- What Is Your Vision, Goal, Or Motive To Start A Coworking Space?
- Are Co-working Spaces Profitable?
- What Do You Need To Consider Before Opening A Coworking Space?
- Steps To Scaling Your Coworking Space
- Why Do Coworking Spaces Fail?
- The Future of Coworking
What Is Your Vision, Goal, Or Motive To Start A Coworking Space?
In a world where coworking is the new way of working with approximately 3.1 million coworkers worldwide, and more than 14 thousand coworking spaces around the globe; it's no surprise that you might consider now as the best time to start a Coworking space, but are you considering this business for the right reasons?
Read more: What Is Coworking / Shared Office Space?
What's the reason you want to start a coworking space? Is it to profit or benefit from the bubbling creative environment? There is no right or wrong answer but having a good grasp of your business model is paramount to your success.
Coming up with answers for your vision, goal, and motive may seem difficult, and a somewhat abstract task at first, which is why using a tool can help come up with these answers in the most constructive manner.
The Business Model Canvas is a visual roadmap to help you answer how you're going to deliver your product and reach your customer and a great tool to determine the key functions of your coworking space.
Are Co-working Spaces Profitable?
Let's cut right to the chase- starting a coworking space is not all bread and butter. In fact, According to the Global Coworking Survey, only 43% of coworking spaces are profitable, which means that 57% are detrimental.
But, that's only because most people go into the business without utilizing all the key revenue streams of coworking spaces. Here are some ways you can increase profitability in a coworking space; almost 90% of coworking spaces generate a profit if they meet at least three of these conditions.
Private Offices Over Desks
About every ninth coworking space rents out more than 60% of its space as private offices. There is a shift toward private offices that are most commonly requested and dedicated desks that are also needed.
Not all members can work in an open space. The coworking and office model allows these customers access to their own dedicated space.
Leverage Vertical Integration
The idea of vertical integration is to increase the number of transactions per member by taking care of every need of the member. You can accomplish this by forming strategic partnerships and acquisitions with businesses that cater to most of your customers' needs.
Some common additional services include breakfast, lunch, dinner, daycare for kids, spa, massage parlor, workout area, educational classes, leisure, etc.
When leveraging vertical integration, don't forget to automate everything (bookings, payments, access, and more). This helps you save money, time and give your customers a better experience.
Thinking Long Term
Whatever plans you make concerning your coworking space, you have to have a long-term picture that should be kept in mind.
Statistically, the longer the space is in operation, the better it runs. The second Global Coworking Survey shows that 72% of all coworking spaces become profitable after more than two years in operation.
Keep in mind that there are factors that have been identified as essential elements for a profitable coworking space. These factors are:
The age of the coworking space and
The number of members
Both these factors are mostly dependent on time.
Target Well-Off Customers
The majority of the people using coworking spaces are indeed freelancers but, if all your members are freelancers then you probably won't make much in terms of revenue and some of the vertical integration strategies you try may not work. Why? Because most freelancers don't earn much.
Read more: How Coworking Membership Works: Complete Guide
This means you need to expand your target audience to well-off customers like:
Startups with remote teams
Tech companies like Google and Facebook
Big corporations like Coca-Cola and Nestle.
Business owners/ Managers
Most of the employees are happy to change the environment and experience the flexibility of a coworking space. Reach out to these types of companies to see if they would like to set up a satellite office near your coworking space, which could, in turn, increase your revenue.
Leverage Opportunities to Cut Cost
To help you spend less on kickstarting your coworking space, you can consider some of the following:
Start your model with a smaller space footprint.
Negotiate with a private insurance provider for your commercial property.
Negotiate with your Landlord if leasing for a grace period on rent to get your space up and running.
What Do You Need To Consider Before Opening A Coworking Space?
Now that the motive for starting your coworking space has been established and the potential profits (both financial and non-financial) have been discussed, it's time to talk about the practical things to consider before opening a coworking space.
What Is Your Target Market?
What types of people are most likely to use coworking spaces?
As mentioned earlier, the majority of people using coworking spaces are Remote Workers / Freelancers. But you could expand your market to serve more people, including small companies/teams, Corporate clients, Software Developers, and IT Services, Financial and Legal Services, Marketing and Advertising Services.
Developing a coworking marketing plan that communicates your services to the types of users it serves is best because it helps you identify avenues for future growth.
Where Should Your Coworking Space Be Located?
When opening a coworking space, the first thing you should consider is developing a community of people who will be interested in working in a coworking space. Once you've identified the demand in a certain area, you can start looking for the right building to house your coworking space.
Coworking is all about convenience, so you have to consider things like the distance from your coworking space to where most of your target market lives and more.
Over 80% of operators take a lease because it eliminates some of the burdens of property ownership but often results in high rent spikes when it's time for renewal. Subleasing is a cheaper and more convenient route.
What Should Your Coworking Space Have?
Irrespective of the target market you intend to serve, some basics that most coworking spaces have to include are as follow:-
Furniture and Fixtures
Tea, coffee, and snacks
Some coworking spaces also provide startup resources ranging from digital assets, coaches, advisors, and even cool tools like 3D printers and some other tech that you may not always have access to.
What Is the Interior Layout/ Design of the Coworking Space Going To Be?
We can all agree that beautiful things are very effective in attracting people. That's why what your coworking space looks like is almost as important as the services it offers.
Traditional corporate offices have long been experimenting with different layouts in search of a way to improve employee collaboration. Luckily for Coworking spaces, they have a little more flexibility and can easily create a 'blended layout' of private offices, common areas, and community desks to provide a good balance of both collaborative areas and focus areas.
Read more: Coworking Space Design Ideas To Succeed
Facilities And Services To Offer
Services offered by coworking spaces include the best business gear and administrative support so you can create your ideal workspace - without the overhead. Here is a brief list of amenities you can offer:
Mail & Package Service
Virtual Business Address
Meeting Room Access
Reception/ Waiting Area
How Much Does It Cost To Start A Coworking Space
Once you've found a convenient location for your target customers, you can begin to consider costs and budget.
If you bought property to start your coworking space, then you will have to consider additional costs such as building codes and city permits, all things that can quickly add up to other charges. Determining how much flexibility and control you want in your coworking space will help determine the best cost approach.
Finally, you have to decide how you'll finance your coworking space. Will you use your own money or find investors? You may have a wide pool of sources to seek financial aid from Local government bodies to people with a real estate portfolio, wealthy friends, and family.
Coworking Space Business Plan
A business plan is an overview of your property management business and lays out your company's core values, strategies, and growth plan for the next future. It explains your business goals and your strategy for reaching them. It also includes market research to support your plans.
Download Coworking Space Business Plan Template
Steps To Scaling Your Coworking Space
Starting your coworking space is one thing but, growing it and scaling to its best capacity is another. This depends on various factors such as your team, your community strength, and your management strategies.
How Do You Manage A Coworking Space?
When you know who your customers are and what they want, it's important to hire the right set of employees to work with you.
The number and skills of staff you need depend on the size of your space and the services you offer but, here are some positions that you should consider:
Coworking space manager
But managing a coworking space goes beyond your team, and It's impossible to run a modern coworking space without dedicatedmanagement software. Every operator needs it to keep things organized, grow business and community, and make the everyday use of the facility easy and streamlined for customers. Here is a short list of advantages you get with awesome workspace management software:
A unified members database
Automation of administrative tasks
Verification of spaces' availability in real-time
Online booking for office spaces, desks, and meeting rooms
Self-service web and mobile apps for members
Guest check-in and digital access
Billing and remote payment
Newsfeed, membership benefits, and value-added services promotion
Costs optimization and performance monitoring
Read more: How To Boost Coworking Membership Sales
How To Build A Community In Your Coworking Space
Although this is not the focus of this post, we have compiled a list of multiple methods used by other coworking spaces to build their community. Try making use of a few of these in moderation and watch your community soar.
Introduce new members.
Organize events and attend them personally.
Share brand stories & encourage members to do the same
Stay true to yourself.
Arrange networking spots
Organize Panel Discussion
Arrange Weekly Team Breakfasts
Arrange Weekly Standups
Friday Bounce Hours
Announce a Food Truck Incoming
Organize Early Morning Marathons
Invite Employees for Monthly Game Nights
Organize Product Launch Parties
Initiate a Blood Drive
Start a Book Club
Organize Quarterly Day Trips
Announce Demo Days
We hope these ideas help you build a thriving community successfully!
Read more: What is Community Building In Coworking: A Simple Guide
Why Do Coworking Spaces Fail?
According to Deskmag, there is a 10% failure rate for coworking spaces, and anyone could be a victim. Even big names like WeWork have battled with the challenges of coworking space, but luckily you can learn from them.
Some challenges arise as you grow your coworking space but, here are the fundamental reasons why most coworking spaces fail shortly after they set off.
Shared offices tend to be less successful if they are in rural areas. As mentioned earlier, many of your potential customers won't choose the venue if it takes a lot of time to reach.
The facilities around a coworking space are also essential. From restaurants to gyms and parking lots; it's important to pick a spot that has essential facilities in the area.
Poor Layout And Infrastructure
If you don't consider your customers and their working needs when creating your layout, you're likely to create an unconducive environment for them.
Thoughtful planning will bring a lot of professionals to your space. People make their judgment of a place within twenty seconds after entering it, and your spot could be overlooked if it doesn't look good.
Lack Of Authenticity
Some coworking spaces try to copy their competitors' business models, especially giants like WeWork or Impact Hub, and they don't succeed mainly because they don't have the necessary resources.
Each successful space has its mission and values, and it attracts certain clientele because of those factors. Define your business philosophy, and you will gain members whose values align with yours. Always strive for authenticity.
Coworking is hugely about the sense of community and networking; therefore, it's essential to create an atmosphere that fosters collaboration and brings people together. Coworking spaces that don't care about building a safe community often get left behind no matter how many cool amenities they offer or how beautiful their space looks.
The Future of Coworking
According to Forbes, Coworking spaces are becoming fast-growing realities, and China is the leader in the shared economy movement.
Coworking spaces are incredibly valuable for community building, as they can host networking events and workshops and provide an area for people to meet and brainstorm.
The future of coworking is bright and filled with endless possibilities. From synchronized calendars to interactive dashboards and so much more, coworking spaces are set to utilize all the latest technology to the max.
Coworking is here to stay, and it will likely only continue to expand especially thanks to today's Millenials and Gen Zers, who cringe at the thought of conventional office space. According to Coworking Resources, 'The number of coworking spaces worldwide is projected to reach 25,968 by 2022, an increase of 42% from 2019.' Coworking has completely changed how office space is utilized, and there's no going back!
Foertsch, Carsten.'2019 Profitability of Coworking Spaces.'SlideShare, 12 September 2019, https://www.slideshare.net/carstenfoertsch/2019-profitability-of-coworking-spaces-171146678. Accessed 5 January 2022.
Foertsch, Carsten.'How Profitable Are Coworking Spaces in 2019?'Deskmag, 4 September 2019, https://www.deskmag.com/en/coworking-spaces/how-profitable-are-coworking-spaces-profitability-margins-market-report-2019. Accessed 5 January 2022.
Bhupta, Malini.'Large companies check into flexible co-working spaces to cut costs.'The Financial Express, 19 August 2021, https://www.financialexpress.com/industry/large-companies-check-into-flexible-co-working-spaces-to-cut-costs/2313391/. Accessed 5 January 2022.
Tusk, Bradley, and Derek Austin.'Why WeWork Failed - And What It Means for Coworking.'Medium, 25 November 2019, https://medium.com/derek-develops/why-wework-failed-and-what-it-means-for-coworking-5d6bb209f5e2. Accessed 5 January 2022.
Yanie, Durocher.'The Disruption Era: The Future Of Coworking.'Forbes, Forbes, 06 October 2020, https://www.forbes.com/sites/forbesagencycouncil/2020/10/06/the-disruption-era-the-future-of-coworking/?sh=119c0bab3850. Accessed 05 January 2022.