Media 4 Retail (M4R) helps Serviced Office Companies conserve cash flow and capital. We help Serviced Office Companies purchase advertising in a way that allows them to pay for some or all of the advertising with their own office space rather than from their limited bank cash resources.
The commercial office space market could not be tougher than it is today. In recent years many alternate shared spaces have popped up undermining both revenue and profits. Now with Corona Virus in the mix people are migrating to “work from home” as they are either too scared to leave their homes or tired of the daily travel grind.
Traditional way: Serviced Office Companies buy advertising with cash flow or working capital
Let’s consider an example where an office supplier wishes to purchase £40,000 of advertising. The traditional method that has worked for years relies on cash flow funding or access to working capital.
Now, in order to have that cash in the bank in the first place, the office supplier must have made sales in well excess of £40,000 leaving them with a clear £40,000 after they paid their operating costs.
In this example we assume the Office supplier has a 5% variable cost of sale. This is the additional cost imposed when a new tenant moves in (some cleaning, wear and tear and electricity). The fixed costs are already being covered by the existing tenants.
The Financial impact and result of the traditional way is:
- £40,000 advertising campaign is produced with no guarantee of a return on investment, it may not attract a single new tenant
- Bank account has now been drained of £40,000 working capital
- The risk of 100% failure is very high
M4R way: Serviced Office Companies buy advertising with some cash and some office space
The M4R method allows the office supplier to pay 50% of their advertising in money and the remaining 50% in empty office space. This immediately conserves cash flow and reduces the drain on working capital. In the example below we show the impact of paying 50% in cash from the bank and 50% in office space.
The office supplier will need to release £20,000 cash from the bank to part pay for the advertising, leaving the other £20,000 for other uses. They will then provide £20,000 of their “stock of unsold office space” to complete the payment of £40,000 for the advertising.
The advertising will run and be exactly the same advertising as that would have received under the traditional way.
The Financial impact and result of the M4R way is:
- £40,000 advertising campaign is produced and before it even commences the office supplier has a forward sale of £20,000 in rent, this is a 50% return on investment from the outset.
- Bank account has not been drained and still has £20,000 cash in it
- M4R customers contact the Serviced Office Company to rent space and utilise the available credit.
- Should no one rent the space then the office supplier receives that portion of the advertising for free
- If the advertising works then it will drive additional tenants to the office supplier directly
- The office supplier saves even more because the incremental cost to provide £20,000 of office space to a new tenant is only £1,000
- The risk of 100% failure is zero as £20,000 of office space was committed to up front.
- The bottom line for the office supplier is, extra office space sold, extra cash flow and extra profits
In every instance Serviced Office Companies should try to buy advertising with unsold office space on hand and not cash in the bank.
Which Serviced Office Companies are best suited for the M4R way?
The Media 4 Retail platform is suitable for almost every Office supplier. The only requirement is that they have a need to advertise. Certain Serviced Office Companies are more suitable than others and each is reviewed for its suitability on an individual basis. Some will be able to buy advertising with 100% payment in packages and for others it may be only 50%.
Every case is different and it depends on the type of office space, its location and standard.
The best way forward is to make an enquiry. We will be able to tell very quickly if M4R will work for your locations.
What types of Media are available?
We are able to supply almost every form of advertising with at least 30% payable in unsold office space. The media includes:
- Print news and digital news
- Sunday paper inserts
- Main stream digital, google and face book
- Bill Boards, paper and electronic, 96 sheet, 48 sheet, bus shelters and phone boxes
- Taxis and buses
- London underground, tube, posters, escalators
- If we haven’t got it we will try to get it
Please ask yourself these two questions.
- “If I stop advertising now and keep the cash in the bank, how long will my Office Space business survive?”
- “Would I rather buy advertising with cash from the bank account or pay with my unsold office space?”
M4R provides a strategy that allows the Serviced Office Companies to have an each way bet, we fill empty offices, create extra cash flow and deliver extra profit, guaranteed!