Why would anyone want to know about opening a coworking space? Is it that the coworking business is a rising trend or is it that the coworking spaces provide the perfect way out of a mundane office routine. Nonetheless, in the last 5 years, there has been a 450% increase in coworking spaces around the globe. Also after 2009, there is a steep rise in the searches relates to coworking spaces (Google Trends). The reason that this trend has gained a lot of traction only within a few years is sustainability and convenience. This is why the mammoth organizations and corporate giants prefer coworking spaces for a more feasible and collaborative office culture.
The numbers are awesome and the money is also good that follow starting a coworking space business, but there is one question that you need to answer. Is starting a coworking space right for you? There are two aspects to opening a coworking space, one involves you directly and the other only requires your money. The thing is that you need to decide which road do you want to take. This guide will focus on those people who want to invest and be a part of their own coworking space with all the heart. These are the people who will dive right in to make things happen and will leave no stone unturned.
A few years back the definition of a coworking space was synonymous with shared office space. But today it has changed, now a coworking space represents not merely a shared space but it is much more than that. There are a lot of new and upcoming trends in coworking that are waiting in the future to make this business even more exciting and propitious. You need to be ready to go all in if you want to start a coworking space.
What is Your Vision, Goal or Motive to Start a Coworking Space?
Behind every business initiative, there is a motive, a vision or a goal. Which drives the entrepreneurs and business owners to work for it wholeheartedly. You need to ascertain what is your vision and goal before opening your coworking space. WeWork is one of the largest coworking operators in the world and they have only one mission. “Create a world where people work to make a life and not a living”. Now, WeWork does not give its members money or stipends to be a part of their space. But what they provide is an ecosystem, an environment of sustainability and community networking. You need to decide which type of community do you want to build in your workspace.
There are some coworking spaces which cater to a different type of goal. They want to eradicate the monotonous office culture and help the people interact with like-minded people. There are a few coworking spaces which have opened up childcare along with their workspace. Erin Richards of Happy Hubbub faced an issue with working as a freelancer and looking after her child. So, she went and solved the problem for herself and for numerous other working parents. Opening a coworking space such as these will force you to solve a lot many other problems along with a major one.
Servcorp is another global coworking space operator and its motive is helping the members with their business. To this end, Servcorp provides the best in class services and facilities to the members so that they are able to focus on their business.
You need to find out what inspires you for opening a coworking space. For instance, If I am to open a coworking space in the future, my motivation would be community engagement. With my coworking space, I will bring together people from various distinct backgrounds and let them sit among each other. Imagine the number of ideas that will be running cumulatively through their minds. Sometimes people have bright and efficacious ideas about a startup or a new business. But what they need is some advice or support going forward. What is better than finding that support right beside you?
Out of all the motives, opening a coworking space with a profit motive is the easiest thing to do. All you need to do is invest right and at the right time, the returns will be efficient and promising if you strike the right chord.
No matter how much money you earn or how many more spaces you establish. Ensure that you do not dwindle from your vision, whatever it is. Your vision also depends on your target market. If you want to cater to artists solely, then the business plan and your vision needs to be aligned with them.
What you need to consider before opening a Coworking Space?
What do you look for before opening a business? The answer may vary according to different types of businesses, but the core principle is the same. It is which type of business has the highest scope to develop in the future. And starting a coworking space business is the best venture that anyone can think of right now. The whole wide world has been taken aback by the potential of this propitious business model. So you are on the right track with opening a coworking space. What else is required in this is what we are going to talk about going forward.
Location: searching for a location for opening a coworking space is not easy. Since it is a new business you would not want to spend too much on rent. So, renting a space in the premium region of the city is not always advisable. What you can do is target such a location which is easily approachable and will come at a lower cost. The trick is to look for not a new building and rent some space area here. You can find a 2000 square feet area for less than $750 in the city’s area which is first of all away from CBD. Almost all the commercial properties have a norm for security and two advance rents. So, your initial rent cost will be Rent*3. You can choose your own workspace area as per the number of members you want to start with.
Also, your choice of location may change if you are catering to some niche coworking business model. A startup-centric coworking space should reside near to a university or a popular college. A coworking space looking to have members from the legal community should be operating from the area near to the courts and so on. I guess you got the point.
Community: Sure your coworking space will have world-class amenities and top-notch seating arrangement. But it all comes down to the type of community you are working with. If people needed an environment which is akin to the everyday office then, there is no meaning to opening a coworking space. Breeding an energetic, efficient and collaborative community in your coworking space is what needs to be done. When it comes to a coworking space, you need to curate and attract like-minded people on your own. The challenge is starting a coworking space in not a posh area and then inviting people.
You can hold coworking events, workshops so that people may come to know about your space. Building a community will not cost you much. You have the whole social media at your disposal and you can save on advertising costs. You need to understand that you are establishing a coworking space from scratch. Hence you will receive members who were earlier working from home or are a cafe. These people are looking for avenues where they can focus on their work and concentrate. What you offer them in terms of a community and the environment will make a lot of difference?
Neighborhood: Neighborhood matters because your members look for the surrounding areas. Apart from public transportation sources, they will need to know whether there is enough parking space or not. Also, opening a coworking space on a busy street which is replete with the bustle of the city noises is not a good pitch.
You need your own team:
Starting a coworking space is akin to running a business. You will need some people by your side who will assist you in setting up everything. Here you have three options. One option is being a one-man army and do everything yourself until your space is up and running. It will save you some money. On average, a Community Manager will cost you around $1500-2000 per month.
The second option when opening a coworking space is to hire people who will work their specific roles and have prowess in their field. This option will cost you a bit on a monthly basis, but the results will be promising. You will have one person dedicated to handling the marketing aspect, the other person is looking after the sundry services in the space.
Lastly, you can outsource some of these roles and thereby save money and workspace which can be further rented out.
Out of the three options, having dedicated people to work their roles will go a long way in helping you run your space. For those of you thinking that you can handle it all alone, starting a coworking space business is not like developing a mobile application. In this parlance, I read an article by Margo Aaron (founder of The Arena), she said that if you are running any business alone, you will end up self-doubting yourself. “It’s easy to get stuck in your head”, that is what she says. On the contrary, if you are working with other people dedicated to their tasks, things are bound to run smoothly. You need people by your side, there are a lot of things to manage. Here are a few of them:
- Holding events
- Community build-up
- Looking after the memberships
- Ensuring that the members get all the facilities
- Looking after the member’s complaints
- Ensuring that there are enough snacks and coffee for the members
- Looking towards the cleanliness of the workspace
- Promotional activities
- Keeping a record of everything
These are some of the activities that are necessary for opening a coworking space. Once you are set up and people start coming in, you will have a lot on your plate if you are working alone. So, it is always beneficial to hire some people who will help you in running the space successfully.
Talking about the initial support you will require a community manager, an operations manager, and an administrative manager. Collectively, these three people will cost you around $4000-5000 per month.
You may be wondering that Alex Hillman started his first coworking space with only $6000. But that was before 2012 when the trend of coworking still anew and people were excited to experience coworking. This saved him a lot of cost and other expenses which are necessary today. The events and workshops were very rare and
Facilities and Services that are important:
What you provide to the members in your coworking space also resonates your mission and goal. For a coworking space focussed on assisting startups, it is necessary that you provide the services and amenities that will help them develop. An example of this is conducting workshops spanning from topics that allow the startups to address their issues.
There is no possible end to the services and amenities that can work in a coworking space. Since it is not just a workspace, you can add n number of elements to make your coworking space attractive. But, it all depends on your budget. On a tight budget, you should focus on just the essentials and necessary amenities and services.
- Furniture: Before opening a coworking space, you need to ascertain the types of membership which you will provide. But there are two types of memberships that every coworking space will have. These are dedicated desk and the hot desk options. In a 2000 square feet area, you can accommodate around 50 members. This means that you will need at least 50 ergonomic chairs and some number of desks depending on their usability. For the dedicated desks you will need storage space and for others, you will need separate storage racks. If the budget allows you can spend some money on interior decoration which will make the workspace more soothing to the eyes. It is evident that when a person is working in a beautifully built workspace, the work seems more fun. Another option is to include standing desks in your coworking space. The standing desks won’t cost much and give a versatile characteristic to your workspace.
- Utilities: most important is the internet and printing facilities. When opening a coworking space you do not want to do away with these two amenities. Without the internet, you cannot expect to run your coworking space let alone allowing the members to work. Another important service is coffee. Believe it or not, most of the members will ask for coffee first thing when they come. Coffee is the human fuel and every coworking space should serve coffee. Then there is the provision of electrical outlets to every coworking station. Lastly, you will need to arrange for washrooms and water outlets within the coworking space design. The cumulative expense on making washrooms and providing electrical outlets comes out to be around $10,000. This cost is summed after including only what is necessary for opening a coworking space.
- Temperature Control: The heating and cooling systems are also necessary as per the climate in which you are opening a coworking space. For a 2000 square feet area, the dual HVAC system will cost you around $4000-5000. And these central solutions are essential if you want the members to work in a comfortable and cordial environment.
Services that you can initially leave when starting a coworking space:
Although the ultimate aim should be to provide as much convenience and comfort to the member as you can. In the initial stages of starting a coworking space business, you can leave aside some services which will only add up to your cost and won’t attract more customers. These services include a bike rack, shower facility, phone booths, lounge areas, exclusive kitchen, and private offices. All these and many more similar services will surely make a difference, but it will also add to your initial cost. And when you are opening a coworking space, it is similar to a business venture. You need to tread carefully and take small baby steps going forward.
How to scale your coworking space?
Now that your coworking space is up and running, it is time to scale it up and reach to a wider market. There is a tremendous scope of scaling up only after a few months of opening a coworking space. The trick is to first assess your progress of the previous period and then move on to expansion. You need to add value to your business plan, add some more features and services which will attract more members and finally accelerate on the marketing aspect. These three steps will surely support you in expanding and widening your work area.
Capital Investment for opening a coworking space:
Talking about the total cost you need to understand that this is the initial cost. The initial cost is what you will spend even before opening your coworking space. Here is the total expenditure that you may have to incur when starting a coworking space business.
Rent: $750-$1000 (Rent x 3; this is the initial rent cost)
Furniture: Chair ($50); Desk ($450). So for 50 chairs and 10 desks, the total cost will be around $8000
Staff: Three posts of an operations manager, a Community Manager, and an Administrative manager ($4000-5000)
Utilities and Services: This includes the painting, remodeling of the workspace, electricity set up, and the HVAC system. The total cost will be around ($15000).
So we are looking at the total initial cost of opening a coworking space of $30000.
The Final Words:
The coworking business has upended the commercial real estate scenario. In the countries where this trend is an emerging concept, opening a coworking space will be fruitful. In others, you need to do something different as there are already a plethora of coworking spaces already running. Ergo, you have to create a USP for your brand and then move ahead towards expansion with a set plan in your mind. And this concludes how to start a coworking business in your city. Stay tuned for more! Happy Coworking!