This is the fourth installment of our ‘Can Coworking Spaces Be Profitable?’ blog post series, where we discuss topics like how to find industry statistics, determine revenue streams, conduct competitor analysis and more. In this post, we will be diving into the various cost drivers of a coworking space and different stages of owning a coworking space.
We’ve previously talked about finding industry statistics and knowing the future of coworking, so head over to read that first before jumping in! More importantly, revenue streams go hand in hand with cost drivers, so be sure to read that as well.
Our next installment will be on how to conduct competitor analysis, so stay tuned.
Costs for the coworking space incur in stages. In this blog post, we break down the costs you can anticipate to incur at the various phases of a coworking space.
Setting up costs
The first stage of running a coworking space includes costs for rent, desks, and chairs, an insurance policy, wireless routers, as well as operating costs for utilities – water, electricity, and a reliable and strong Internet connection. In the beginning, you also need to budget for basic pantry and cleaning supplies, such as a water cooler, coffee, toilet necessities and various small operating costs, such as trash cans, light bulbs, and a coat rack, to name a few.
Depending on how far you go with revamping the place, make sure that your basic refurbishment costs include fees for:
- Interior design
- Electrician’s work
Plus, there are various health and safety requirements for different office sizes, so make sure that you have everyone covered. You might want to consider consulting a legal expert for this aspect, so check the market fees for that and add them accordingly.
For instance, you may need to replace or enhance the current air-con system if you intend to host more people at once. Some spaces need to be redesigned security-wise. Check if you need to build additional exits, install new fire alarms or buy extra fire extinguishers.
Operating costs – General
Operating costs can also include a telephone line or one of the multiple communication options, such as VoIP telephony, a coworking software, security, and health and safety requirements. Advanced communication or administrative tools are not mandatory, but it’s wise considering all your options in advance because many providers have turned to the “as-a-service” model and provide multiple software services for a fraction of the cost that would have incurred in other business models.
- Coworking software can help you manage your bookings and appointments.
- Access control software can simplify your security procedure.
- Customer relationship management software can help you connect with potential customers
- Marketing software can help you reach out to a new customer base.
This stage includes costs for conference room equipment, workstation furniture, additional chairs and desks, projectors, as well as whiteboards and markers. In this stage, you can also calculate any extra kitchen supplies and costs for various small furniture, such as lockers, portable small chairs, cabling, extra routers, audio and video equipment, such as speakers and headphones, as well as office supplies.
Operating costs – Overheads and Miscellaneous
The third stage must include costs for staff. How many people will be enough to help you run the place? Will you be open 24/7? Do you need to think of security staff? Can you make a self-serviced coworking space and save on front desk staff? Sometimes, long-term members of the coworking community can assist in servicing the place in exchange for free services or discounts.
The final stage includes costs for various extra perks, special services and design improvements that don’t require immediate attention. These can include partitions and noise-blocking devices for adding another layer of privacy and increased productivity. If the place comes with a garage or a basement, consider how much you need to invest to remodel the spaces into something that can bring additional income, such as a fitness center or a small movie theater. If you plan to host large events, you need to include costs for extra chairs or tables and any additional equipment you may need if you are the main event organizer, such as food and beverage storage, decorations, and sponsorship equipment.