free time, but you’re still putting in 70-hour weeks, then your reality is well out of line with your intentions, and you might want to rethink your workload.

#4: It helps with improving profitability.

The more you can arm yourself with information, the more accurate you can be when making projections, like giving clients quotes and estimating expenses, which in turn leads to increased profitability.

You can also learn a lot about what tasks are taking more than their fair share of your attention. You might have a “busy” month (one filled with things to do, communications, etc.) and not really have a “profitable” month, since much of your time was unpaid. Hopefully, you can then identify low-value unpaid tasks going forward, and weed them out of your to-do list.

So, although time tracking might seem like yet another demand on your already overtaxed schedule, give it a try for a few months and see if it doesn’t improve your business, and your bottom line.

How do you streamline the time-tracking process? Share your tips, as well as the ways time-tracking is helping your business.

Image by flickr user RBerteig

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The package is called Sharpening Your Skills: Starting a Business. Sub-links to the essays follow, with additional F|R pieces that address the same topics.

1) Ownership and change of control: Rich or Royal: What Do Founders Want?
See also F|R’s:
Do you Want to be Rich or Be the King?
My Case Against Venture Capital.

2) Striving for profits: Turning High Potential into Real Reward.
See also:
The Margin Manifesto Part I The Margin Manifesto Part II.

3) Resource management: How Can Start-Ups Grow?

F|R, on bootstrapping and economizing:
Startup Math: 1 + 1 = 1/2
How to Bootstrap Your Startup.

4) Legal sand traps: : Top Ten Legal Mistakes Made by Entrepreneurs.
See also:
Question of the Day: Boiler Plate NDAs and Non-competes
The Dangers of Moonlighting
Patents, Why Bother?
Question of the Day: Self-Patenting.

Do you have suggestions for how to address issues like change of control, profits, legal pitfalls and resource management? If so, share them with us!

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