I thought it would be an interesting exercise to offer up some insights into what it really takes to run a space like Kustom Kommune and show you how far your membership, T-shirt purchase, donation or contribution really goes.
It’s no secret that DIY workshops like ours are a challenging model to get right. Otherwise, everyone would be doing it, right? However, the satisfaction from running a space like Kommune trumps all else. I personally love a challenge and thrive on building what I feel is a world-class community.
Kommune is a space for everyone. It’s a space to help people network, build relationships, be a part of something and acts as a third space for many. It’s not just a workshop. It’s treated as a social enterprise, in the eyes of the law, we are set up as Pty Ltd. and the majority of people that help run the space donate their time. We charge $449 per year to become a member. Once you’re a member, you can utilise the space as much as you like with no additional charges to ride-in-ride-out. There are no bookings, no hidden costs, no nothing.
Over the past few years, in total, we have signed up 1000 amazing, supportive, incredible DIYers that have now become a part of our ever-growing family. Kustom Kommune has become one of the most successful DIY workshops in the world. A massive milestone that has spurred us to give you a deeper look into what we do, how we do it and hopefully inspire others to have a crack, or at least get involved at their local DIY workshop or club.
Without getting too ‘businessy’, what does success look like to us? Well, we base it on these three foundations:
- Community. This is our absolute number one. Creating an engaged community, that consistently offers support to one another and welcome people with all skill sets, from all walks of life.
- Value. Creating a space, that offers huge amounts of value for a small contribution, from a lot of people.
- People before Profit. Create a sustainable model, that has longevity and offers greater value to the community as it grows.
Our values are very much community focused and creating a sustainable space. That’s the absolute priority.
So, what does it take to run a space like Kustom Kommune? Let’s look at some numbers.
Currently, it costs us approximately $300,000AUD per year to keep the doors open. That’s just the break-even point. This number goes up every year as our community grows and general expenses such as rent, maintenance and utility costs go up.
Our space is open 10am – 9pm Tuesday to Sunday and then Monday 6pm – 10pm for Training Courses. That’s 70 hours a week, plus those times we stay back late to make sure our members get their bikes on the road, which is more often than not.
Kommune hugely relies on Volunteers to help manage the space. This is so we can keep the costs down and ensure the space is affordable for everyone. We generally have 2-3 people on-site to help manage the day-to-day of the space. That’s about 9,100 work hours a year (averaging out at 2.5 people helping out per day). 90%+ of these hours are donated by our amazing team of volunteers. If we calculate that based on the national median wage in Australia, it works out to be around $260K worth of time donated to make sure we all have a space to hang out at. How absolutely massive is that!?
We host loads of free events every year (this is one part of our community focus) from Sunday Session BBQs, weekend and weeknight rides, through to paid events such as large scale festivals. As of today, we have 60 events scheduled for the year, again these events are generally organized by our team of volunteers. All events are for members and the Kommune curious, to get to know each other and expand their networks. Last year our events had a cost of touch under $50K AUD. This is what we spent on entertainment, catering, hosting, etc
Our ‘interaction model’ is very online heavy, meaning we spend huge amounts of time managing our website. We made a conscious decision to use online transactions rather than in-store, as we like to make it feel that minimal dollars are handed over in the workshop. The workshop is a place of recreation and fun, and not a place to cough up cash. We like it this way.
Last year we had a cost of approx. $30K AUD for contractors (including me). We don’t have any staff on the books and we use contractors when we need some professional help and can’t find someone in the community to help out. This is the number one reason we can offer memberships at such a low rate. Our regular contractors include Trainers and Web Developers. Next time you’re in the space and one of our crew is giving you a ton of time, make sure you give them a big thanks, as they more often than not, doing it out of the goodness of their heart!
Rent and outgoings are our biggest expense. Rent and rates etc are upwards of $80k per year, and our long opening hours mean our utilities costs are around $8K per year. Insurance is another big one, it was difficult to find and only a couple of brokers were even interested in discussing the model. Insurances cost us upwards of $10K per year. Ouch!
The biggest surprise to most is that memberships only make up a small proportion of our income, in-fact Memberships in 18/19 only accounted for 10% of our revenue. Onsite storage generates around the same as memberships and is why storage at our workshop is such a big focus. We do charge a premium for on-site storage, currently $169 per month, but our goal is to help our members plan their builds, so they need to spend minimal amounts on storage fees. Sounds counterproductive, but that’s where our people before profit values come in to play. Memberships are a big growth area and membership drives are now a big focus, rather than word-of-mouth, that we’ve always relied on.
Sponsorship is one of our biggest sole income streams and cost savers. It accounts for at least 20% of our revenue and saves us tens of thousands of dollars per year on tools and equipment. This is definitely a big focus for me and building and nurturing these relationships is my highest priority. Next time you see a post from one of our sponsors, click the link, send them a message and say thanks, or support them by purchasing a product or utilising their services. Sponsors are absolutely key to us being able to do what we do, so make sure you show them some love.
Events are also a substantial revenue stream for the space, accounting for nearly 20% of our turnover. This is ticketed events and training courses, and also includes venue hire fees for private parties, product launches etc. When we host paid events we always put a focus on extras or at the very least discounts for our members. Most of the time we aim to only charge our members what it costs us and we make the extra turnover from the crowds of non-members that attend. This is why you should buy a ticket… and always bring your mates!
We also offer parts and consumables to members. We spend a lot of time finding new suppliers for those unique parts and building relationships with wholesalers to make sure we can get the best rates. We split the mark up with our members 50/50, so if we make 30% profit on an item our members will get 15% off and 15% goes back into the workshop. We have fast become the first point of contact for many, and members have a lot of trust in the advice we give around what products and brand they should by. Parts, consumables etc. account for over 30% of our turnover. It can be time-consuming for the relatively small profit margins, but it’s a massive help with cash flow, which is so important.
Having multiple revenue streams imperative for a space like this. As you can see, if you relied on Memberships alone, it would be very difficult to make it sustainable. So, buy your parts through the space (you save $ too), grab a T-shirt, attend the events, renew your memberships and pay for storage, this is the lifeblood of the workshop.
Where does the profit go?
To be brutally honest there’s not usually much, if any, because the profit generated by the space is constantly reinvested back into new equipment, and then into the maintenance of existing machinery and hosting and running additional Kommune social club events. Our principals are simple, the more members we sign up the more we can invest back into the facilities. More members means more parts purchases, more tickets sold, more merch moved and so on. We have membership milestones in place and as we hit them, we’ll be able to upgrade existing machines, introduce free courses for members, hire a full-time Mechanic to assist members (at no charge!) and secure more space for more retail, hospo and storage. Again, a huge focus on the people before profit model.
Why would you do this, if you’re not making fat stacks?
Because, I don’t want to get a ‘real job’! But, in all seriousness, Passion. Building communities and bringing people together drives me. Motorcycles are a massive bonus. Being front of centre of such an interesting space gives me other financial opportunities. The flow-on effect tends to bring a small side income, mainly influencer jobs and content creation. If it wasn’t for that, it would make it much harder to sustain.
These spaces are relatively new in the scheme of things. We’re taking DIY out of your mate’s garage and into (for argument’s sake;) a commercial space, but one with a great list of perks. Once these spaces become more mainstream, people see the benefits first hand, and the business models are nailed down, the uptake will be greater and more funds will come. I have a long term goal of supporting and partnering with others to get more spaces like Kommune off the ground, with that comes more potential for profit and more opportunities outside of the workshop.
My vision sees Kommunes all around the world. If you’re a member of one, you’re a member of all. When you travel you can head to the local workshop, giving you an instant in, with a like-minded community. You’ll be able to grab a Kommune bike and go for a burn with the local crew and hopefully make some lifelong mates. That would give me huge amounts of satisfaction and hopefully a few bucks in the bank for my time.
The big question is, how do you start a space like Kustom Kommune?
Get in touch with me, I’ll give you all the advice that you need. I’d love to see more workshops such as Kommune up and running. The only real requirement is a passionate and dedicated community. Motorcycles are fun and social, and the communities that surrounds them have always been special. Bring these people together and start small if you need. That’s how we did it.
How can you support your local DIY Workshop?
Get involved. Buy some stuff, donate some time, grab a membership – even if you’ll never use it.
If you run a successful brand or business, sponsor the workshop and use it as a tax write off.
If you have skills in marketing, design, mechanical, trades, social media, web design etc, offer them up. A little bit of time from many people makes for light work and helps grow the tribe.
The absolute key to all this is two things
- Small contributions (time or money) from lots of people.
- GET INVOLVED & CREATE THE COMMUNITY YOU WANT. Come in and help someone that is learning, sweep the floor, tick a list off the workshop to-do list, host an event, tell your mates, put up a poster at the local bar, drop off a flyer, attend an event, offer feedback, service your bike, pass someone tools, weld up a bracket for someone that can’t. You will only get what you put in, and the space is only as powerful as its collective community.
(And don’t let the team, that is responsible for the space, burn out.)
We love what we do, as the person responsible, it is challenging at the best of times but the satisfaction of building such an amazing community makes it all worthwhile.
Support your local DIY workshop and the entire community with thrive.
Founder of Kustom Kommune, Melbourne Australia.