Although coworking spaces have been around for many years, they’ve never been so popular. This industry grew rapidly during the last few years, and now coworking spaces accommodate not only small startups and freelancers but also larger companies and remote teams, as well. A coworking business model allows you to create several revenue streams, monetising your community, and building a vital, highly profitable business.
Startups and freelancers have always appreciated networking opportunities. In coworking spaces, freelancers can find a community of like-minded individuals. Big companies see another advantage: coworking spaces offer a flexible workplace for remote teams. As the demand for coworking spaces grows, it becomes especially important to find your niche and to address the needs of all the categories of customers, offering more than just WiFi and chairs. This is a reason why new coworking business models appear.
Types of Coworking Business Models
1. A repurposed underutilised space
This is one of the latest trends in coworking. There are many places that sit empty, and entrepreneurs turn them into coworking spaces. Such coworking spaces may only work during business hours. If you want to save costs, you should certainly consider this option, however, even successful companies like WeWork stick with this model, transforming various buildings into collaborative workspaces.
2. Coworking and consultancy
This is a good model for small-scale coworking spaces which has proven to be quite profitable. The first advantage of this model is that you have two businesses, and if one doesn’t perform well, you always have a plan B. Another great advantage is that the coworking space provides projects and talent for consultancy, while the consultancy provides work for the members, which is a win-win situation. If you don’t want to create your own consultancy, you can also partner with the existing one. For example, search for companies that want to upgrade their space.
3. Coworking and offices
This is a very common option because private offices drive a lot of profit. In addition, if you have a collaborative workspace and offices, small companies can find everything they need in one place. However, if you’re thinking about this option, make sure that you have enough space (12,000 to 20,000 square feet). Such coworking spaces as Wotso, Regus, Colabs, and Colony offer private offices, and the latter also has luxury suites, gym, and spa.
4. Coworking and events
Hosting various events offers a number of benefits. First, it’s an additional revenue stream. Secondly, events are a source of potential members. There are many coworking spaces that host events, however, you can also move further and organise your own events. Find sponsors that will cover the costs, collaborate with external content providers, and create your own programs. For instance, Impact Hub organises events aimed to help professionals from the same field find each other and collaborate.
Key Aspects of a Coworking Business Model
The success of your coworking business to a large extent depends on your ability to meet the demands of your members. You need to provide all the necessary workplace amenities and to offer comfortable locations. In addition, we recommend that you look for any opportunities to scale your business, making sure that all the space you have is fully utilised.
Modern coworking spaces should also be corporate-friendly. As companies like Microsoft, Google, and Starbucks put their employees in coworking spaces, big corporations become interested in flexible workspace. Thus, you need to think about their needs. We suggest that you have lounges, meeting rooms, offices, and open areas. To stand out from the competitors, you can focus on a particular niche or offer unique pricing plans aimed for different types of members.
- Revenue streams
The main thing is to understand the difference between the revenue that comes from rent and that coming from services that you offer. Even if you don’t have enough members to fill 100% of your space, you can still maximize your revenue by offering various membership options. Offer hot desks — they will be filled consistently, driving more new people to you. You can also offer specific memberships for conference rooms, as well as all-in-one options.
- Main cost drivers
Even though coworking business models are not associated with significant initial investments, there are still some cost drivers you should be aware of. You’ll need to pay upfront for construction work, equipment installation, engineering works, setting up the computer system, etc. You should also keep in mind administrative expenses.
Make sure to have the latest software and hardware so that your business can run efficiently. Technology is crucial for coworking spaces, as many companies start to use space management software, access cards, attendance and booking systems.
Coworking spaces always differ from regular offices, having a stylish and efficient design. Make sure that your coworking space is user-friendly and facilitates social interaction.
- Marketing channels
First, you need a good website. Even though coworking spaces are generally associated with affordability, your website shouldn’t look cheap, so hire professionals. You should be also present on social media, and don’t forget about email marketing. In addition, your customers are a source of word-of-mouth marketing.
- Possible partnerships
You may find local partners that will provide food and drinks while getting additional promotion from you. Another good idea is to partner with gyms.
Think of coworking spaces as of environmentally-friendly business. Sustainability is a strong trend, so we suggest that you don’t ignore it. Take it into account when choosing building materials, partner with bike-sharing services, and have some indoor plants. Not only will your customers appreciate your efforts, but your sustainable workplace will also be cheaper to maintain.
Coworking spaces are more popular than ever. Now they are popular not only among small startups and freelancers but also among big companies that embrace the idea of a flexible workspace. There are many coworking business models to choose from. You may start by repurposing underutilised buildings and expand your business with time, offering private offices and various extras. Keep in mind the needs of your customers, don’t be afraid to experiment with various revenue streams, and invest in technology. Make building a community your main goal, and your coworking space will turn into a very profitable business.
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About the Author
Berta Melder is an experienced brand manager and content marketing strategist for Masterra. She cooperates with different education courses covering a broad range of digital topics as a guest lecturer. Berta also manages the company’s internal training activities on branding. Follow her on Twitter.