Lately I’ve been really interested in helping entrepreneurs and digital nomads start their own small business.
I’ve been getting messages from my readers wondering how to start a co-working space. In this post we’ll go over the basics of starting your own co-working space business and everything that it entails.
There are three main factors involved in building and running this space. These are:
- Finding the right space
- Budgeting for ongoing monthly costs
- Attracting visitors to your space
Getting these three things right will make it easier for you to start, build, and grow your business.
Don’t think it’s easy – there are a lot of other things involved to get up and running. Thankfully, most of them are tedious and require a bit of effort rather than creativity.
Let’s jump right into it and take a look at everything you need to know to get started!
A Quick Guide to Starting Your Own Coworking Space
Step 1: Create Your Co-Working Space Business Plan
The first step in starting a co-working space is to work on creating your business plan.
When I say “create a business plan” I don’t mean spending weeks analyzing every aspect of starting a small business. These days you’re better off failing fast so the focus is on getting started instead of worrying about the details.
Take a few hours to write down all of your co-working space ideas. Head online for inspiration and see what other people are doing.
Take notes on the things you like, areas that could be improved, design ideas, website themes, membership options – do you get the point?
You need to dive right into the coworking space market and get a feel for what’s going on before you can start running your own.
Step 2: Budget + Costs
With a quick business plan in place the next step is to come up with a budget and estimate your costs.
How much does it cost to start a co-working space? It depends on a lot of factors to determine an accurate budget.
In general, an individual can expect to spend between $10,000 and $100,000 to open a shared working space. On top of that there will be ongoing monthly operating costs between $1,000 and $10,000.
It’s possible to start this type of business on a budget. Many of you will have to secure financing if this is a small business dream you’re hoping to pursue.
Keep reading this guide as there’s an in-depth analysis on all of the costs further down in this post.
Step 3: Find the Right Space
Finding the right space is one of the hardest, yet most important, steps in this process.
Choosing a location with affordable rent and accessibility for your target demographic is where a lot of people go wrong.
It’s important to find somewhere close to public transportation. You want your members to have access to everything they need.
City centers tend to be expensive when it comes to renting office space. Consider locations outside of the downtown core but still within walking distance.
For a co-working space you can even consider low-income areas. These areas usually have great public transportation accessibility and better value for rent prices.
As for choosing the right space – look for something big enough for 15-25 people. You’ll have to make room for desks, private offices, lounge areas, and any other features or amenities you plan to include.
Step 4: Fill Your Space With What People Need
Take a look at the other co-working spaces in your city and popular ones in your country.
What are some of the common attributes that these spaces share? This is what you need to include in your own space along with anything else you want to provide.
Along with the basic items like tables, chairs, desks, computers, carpets, and office essentials there are a number of other things you’ll need.
Will you be including a cafeteria or pantry area with snacks and drinks? Will there be private conference rooms or meeting rooms?
What about the internet? How are you going to get that set up for such a large group of people?
This is a tricky yet fun step of the co-working space process. You get to be creative with the design and layout. Don’t forget – you still need to make sure that all of the right things are being included.
Step 5: Get Online With Your Website
At the same time that you’re setting up the space you can also be working on getting a website up and running.
Having a website is essential if you want people to use your space. Without one I’m not sure it’s possible to grow your co-working business.
This is a fairly time-intensive step. Setting up the website properly can be tedious and stressful if you’ve never done it before.
I recommend starting out with SiteGround hosting and building your website on the WordPress blogging platform.
Along with your homepage don’t forget to include an about page, contact page, gallery, pricing info, membership info, and some blog posts.
Step 6: Membership + Start Attracting Members
With everything else in place it’s time to build your membership plan and start attracting members.
The pricing for your membership plan will depend on your monthly costs and how much you’ve already invested.
Take a look to see what your competitors are doing. Are they offering enough value for how much they’re charging? Could you offer a better service for the same amount, or more?
Consider including daily, weekly, and monthly membership options. You can start including discounts once you have built a small base of members.
How do you attract people to your co-working space?
It’s simple – use your website and social media.
There are a lot of strategies on getting members for your space. Keep reading for a better look at some of these strategies!
How Much Does it Cost to Open a Coworking Space?
Your personal costs will be unique to the following factors:
- The size of your anticipated membership base
- What you’re hoping to provide for your membership base
- The costs of renting office space in your city
- The availability and location of office space in your budget
Once you’ve found a suitable space and have gone through the rental process the next step is to furnish the space.
You’ll need desks, chairs, wireless routers, and everything else an office space needs to run properly. Miscellaneous supplies like cookware, trash cans, and carpets also needs to be budgeted for.
There are operating costs to consider as well. These would include electricity, hydro, internet, and any local costs.
The more members you want to have the higher your initial and ongoing costs will be.
On a shoestring budget it’s possible to start your own co-working space for around $10,000. Plan to have an additional 100% of your start-up costs budgeted for ongoing costs and incidentals.
How Much Does it Cost to Run a Coworking Space?
The ongoing costs for running a co-working space are predictable and fixed for the most part.
These costs will vary depending on your location and local market. Utilities and taxes will need to be factored into your budget as well.
The typical fixed monthly costs that you can expect include:
- Rent or mortgage payments
- Payroll (if you have hired anyone)
- Internet and electricity
- Keeping the pantry stocked
- Office supplies
- Cleaning and garbage removal services
- Any recurring website and software fees
- Marketing + SEO fees
You can expect to spend between $1,000 and $10,000 to run a co-working space on a monthly basis.
Your memberships need to cover your monthly expenses from day one.
Starting your space without pre-booking memberships is stressful. Don’t rely on a financial runway for this business to success – plan it right from the start and you won’t have to.
The Different Types of Coworking Space
This might be controversial – there’s only one type of co-working space “type” that I subscribe to.
All you need to start this type of business and run it successfully are five things:
- A bright, comfortable space
That’s it! Can you really call that a type?
Sure, some of them might be designed for specific types of people and others might come with a wide range of amenities.
Those five things are all you need for any “type” of co-working space. Once you have it up and running it’s yours to decide what to do with!
The best spaces are the simplest.
People are there to work and socialize.
At the end of the day they’ll remember their accomplishments and connections rather than whether or not there was any coffee!
Why Start Your Own Coworking Space?
Co-working spaces are lucrative, highly profitable, and it’s still an open market for entrepreneurs.
With a small amount of capital it’s relatively easy to get your own space up and running in a short period of time.
These spaces also have a positive impact on your local community. You can give back while making a great living for yourself at the same time.
Some great reasons why you should start your own coworking space include:
It’s a Lucrative Business Model
With reasonable startup costs and fixed monthly costs running a shared working space can be highly profitable.
Your revenue will come from paying members. Many of these numbers will pay for a monthly membership.
The rest of your members will come from daily users and those looking to rent a private office or meeting space.
This is still a great small business to start given the obvious lack of competition in most cities. In cities with established coworking spaces you’ll find that a higher startup budget can still give you a fair chance in becoming established yourself.
Interact With Other Entrepreneurs
You know who uses co-working spaces the most? People looking to grow their own small business in a motivating environment.
With your own space you’ll be surrounded by and interacting with other entrepreneurs on a daily basis.
This is going to expand your own personal network of connections. You never know what kind of opportunities you’ll be presented with.
You Can Take Advantage of Unused Office Space
In mid-sized cities, especially in Canada and the United States, there is a lot of unused office space.
This space is usually offer for rent or lease lower than the market value as a way to entice people to start using it. This is a huge opportunity for those of you looking to start a co-working space!
Take advantage of the lower rent costs! With the extra cash you can spend more money growing your business and attracting new members.
It Beats Sitting at Home!
Even if you’re already paying for an office or using a co-working space you’re probably still spending a lot of time working at home.
With your own space you’ll be able to set a boundary between home and work – especially since the co-working space is where you’ll be able to get all of your work done.
This way, at the end of the day you can head home to relax and leave the office behind.
Factors to Consider Before Getting Started
There are some common problems you’ll face when starting, designing, running, and growing your business.
Random costs are going to start adding up from day one.
It’s important to be dedicated to keeping track of your business finances.
Otherwise, you’ll find yourself funnelling cash on random expenses.
Many commercial office spaces will require you to pay three months of rent in advance. This does not include a significant security deposit.
These office spaces typically require you to have insurance. You’ll likely have to pay for some maintenance and ongoing costs as well.
Building and Renovation Costs
Unless you’re moving into a perfect space you will have building and renovation costs. Depending on your skill level there’s a lot you could do yourself.
Always look up reviews when hiring contractors. Speak with your rental manager to check the renovation that you’re allowed to do.
Accessibility and Parking
This can make or break your co-working space.
Consider the public transportation accessibility and parking options when looking for spaces. If it’s hard to get to using public transportation and there’s no parking – why are people going to come?
You’ll pay a premium for a better location. This investment is worth it in the long run when it comes to growing this small business.
How Are You Going to Attract Members?
Do you have a plan in place to promote your co-working space and build up your membership base?
This is where having a great website comes into play.
Blogging and social media are one of the most effective ways to promote your space and get new members.
Taking advantage of local SEO and ranking your website in Google can have an impact on the success of your business! Don’t miss out on all of the free search engine visitors to your website.
Wondering about other small business ideas that you could try out?
Take a look at the following posts here on my blog!