- Though opening a second location is a logical step when growing a coworking business, opening a new location brings about a set of challenges that need to be carefully examined.
- Before you say yes to a second coworking space location, make sure you know your numbers and your competition, and analyze your market.
- To successfully open a second location, coworking space operators will need to streamline their sales, on-boarding, and communication processes.
This article was written by Mihaela Ivanova, Content Marketing Manager at OfficeRnD
If you’re already operating a coworking space and have the appetite for expanding your business, a second location would be a logical step. But before you say yes to growth, it’s worth it evaluating if you’re actually ready to scale.
On the surface, it might look like your coworking space is doing great, and that you’ll just need to ‘duplicate’ it. However, a second location requires more as it brings challenges that you haven’t faced with your first location just because of the essence a multi-location in comparison to a single-location business.
It might sound a bit unmotivating but success doesn’t come just with the goodwill to scale. You also need to have the capacity to do so – think physical, operational, financial, etc.
To make an educated decision about whether it’s the right time to expand, you need to go through an evaluation of your current business and the demand. Below you’ll find 6 important things you need to know before you say YES to your second coworking space.
Know your numbers
Measuring important key performance indicators (KPIs) will objectively show how your business is performing and will also allow you to capture any business-related trends.
Here are the most essential indicators you should measure:
- New prospects: you don’t need to observe a dramatic increase, but look for at least a steady growth in the number of prospects.
- Conversion rate (leads to members): if you have many leads but only a few of them convert into actual customers, you might want to reevaluate marketing or sales efforts.
- Monthly recurring revenue: this metric will allow you to see if there are any monthly trends you should consider.
- Profitability: you need to know how much you’re getting out of your business, and when you expect to break even (regardless of if you’re bootstrapping or working with an investor).
- Occupancy rate: it’s one of the most significant indicators; being consistently at 90% or above is a good sign.
- Income per SQ Meter/Foot: if you’re making not enough money per sq foot, you might need to reevaluate the ratio between offices, meeting rooms and open area.
- Meeting rooms utilization: meeting rooms are significant revenue stream so try to measure if you’re making the most out of them.
Analyze your processes
With a second location, the workload gets bigger and more diverse, and the design and implementation of processes might save you a lot of time and effort in the long term.
Of course, you shouldn’t create a process for every single thing, but for the areas that really need to have one. Such areas include sales, on-boarding, and communication.
Having clear procedures on how you approach inquires will save you a lot of time and effort and will also allow you to train staff.
How you welcome your new members, what documentation you share with them and having clear and consistent communication with your community will also become essential once you open a second location.
Know who you are and who you’re for
Answering questions like who you are as a brand and what kind of audience you want to attract will help you nail the direction you want to take with your second space.
Not that you shouldn’t have an answer to those questions with your first location. But once you start expanding, it becomes even more necessary to have a clear definition of who you are.
Ask yourself questions like:
- What audience do I want to go after (tech companies, startups, marketing agencies…)?
- What kinds of products do I want to provide (more private offices, more hot desks..)?
- What vibe and environment do I want to have in my coworking spaces (funky, tech, artistic…)?
- Is there something specific in my coworking space that has become emblematic for my brand (e.g. a brick wall, a top roof terrace…)?
Analyze the local market and the demand
When you start thinking about expanding your space, you’ll probably have a general idea of where you’d like it to be.
Investigating that area will help you find out how favorable the market in that region is and establish connections with local communities prior to launching your space. Have in mind that it’s always an option to outsource this analysis to consulting experts for more precise results.
A few things you can do on your own, however, are to visit local coffee shops, or other public places and talk to people so you can find out more about them and the type of work they do.
Reaching out to local professional communities and business-related institutions might give you valuable insights on the scope and size of the workforce in the region and if there are any unsatisfied market needs.
Research your competitors
Having competitors is a good sign – it shows the market is developed and you won’t have to be the first to introduce that kind of product/service to the people in that region.
If their business is doing well, it doesn’t automatically mean that there will be enough demand for an additional workspace in town, so you’ll have to validate that.
To get the most out of your competitors, try to learn more about them – what they offer, what audience they target, what their price ranges are. Most people would be sensitive about giving exact prices but if you can get a general idea of a range, it would be more than enough.
Define the mission of your space
Based on the market, the demand and your competitors, you should define what role your space will play in the local business community.
To be successful, a coworking space should be more than a piece of real estate with modern office design – it has to play a business-based role, whether it is to help tech startups grow or to support local social entrepreneurs. The latter depends a lot on your brand as well.
Best-case scenario, you’ve figured that out with your first location, but in all cases, stressing that enough with your second one is essential.
Once you find out what your role is, you’ll be able to make much more educated decisions about the way you operate and position yourself in the market.
Before you start expanding your coworking business with a second location, it’s worth it to analyze if you’re actually ready to grow. The expansion process comes along with plenty of business, financial and operational challenges, and proper analysis of your current performance and the local market will help you nail if it’s the right time to scale. Answering this question will allow you to avoid a lot of problems further down the road of expansion.
If you found this article useful, check out “The Ultimate Guide to Successfully Expanding Your Coworking Space”, where you can find these and other first-hand tips explained in more details from top industry experts.