Before we break down the various aspects that comprise your coworking space business plan, it’s crucial to understand the advantages of such an environment.
If you’re a freelancer, consultant, remote employee, or a professional without an office, you will benefit from a space consisting of like-minded individuals who will motivate you with their interaction. Also, working alone from home comes with an array of disadvantages because it’s directly linked to the many pitfalls of workplace isolation.
Furthermore, coworking spaces are a primary catalyst for human approach designs, which foster collaboration, innovation, and productivity. There are seemingly an infinite number of reasons to start your own coworking community, but ‘wanting’ and ‘doing’ are entirely different things. Bringing your vision to life necessitates producing a well-structured and insightful business plan.
Coworking Space Business Plan Check List
1. Finding the Right Fit – Literally
We are not talking about the importance of finding the right culture fit for your community in this section – instead, we’re discussing how crucial it is to purchase an optimally sized space that comfortably fits all the members of your community and helps you flourish as an owner.
A workplace between 1,000-3,000 square feet is likely too small and makes covering the cost of rent/mortgage, operations, and personnel completely unfeasible. Conversely, anything over 5,000 square feet, with a reasonably high occupancy rate, usually generates larger profit margins.
Small coworking spaces of 70-80 seats and more sizeable locations with a few hundred seats are ideal for earning back more than your operational costs.
2. Create A Vision That Scales
You need a definitive purpose for your coworking space. Otherwise, you will have a bunch of random people (if you’re lucky) showing up to work without any rhyme or reason. The best coworking spaces have a defined set of values that draws in each community member.
Whether you aim to cross-finance your own Startup, build your own community, or start a national chain of coworking spaces, knowing ‘why’ acts as a guideline to your business strategy. As your coworking business grows, strategy amendments are a must, but a defined vision ensures those changes are done with a purpose, rather than pulling you in too many directions.
In this particular vein, we suggest reading the story of WeWork’s pitch deck. The read serves as a valuable anecdote for those looking to start their own coworking business. Despite experiencing exponential growth, WeWork never lost sight of their original vision.
3. Location, Location, Location
You may become enticed by the low cost of rent for a given piece of real estate, but before signing the dotted line, ask yourself – why is it such a steal? Where is the space located? If it’s in an area that guarantees an inconvenient commute for your potential community members, then look elsewhere – despite its attractive asking price.
Filling up desks in your coworking space is much more likely in a central location. The rest of your plan could be sound and logical enough to make Mark Cuban blush, but a poor choice of location will hamstring your coworking business before it starts. You will need an 80%-plus occupancy rate to succeed, and that won’t happen if your building is in a remote area.
4. Research Industry Insights
Gain a thorough understanding of how much the coworking industry is growing in your region, city, country, state, or province.
For instance, did you know that coworking spaces accounted for almost 10% of real estate leased in Manhattan in the first half of 2018? Sure, that’s only valuable for coworking professionals in Manhattan, but try to extract similar statistics from the coworking landscape in your region.
Correspond with other nearby coworking space managers and see what kind of stats and insights they’ll provide. Or, ask questions on Google and LinkedIn coworking group forums. Lastly, there are surveys with valuable data about coworking growth that are sure to provide invaluable nuggets of information.
5. Knowing Your Intended Community
What kind of occupants/community members are you targeting, and what is their ideal coworking environment? For example, many coworking facilities offer premium, affordable spaces for freelancers; others, cater to big businesses – while many communities focus on smaller teams.
You must decide whether you can work harmoniously alongside your city’s business infrastructure through leveraged partnerships, or if you can operate an independent space open to all professionals. The more specific you are about your ideal community member, the easier it is to plan pricing, marketing, amenities, and location.
6. Your Coworking Financial Plan
A financial plan is one of the most integral aspects of establishing your coworking space. Here’s what you need to consider:
- Capital needed to get to get started
- Areas your money will be spent
- Obtaining the remaining capital needed to get started
- The date you expect to become profitable
- Expected total monthly revenue
- Potential setbacks
- Exit strategy
Of course, deciphering these numbers isn’t an exact science – but base your plan on realistic estimations based on data and research. Provided you’re trying to entice investors, you will need a robust financial plan.
7. Finding Balance in Your Price Model
Charging too much per desk will lead to a barren community that lasts about as long as it takes Usain Bolt to run 100 meters. Also, charging too little makes it extremely challenging to turn a profit, no matter how many members fill up your coworking space—and too low of a price also makes potential members think your offer is too good to be true.
Charge what your services are worth, within reason. If you’re providing premiere services, community members won’t mind paying a premium, if they reap the benefits – such as earning more money and being more productive.
8. Build Your Dream Team
Sure, running a business means DIY as much as humanly possible and this approach mitigates operational costs. Most people aren’t expert in everything, so you may need a reliable, efficient team to turn your coworking space into a profit-turning machine.
Generally, coworking spaces require coworking software experts, an operations manager, and a marketing person. If you are an expert in either of these fields, do them on your own, but either assemble an in-house team or hire freelancers to fill-ins the rest of the gaps.
Lastly, contemplate potential real estate partners, investors, and other staff members that will help increase your coworking space’s value and overall growth.
9. Develop A Coworking Marketing Strategy
Your coworking space isn’t just an environment for highly driven professionals to execute, innovate, and thrive—it’s also a product.
And like any product, a nuanced coworking marketing strategy is crucial when selling your business to your target market. Depending on your budget, you can run advertisements in the local news or niche magazines that are relevant to your audience. In addition, since it’s 2019, a professionally designed website and savvy social media presence are both marketing and advertising necessities.
Brand advocacy from existing community members is extremely effective as well since consumers tend to trust the words of ‘real’ people over traditional advertising. So, offer incentives to members who refer peers to your coworking space. Since 49% of consumers depend on influencer recommendations, utilizing industry-specific influencers is another marketing method worth considering.
Consider hosting a booth at industry fairs, where you can provide a litany of marketing materials to passers-by. Remember, no matter what you do, it should highlight your main message, so there’s always a streamlined focus to every single one of your marketing tactics.
10. Become Niche Focused
Without a niche, your coworking business is overly generic, making it entirely more challenging to figure out a quality business plan. Finding your niche requires a myriad of research to decide what will differentiate your coworking community from other businesses in the industry.
If your competitors cater too much on one type of worker, you should focus your services on the individuals they neglect. Assess what everyone else is doing and discover that profitable segment of the market other communities have yet to address with their services.
Need some inspiration? Google was initially just a search engine using links to rank the relevance of individual pages on the web. In 2019, while the search engine is still the king of its niche, it’s grown into a worldwide superpower offering a smorgasbord of other services including mail, calendars, maps, and phones. Google only grew into the massive entity it is today because it tapped into a lucrative niche.
Conclusion: Do You Want to Run a Coworking Space? It’s Time to Start Planning
Your coworking space isn’t going to build itself. It is time to start planning – equipping yourself with solutions that will transform your real estate into a living, breathing coworking space, such as Become A Host program.