As we look next into how we define coworking and shared workspaces, it is important to keep in mind that the self-sustaining business strategy of a space is just as important as building a community or providing a great work environment.
The first article in this series talked about defining the coworking and shared workspace industry. You can read it here.
What is the business behind coworking and shared workspaces?
When discussing coworking or shared workspaces, I often only hear about the community, amenities, and hospitality services. Rarely have I heard people talk about coworking and shared workspaces and finances, business models, and business strategy. The topic of creating a self-sustaining workspace business is typically mentioned in private or in offhand conversations.
At this point in time, there are over 10,000 coworking and shared workspaces around the world. As this number is only likely to keep growing, itโs crucial for the industry to not only deliver on its brand promise, but to also focus on what workspace operators need to do in order to create a business that will be around for the long haul for its members.
With this in mind, we need to ask ourselves: What is our industryโs core focus when it comes to building a sustainable business? How can operators build a financially strong and stable workspace?
As a starting point, Iโll quote Yogi Berra, โif you don’t know where you are going, you’ll end up someplace else.โ
Coworking and Shared Workspaces as a Business
Letโs start off with a simple definition for coworking and shared workspaces:
A self-sustaining business model whose primary source of income is generated through short term agreements of unreserved / reserved workspaces and private offices that share amenities.
Along with the primary source of income, many spaces also focus heavily on secondary income sources such as:
Additional Memberships
Mailing address only (virtual offices)
Social members that only attend events or desire access to the network
Alternative Uses of the Space
Conference room rentals
Event space rentals
Events/workshops
Food and Drink
Catered meals
Daily snacks and drinks
Happy hours
Vending machines
Parking
Retail Business
Coffee shop
Support Services
Front desk receptionist
Printing
Storage lockers
Though there are various other additional sources of revenue, these are the ones workspace operators generally offer.
Even with all of these revenue options available, the challenges of operating a successful space have continued to be present. Whenever a business has longer term fixed costs such as rent or other monthly bills matched with shorter lease and service agreements, there is an inherent business and financial risk.
This means that even though we understand the core business of what coworking and shared workspaces are and should be, there are opportunities for improvement, new ideas to test, and continued development of the business model in order to best serve the industryโs stakeholders.
What do you believe is most important for our industry as a business?
As we look next into how we define coworking and shared workspaces, it is important to keep in mind that the self-sustaining business strategy of a space is just as important as building a community or providing a great work environment.
