Essential Guide Steps on How to Start a Coworking Space Business

Even though many people nowadays work remotely and have more freedom to choose their own schedules, many nevertheless miss the workplace and its emphasis on teamwork.  Enter coworking spaces – a solution that combines the freedom of working independently with the benefits of a community setting. 

These shared workspaces have seen unprecedented growth in recent years, with the market size expected to reach $34.99 billion by 2027, growing at a rate of 16.4% according to The Business Research Company. The rise of coworking spaces is not just a trend; it’s a reflection of the evolving needs of modern professionals.

If your community lacks a coworking space, you could be sitting on an untapped market. Starting a coworking space not only fills this void but also offers a valuable return on investment, providing a hub for innovation, collaboration, and productivity.

What are Coworking Spaces and Their Role in the Community

Coworking spaces are shared work environments where individuals or small teams can rent desks or offices on a flexible basis. These spaces offer amenities such as high-speed internet, meeting rooms, and kitchen facilities and often host networking events. 

The key attraction of coworking spaces is the sense of community they foster, offering a solution to the isolation often experienced by remote workers or freelancers.

Steps to Start Your Coworking Space

If you’re considering bringing this valuable resource to your area, let’s dive into a step-by-step guide on how to start your own coworking space.

Define Your Coworking Space Concept

Defining the concept of your coworking space is the first and one of the most critical steps in starting a coworking business. This is about what your space will look like.

• Open Coworking Spaces: These are open-plan, shared workspaces used by a diverse range of professionals, from freelancers to small businesses.
• High-End Coworking Spaces: Offering premium amenities in luxurious environments, these spaces cater to those seeking top-tier facilities.
• Corporate Coworking Spaces: Designed for corporate professionals and businesses, these spaces provide a more formal work environment.
• Private Coworking Spaces: Ideal for individuals or teams who prefer a bit of privacy while working, these spaces offer private offices or dedicated desks.
• Coworking Spaces for Digital Nomads: Catering to the needs of remote workers and frequent travelers, these spaces offer flexibility and connectivity, no matter where you are.
• Incubator Coworking Spaces: Perfect for startups, these spaces not only provide a place to work but also offer resources and services that help new businesses grow.

Research Your Local Market

Researching your local market is the next critical step in establishing a successful coworking space. 

Start by identifying potential locations, taking into account areas with high foot traffic, easy accessibility, availability of parking, and proximity to amenities such as cafes, restaurants, and shops. A lively neighborhood can be a significant attraction. 

Next, take the time to analyze your competition, considering their pricing, services, offerings, and the demographics of their members. This analysis can offer insights into what’s already available and where there might be room for your new space.

Understanding your target market is also essential. Whether you’re aiming to attract freelancers, startups, small businesses or corporate remote workers, conducting surveys or interviews can provide valuable insights into their needs and preferences. You’ll need to determine what amenities are important to them and what they like or dislike about existing options.

Calculate Costs

Starting a coworking space involves various costs, including leasing or purchasing property, renovation, furnishing, and ongoing operational expenses. The total cost can vary significantly based on several factors, such as location, size of the space, and the level of amenities provided.

Based on the information gathered from multiple sources, the cost breakdown for starting a coworking space could look something like this:

• Property Lease/Rent: This is usually the most significant expense. For example, a 6,800-square-foot coworking space could cost around $14,170 per month to rent.
• Renovation Costs: The cost of building out the workspace can range from $100 – $150 per square foot, depending on customization and finishes.
• Furnishing: This includes desks, chairs, lounge furniture, lighting, etc. The cost can vary widely depending on the quality and quantity of furniture.
• Operational Expenses: These are recurring costs such as utilities, internet, cleaning services, etc. Based on one source, these costs could be around $9,000 per month.
• Staffing: Depending on the size of your space, you may need to hire staff, such as a community manager. The estimated cost for a part-time community manager is about $1,600 a month.

Altogether, the total estimated starting capital for a coworking space, factoring in six months of operation, could range from approximately $853,620 on the lower end (with minimal renovation) to $1,193,620 on the higher end (with significant renovation). 

Remember, these figures are estimates and actual costs can vary based on location, specific property, and other factors. It’s always crucial to conduct thorough research and financial planning before launching a coworking space.

Write a Business Plan

Writing a business plan is a crucial step in establishing a coworking space. It serves as a roadmap for your venture, outlining the specifics of your business model, membership plans, projected income and expenses, and marketing strategy.

Your business model should detail how you intend to generate revenue. This could be through various membership plans, renting out event spaces, offering additional services like printing or catering, or partnerships with local businesses.

The membership plans are a key component of your business model. You might offer different tiers, such as hot desks (non-reserved seating), dedicated desks (reserved seating), and private offices. Each tier would have different pricing, reflecting the amenities and flexibility it offers. You could also offer discounted rates for long-term contracts or groups to encourage loyalty and stability.

Your projected income and expenses section should provide a detailed financial forecast for your business. Include all startup costs, such as rent, renovation, furnishings, and operational costs, and then project your income based on your proposed membership fees and occupancy rates. Make sure to account for potential fluctuations in occupancy and other variables.

Finally, your marketing strategy should outline how you plan to attract members to your coworking space. This could involve online advertising, social media promotion, partnerships with local businesses, hosting events, or offering introductory discounts.

Market Your Space

Promoting your coworking space effectively is essential for attracting members and building a vibrant community. 

A powerful tool for this task is social media, with platforms like Instagram, LinkedIn, and Facebook serving as perfect stages for showcasing your space and the community it houses. Regular posts featuring engaging content such as photos of your space, member testimonials, and upcoming events can draw attention.

A maintained blog on your website featuring articles related to coworking, entrepreneurship, and productivity can improve your standing in search engine rankings and attract more organic traffic while positioning you as a thought leader in the industry.

Collaboration with local businesses that complement your coworking space, like cafes, restaurants, or fitness centers, can enhance the overall experience of your members through exclusive deals. In return, these businesses gain promotion within your community.

Plan Your Grand Opening

Planning a grand opening for your coworking space is a great way to introduce it to the community. Start by setting a date and planning the event’s details, considering any local restrictions. Decide on a theme that reflects your space’s ethos, and send invites to local businesses, freelancers, and the press. 

Make sure your space is presentable on the day, and offer tours to attendees. Facilitate networking opportunities and consider hiring local caterers or musicians. After the event, follow up with attendees, thank them for their presence, ask for feedback, and invite them to join your coworking space with an introductory offer. The goal is to attract members and build community relationships.

Embracing the Joy and Innovation of Coworking Spaces

In conclusion, the advent of coworking spaces has truly redefined our concept of a workplace. These spaces offer a vibrant and dynamic alternative to the traditional office setup, infusing a sense of community, collaboration, and flexibility that is often lacking in conventional work environments. 

The joy of working in a space that encourages interaction and innovation while also providing the necessary amenities and privacy is a refreshing change for many. It’s not just about having a desk and a chair, but about being part of a diverse community of thinkers, creators, and doers. As we move forward, coworking spaces will continue to challenge the norm, offering more than just a place to work but a unique, enriching experience that fuels productivity, creativity, and professional growth.