With more than 1.08 million people from various industries and sectors working in coworking spaces in the U.S. alone, these spaces have become places of creation, innovation, and exciting opportunities. They offer benefits such as a vibrant community of working people, a cost-effective solution for small businesses and entrepreneurs, and office amenities without the traditional commitments and expenses associated with them.
Other persuasive statistics include:
- The U.S. has 18.3% of the world’s coworking spaces.
- The coworking market in the U.S. is expected to record a CAGR of more than 11% between 2022 and 2027.
- Nearly three-quarters of coworking spaces globally become profitable within two years of their launch.
- Statista estimates that by the end of 2024, there will be 41,975 coworking spaces worldwide.
- According to the global 2023 State of Remote Work survey, 22% of companies pay for coworking memberships and 38% of respondents wish their companies would pay for or offer the option.
- Globally, the market for coworking spaces is expected to increase by $13.35 billion, or 11% annually, from 2021 to 2025.
For entrepreneurs in the U.S., it’s clear that when well managed, a coworking space can be a successful venture.
If you’re interested in setting up and running this type of business, this guide explains how to do so in the most profitable and sustainable way.
4 STEPS TO SUCCESSFULLY MANAGING A COWORKING SPACE
Use these tips to map out the way forward and set up your business:
Step 1. Start with a coworking space business model
The first step is to create a solid business model. The three most important aspects are your unique selling proposition (USP), revenue streams, and costs.
Develop a USP
The number of coworking spaces is growing, so you need to set yours apart from the rest. Focus on the following points to start developing your coworking space’s USP:
Pinpoint your target audience: Think of the specific sectors you would like your space to attract, such as startups, freelancers, digital nomads, or small business owners. You can also define your target audience in terms of age, profession, and other factors. You might want your space to attract older consultants, freelance writers and journalists of all ages, or designers or programmers.
Define your business model: Will you have hot desks that people can use on a first-come-first-serve basis, or will you adopt a hoteling approach, where people reserve desks in advance? You’re not limited to only one of these approaches, so you might prefer having both hot desking and hoteling to cater to visitors from out of town and your regular members.
Provide cost-effective solutions: Offer solutions to suit your target market’s budgets. Companies that use your coworking space have bigger budgets and potentially more requirements than solo freelancers or people traveling for business.
Include various solutions, such as packages that include hot desking, free Wi-Fi, bottomless coffee, and use of the kitchen and communal area aimed at those with smaller budgets. For startups or small businesses, you can create a package that includes workspaces, the use of an office, bi-weekly access to a meeting room, access to the kitchen and communal area, various amenities, and bottomless coffee.
Create a functional workspace: Plan and create workspaces and easy-to-book conference and meeting rooms fully equipped with furniture, equipment, a kitchen, and other amenities that will appeal to your target audience, as well as a reliable internet connection and shared services.
If your target audience is largely solo or small groups of freelancers, they might appreciate a mix of community areas and quiet spaces, networking opportunities, and 24/7 access to your coworking space. If it’s remote workers, ensure you provide a stable internet connection, a coworking lounge, and bottomless coffee. Or, if you’re focusing on small businesses, offer future-proof technology, streamlined operational costs, and hands-off property management.
Build a community: Encourage professionals with similar backgrounds to interact, share knowledge, and collaborate. There are various ways of doing this, such as hosting regular social gatherings, networking mixers, or social gatherings, and facilitating mentorship programs.
Evaluate your revenue streams
Coworking spaces’ main source of revenue are the memberships they sell to individuals and businesses. In addition to longer memberships, some spaces also sell day passes, feature additional services, and/or enter potentially lucrative partnerships.
Think about revenue streams such as:
Membership fees: Offer a variety of membership options, such as daily, monthly, and yearly.
You can also create membership packages, such as:
- Basic memberships for $30 per month that include one drop-in day per month and full access to all amenities.
- Full-time memberships for $300 per month that include the member’s desk where they can lock up and leave their belongings, as well as full access to all amenities.
- A weekender package for $150 per month, which includes unlimited weekends-only access to hot desks, full access to all amenities, discounts on event tickets, and discounts on weekday meeting rooms or hot desk rentals.
Additional services: Think of additional services you can offer and how much you will charge for them, such as conference and meeting rooms. These add-ons can set your coworking space apart from the competition. You can also take it a step further by offering services such as airport pickups and drop-offs, personal assistants, an office handyman and cleaning services, offset printing, alcoholic beverages, and food and beverages.
Potential partnership opportunities: Try to find potential partnership opportunities with technical equipment providers, caterers, coffee and snack brands, and even small gyms. If you find a gym to partner with nearby, they can either set up a small gym room at your coworking space, or your members could work out at their premises for an hour a day or receive a discounted gym membership.
Be realistic about costs
While these ventures can have relatively low startup costs, it’s important to be realistic about the cost of starting a coworking space. Get quotes for costs such as construction, equipment, office furniture, IT infrastructure and software, licenses and permits, utilities, staff salaries, marketing and advertising, connectivity setup, insurance, and legal fees.
This list gives you an idea of the potential costs of setting up this type of business in the U.S.:
Rent
$2,163–$7,000 per month, which can include:
- Base rent
- Initial bond
- Utilities
- Strata or maintenance fees
Structural renovations
$465-$518 per square foot for work such as:
- Foundation repairs
- Space extensions
- Wall restructuring
These costs could be even higher if you enlist the help of a structural engineer, which can cost up to $15,000 in addition to hourly fees of up to $250 and a construction fee between 5% and 10%.
Office furniture and design
$1,000–$1,500 per square meter for a fit-out package, including:
- New floors and desks
- Updated couches and desk chairs
- Modern lighting and lamps
Infrastructure and technology
$2–$4 per square foot for a networking system plus equipment costs for:
- Desktop computers and monitors
- Video conferencing equipment
- Scanners and printers
Insurance
$340.75 per month for basic coverage encompassing:
- Property insurance
- General liability and asset insurance
- Fire and physical safety
- Data security and privacy
Legal and Administrative Setup
$200–$1,000 per hour for lawyer fees for assistance with:
- Business registration
- Zoning permits
- Tax policy compliance
- Drawing up membership/lease agreements
Marketing and branding
$22,260 (or 5% of your revenue) to cover expenses such as:
- Email marketing
- Newsletters
- Social media advertising
- Search engine optimization (SEO)
Amenities, office supplies, and maintenance
Costs vary, depending on your preferred choices for options such as:
- Cleaning services
- Water coolers
- Vending machines
- Parking spaces
- Complimentary coffee and snacks
Step 2. Get your coworking space’s location and design right
Put thought into your coworking space’s location and design, as these elements can help prospective members’ decision to join your community. Location and design also have an impact on the overall experience of those who use your space.
If your target audience is mostly freelancers, they might prefer working in a quiet, cozy, suburban space, while fast-growing technology start-ups who plan to eventually find a long-term office might prefer a coworking space in an easily accessible, crowded urban area that offers ample networking and other business opportunities.
The location you choose should be accessible and close to amenities such as restaurants, shops, and gyms. It should also be secure and in an area with a thriving community of businesses, startups, and entrepreneurs. You can research areas by checking out where other coworking spaces are located and paying attention to who uses them and which amenities are nearby. Spend some time driving or walking around those neighborhoods and do further research on Google Maps.
Your coworking space should have an open, flexible layout with breakout spaces, communal areas, and meeting rooms, as well as a mix of workstations for hot desking, dedicated desks, private offices, and lounge/social areas. Include amenities such as a communal kitchen, printing and scanning facilities, private phone booths, and meeting rooms with good-quality audiovisual equipment. Make sure your space has natural light, green spaces, and a cohesive brand identity expressed through branding elements and interior design.
Step 3. Consider legalities and compliance
Understanding the legal requirements to ensure compliance is a big part of knowing how to manage a coworking space successfully. These include:
- Internal rules and policies on liability, late payments, noise, and a code of conduct for employees and members.
- A legal structure for your business, such as a sole proprietorship or limited liability company.
- Any local licenses or permits needed to operate a coworking space.
- Accurate registering of your business activity.
- Business insurance.
- Comprehensive membership contracts.
Step 4. Implement key strategies for effective management
Now that you’ve laid the groundwork, it’s time to get to grips with how to manage a coworking space successfully on a daily basis.
Be guided by your vision and mission: Let your coworking space’s mission and vision guide your decisions and shape the space’s culture and atmosphere to better serve your target market.
For example, Regus’ mission is to help millions of people have a great day at work– every day. The flexible workspace provider believes in giving businesses choice, flexibility, and access to a thriving community. Hub Coworking Hawaii’s mission statement is to create different spaces where different people can feel safe, be productive, and are welcomed and inspired to do well and do good for Hawaii.
Hire the right people: Assemble a team of people with superb communication skills who are community and customer-oriented. Ensure they’re trained in their respective tasks, understand your space’s vision and mission, and are attentive, helpful, and responsive.
Before beginning the hiring process, consider your coworking space, your needs, and the needs of your members to help you identify key roles to fill. Examples of key roles include a community coordinator, an IT supervisor, a brand promoter or marketing manager, an operations assistant, and a membership development assistant.
Once you’ve identified the key roles, develop comprehensive job profiles that outline roles and include clear, measurable expectations. When you’ve completed the job profiles, advertise on various platforms such as Indeed or LinkedIn, on your website’s Career or Work With Us section, your social media channels, coworking forums, and community channels.
Use the following tips to onboard your new hires:
- Plan a surprise for their first day, such as taking them out to lunch.
- Personalize how they’re welcomed, such as by taking them around the space and introducing them to their teammates.
- Increase their interactions with their immediate manager.
- Organize a team-building exercise with icebreakers.
- Give your new hires copies and explanations of their job descriptions.
- Be approachable and check in with them regularly during the onboarding process.
Leverage technology: Use technology to simplify management and administration and provide members with everything they would expect from a reputable coworking space. Automate administrative tasks such as room bookings, billing, and membership registration with coworking management software.
SuperSaaS is one of these technologies. You can use this solution to schedule amenities such as equipment and meeting rooms, set booking rules and cancellation policies, create and use waiting lists, define events, customize email or SMS confirmations and reminders, integrate payment options, and limit reservations to members. You can also adjust the look and feel to match your branding, and you can integrate a SuperSaaS button or schedule on your website.
Provide members with versatile and modern hot desking solutions along with robust online platforms for meetings, communication, and resource sharing. Equip shared spaces with advanced tools that facilitate seamless conferencing and collaboration.
For instance, consider integrating technology like the Neat Frame and Neat Bar, which offer high-quality videoconferencing and interactive display features designed to enhance both virtual and in-person meetings.
These tools can streamline event scheduling, ensure effective communication, and provide an overall superior experience for your members.
Evaluate and adapt regularly: Communicate with members via a CRM platform and collect data on financial performance and occupancy rates to gather feedback regularly. You can also track CRM interactions and communications to pinpoint where you can improve your offering.
Additionally, surveys and questionnaires are excellent for getting to know your audience, gathering feedback and members’ opinions, and building relationships. They are easy to implement, and you can create targeted questions to get the answers you need. Use members’ suggestions and the data you collect to identify areas for improvement and make changes or adaptations that meet your target market’s evolving needs.
Create a coworking space that drives continued success
Knowing how to manage a coworking space successfully requires preparation, continued learning, and adaptation. Getting organized doesn’t happen overnight, but with the right tools, platforms, and systems, you can get your space up and running and ensure that it offers members everything they need for a seamless working experience.
Use the information in this guide to create a unique coworking space where individuals and businesses can thrive.
