How to Make it Big in the Coworking Business?
The coworking industry has more than what meets the eye. How can you plan and succeed in this growing, ever competitive industry? Let’s look at the basics.
In this post: we look at how to form a stable business model for your coworking business, understand your real target market, services you should or could offer to drive business and finally how to manage all these tasks with a help of software.
The coworking industry snapshot
The world is changing the way it creates products and services, especially with globalization and automation. This innovation has trickled down to the way offices are run and how and where people (us and you) work. Gone are the days of massive HQs in every city where thousands throng to work in one massive, tall office building. The working space has been democratized by coworking or shared office space options.
The shared office model is not new, it has been in existence for decades, it’s only now that the term ‘coworking’ has swept the business world by its feet. It is estimated that 3000 coworking businesses crop up each year, around the world. Out of which 63% are brand new spaces (not extensions of existing coworking brands). As of the end of 2018, more than a million people work from these shared office spaces, and the number is projected to grow upwards.
The market is ripe for innovative, yet small to medium sized businesses to thrive and generate revenue sustainably. However, we got to pay attention to the fundamentals of laying the groundwork for your coworking business to grow.
Coworking hack: Don’t know what all is involved in running a coworking business? Play this game.
Understand your business model and target market
The mantra for coworking businesses is to become a platform for communities, give them access to things which helps them achieve day-to-day tasks with ease and let the communities drive your brand and business. This forms a bedrock for sustainable success in the coworking business. Just this is not enough, though.
As a business, you need to understand what kind of people or companies you want to work out of your shared office space. Do you want to open your floor to everybody? Or should you pick and choose a specific type of customer, one who is willing to pay and participate in your community driven business?
The next step is to chalk out your membership model, or models to be precise. Just one monthly or annual membership model may not work. It may not be enticing enough for people or companies who want to experience your coworking space for a few weeks or months before they commit for a longer duration. It might be wise to create a variety of onboarding memberships such as hourly, daily, weekly and monthly plans.
Once you know who to target (multiple sources), and what to offer, now comes the diversification of business sources. Here are the basic varieties of models to choose from:
Only coworking: here the idea is to convert your entire floor space dedicated to desks, cubicles, and offices only. And drive business from direct walkins.
Some coworking and a few partnerships: you can dedicate 80% of floor space for direct walkins and the remaining 20% for partnership driven activities. Many tech companies are open to sponsor your space to conduct their flagship activities. If your coworking space is in a city with tremendous amount of startup vibe, this combination might give you some food for thought.
Events and other services: you can let majority of the revenue to be driven from walkins and partnerships, and dedicate a small percentage to events and other services. Events allow you to rent out space for community activities and thereby grow your network. Besides, you can create a cafe bar and open it to members only for coffee and snacks and generate revenue this way as well.
An open cafe or bar for all: you could go one step further and turn half your space into a cafe bar and let the market identify you as a place for hangout for business and startup folk, and nonchalantly convert some floor space for coworking desks, office, and cubicles. This way, you differentiate your brand identity in the market.
What services should you offer
Defining your business model was the first task to accomplish, once that is ticked off your checklist, we move onto the services you want to offer in your office space. The idea is to offer the services which would enhance productivity for your users, and a few services to help them relax, which will eventually lower attrition rates and increase new signups sustainably.
What do your local audience, who seek to work out of shared office spaces want? Conduct some market research to understand your ideal customer in a better way. Especially to understand how much they are willing to pay for the service you offer. Gathering such precise data is a difficult task, the idea of your research should take you deeper into your audience’s psyche. Based on this, you begin charting various membership programs to suit majority of your audience.
The idea of forming membership plans is to strike a balance between fixed users and flexible users. If you generate a lot of fixed users who pay the same each month, then it will be nigh on impossible to grow revenue significantly in your first year. On the other hand, if you let more flexible users (daily, weekly) then you would fail to generate a constant flow income. A healthy mixture of both fixed and flexible should help you draw variety of users.
Here are some common Coworking plans:
By the hour
A part of your office space can and should be dedicated to offer complementary services to your community. You can include some meeting rooms for members to interact with their visitors and clients, a reception service, a physical PO box service, printer and scanner access etc. You can begin by offering these services for a fixed set of new signups each month and charge for the rest of the community.
Conducting events regularly will help you achieve two things; a) events work as a great marketing strategy where it drives footfall into your coworking space often and b) more people interacting at your shared office space means a terrific opportunity for networking. With the right collaterals and digital marketing strategies, you can convert some of your event participants into your customers. There are tech companies who would love to pay for a hip location to host All-hands-meet ups and quarterly or annual company events and pay handsome rent for such a space.
Hire professionals, or look into your existing community of customers and handpick some to conduct free workshops for your target audience. If you operate your coworking space during weekdays, then conducting workshops during weekends would drive walkins, and convert some of the captive audience as customers using cross-selling opportunities.
A cafe bar
You can dedicate a reasonable amount of floor space for a cafe bar. Open it to the general public as well as your community members, and you can generate revenue. Or if you wish to make is accessible exclusively to community members only, then highlight this service to drive more conversions during your sales and marketing activities.
Opening the cafe bar exclusively to members may not make you a lot of revenue, but community members will highly value the exclusivity and further your brand identity.
Open your door to incubators
If your city is a startup hub, then reach out to resident incubators to become a part of your community. Offer them a 20 to 30% commission for each desk or space occupied. As incubators handpick their projects and work hard to deliver success, they are sure to stick around using your coworking space longer than anyone.
What else can you offer?
With freelance individuals, brand new startups, and large corporations in your community, they all perform a specific set of tasks each month or year, such as filing taxes, creating investor pitches and presentations or they might need a quick courier service to send important documents. The opportunities are quite a few. You can either hire people to render these services to your members or tie up with a local partner and share revenue with them.
What KPIs should you pay attention to?
Once your coworking space is up and running, you need to control and measure your business performance. Below are some metrics and indicators to help you:
Coworking business is a dynamic one and is ripe to earn a lot of revenue if you play the cards right. Here are some performance indicators you should closely monitor to assess your business health.
Total floor size of your business in terms of sq meter
What is your occupation rate?
How much income do you generate per square meter?
How many coworkers do you house per workstation?
Conduct surveys to understand member satisfaction
What is your monthly churn rate?
Monitor every Dollar or Euro spent for business
How do you manage all this?
Obviously, you can’t possibly manage all this manually. This is where you need the right set of software applications to help you integrate your a) complete business model, b) marketing activity, and c) measure your performance, even down to a day-to-day level. We (Rentcubo) are a software development team based out of India’s Silicon Valley, Bengaluru.
We have a vibrant startup culture here and we have been a part of this vibe and continue to do so by creating a lot of value to local and international startups with web and mobile app development service. Our RentWork script is one such successful product we have delivered to many coworking and shared office space businesses.
Our script is robust and flexible, offers free upgrades for life, and we have a highly experienced tech team in-house to help you with product installation and customization. Visit our RentWork page now to know more and signup.
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