Financial considerations of starting a coworking space decoded

The concept of coworking has been picking up traction quite rapidly in recent years More professionals are working as freelancers, small businesses are evaluating their investment in private office space and its upkeep in favor of office on rent at coworking spaces, and there is a rising awareness about the importance of collaboration and sustainability. If you’ve been thinking about getting into the game for a long, now is as good a moment as any!

However, while some managed office franchises are booming, others are struggling to keep their doors open and pay their employees. Finances and precise strategy are the two cards that can determine whether you win or lose the game.

In this post below, we will discuss all the financial aspects you need to consider before kickstarting your enterprise to develop a community of like-minded individuals from all walks of life. As glamorous as a business may appear, running it can be cumbersome, and financial planning may be much more so. But, if you do it right, my friend, you’re already one step closer to having a fantastic lucrative business.

Startup Costs

The initial investments that go into building and launching the coworking space are the first stage in the financial considerations for beginning the coworking space. This consumes the lion’s share of the financial pie. To estimate, break this down into 2 primary considerations: purchasing the property or space, and designing and furnishing it to provide a work environment where firms can thrive and professionals can grow.

These expenses can vary substantially depending on the following major factors:

  1. City
  2. Locality
  3. The scale of the venture
  4. Moving into a space vs. building your own
  5. Condition of the building if you’re moving in
  6. Renting vs. Buying

While you may not have much influence or choice in the city, the neighborhood is something you should consider carefully. The location of your premise in the city may have a significant impact on the pricing of your space or rents, as well as the number of people it draws. A business at a prominent location in the city, well connected by public transportation, is more likely to attract more users. Always remember, the trump card in this game is convenient for the users!

Physical Space

Buying or renting the premise is the first thing that you should be considering. It is a common practice to rent the space for operating your coworking space, but if you intend to expand in the long term, buying may prove to be more beneficial. However, this is not always the case. To make an informed decision, you must properly calculate the odds and examine your resources as well as the economic conditions in which you operate.


If you’re buying or renting an existing, pre-used space, you should consider the repair and renovation expenses based on the condition of the building.


If you have a substantial cash investment and want to start a business on a greater scale, you may consider creating the foundation from the ground up. This allows you to have the space created by an expert to meet the demands of various sorts of work settings that are meant to optimize workflow and productivity while minimizing stress and fatigue. In the long run, this will maintain a consistent influx of users and ensure a profitable business.


Interior Design

Interior designing and furnishing will take up another hearty portion of your financial pie, and make sure to do so since it makes or breaks the comfort, feel, and ambiance. The up-scale, cheque, and cozy ambiance of the place plays a key role in creating the working environment for the users. On average people spend around 6 to 7 hours sitting at the same desk, using the same chair. The effects of uncomfortable furniture may not be drastic immediately, but can be severely damaging to body posture and health in the long run. Uncomfortable furniture risks your users’ renewal of memberships.


Investing in ergonomic furniture ensures comfortable working for your users which makes them continue renewing their memberships. Interior decor and ambiance is the major thing that drives the decision of new potential users.


Operating Costs

you must anticipate all running expenses and estimate them accurately for the number of target people that you want to serve. Starting a coworking space will incur running costs depending on a variety of factors such as the size of the space, the level of amenities provided, the location of the property, and the number of users. Consider the following operating expenses:


If you have chosen to rent a place, this is likely to be one of the more expensive running expenditures for a coworking space. The cost of establishing a coworking space is determined by several factors, including the location, size, and quality of the facility. When calculating the cost of renting a coworking space, consider the following factors:


  • Rent expenses might vary greatly depending on where the coworking space is located. Rent charges for locations in metropolitan regions or high-traffic areas are often higher.


  • Bigger the place, the higher the rent.


  • The conditions of the lease contract will also have an impact on the rent. Shorter lease periods result in higher rent expenses, whilst prolonged lease terms result in cheaper rent.


It is critical to research the regional market to determine the average rent pricing for commercial premises in the region. When determining the cost of renting a coworking space, it is essential to make sure that the rent expenses can be easily covered by member subscriptions, allowing the business to stay financially viable.


Housekeeping Items

For a well-maintained coworking space, you should always allocate a budget for housekeeping items. This, a seemingly trivial consideration while planning such a large business may seem insignificant, but it actually, makes a great impact on how the space is maintained to retain the existing users and attract newer ones even long after the establishment of the space. Regularly supplied restroom supplies such as toilet paper, paper towels, hand soaps, linen laundry, recycling, garbage disposal, cleaning products and equipment, gardening necessities, typical cooking staples, and so on should all be on your list. Continue to add to the list as your requirements dictate!

Business Operations

Depending on your company’s demands, you may need to hire outside counsel for legal, accounting, or other services. The rates paid by experts and the unique demands of the business will determine the cost of professional services.


Marketing expenses must be considered because they are critical for recruiting new consumers. Paid advertising, social media marketing, and other types of marketing and advertising to reach new members are examples of this.


High-speed internet, office supplies and stationery, and printing and scanning facilities are also required for commercial activities.


Utility Service Maintenance

Utilities take up another large portion of your operating costs. Utilities like electricity, water supply, waste management, mechanical services, fire fighting, etc. These are the essentials of running any premises and should be calculated in proportion to the scale of the venture.

Technology and Electronics

Investing in technology and electronics is a crucial component of launching a coworking space since it improves the member experience, increases productivity, and helps differentiate the space from the competition. High-speed internet, Computers, desktops, printers, scanners, audio-visual equipment, Voice over internet protocol phones, video conferencing tools, and surveillance technology are certain things you should plan with two considerations – installation costs and maintenance costs. There will be a lot of miscellaneous hardware also, like routers, extension cords, power strips, HDMI, and other cables, etc. The expense of the technology and electronics you give will be determined by the quality as well as the quantity.


The top players in the industry house amenities like reception and concierge services, meeting rooms, coffee and refreshments, workout spaces, daycare centers, spas, game rooms, common kitchens, lounge rooms, nap rooms, and so on. The better the amenities you plan to provide, the better the volume of users can be attracted and retained. But, the better the amenities, the higher the operating costs! It is essential to estimate this beforehand since you’ll have to plan them out for designing the spaces. The cost of amenities and services will depend on the level and quality of the offerings, as well as the local market. When considering which amenities and services to offer, it’s important to balance the cost with the potential revenue generated by increased membership and member retention.


To safeguard the business from litigation and property damage, you have insurance coverage. It is certainly an essential operating expenditure to plan for. There are several insurance options available on the market today, and thorough research is recommended. Insurance costs vary depending on the type of coverage required, the location of the venue, and the insurance company. In addition to the expense of insurance, the deductible and any limitations in the insurance plans must be considered.


Website and Management Software

A website is a necessity today that you cannot skip. People should be able to find you, your business, and its credibility on the internet to be able to invest in your business. If building a website seems like too much work right now, you may focus on building a social media following for free.


However, a website is undoubtedly in your future. The cost of developing a website will vary depending on whether you hire an agency or employ a freelance developer. Consider the initial cost of putting up the website as well as a monthly fee to keep it functioning.


Running a coworking space can be a herculean task if ran like cavemen. There are special software available that are designed specifically for managing the operations of a coworking space. It can help streamline many of the day-to-day tasks involved in running a coworking space, such as member onboarding, bookings and reservation, billing and invoicing, access control, and analytics and reporting.


This software can easily be integrated with other systems, such as accounting software, CRM systems, and marketing automation tools. Also, they can be customized to suit your needs.

 Security Systems

Establishing and operating a coworking space calls for a huge investment. An investment that should be protected at all costs by a multi-layered security system. While allocating the budgets for the security systems, research the latest available technology. You should plan the installation of the following systems:


  • Access Controls – To ensure that only the authorized member can access the premise. Access can be given using Biometric readers, Keycards, or smartphone-enabled access control systems.


  • Surveillance Systems – Surveillance cameras may offer an extra layer of protection by watching for strange behavior in the coworking space. Indoor and outdoor cameras with the capacity to capture and store footage can be included.


  • Alarm Systems: In the case of a security breach, alarm systems can give a rapid reaction. Motion detectors, door sensors, and panic buttons are examples of such devices.



Strategize Revenue Streams for Maximum Profit

As per the Global Coworking Survey, merely 43% of coworking spaces have proven to be profitable, leaving 57% in the red. However, this is only because most individuals enter the business without making use of all of the important revenue streams of the venture. Here are some strategies for increasing revenue in a coworking space.


Target Customers

The majority of individuals who use coworking spaces are freelancers, however, if all of your users are freelancers, you won’t generate much revenue, and certain vertical integration tactics you try may not materialize. Why? Because the majority of freelancers do not make much money. This implies you should  broaden your target group to include more affluent clients. This implies you should broaden your target demographic to include well-off consumers such as startups with teams working remotely, business owners/managers, large businesses, and technology companies.

Planning on 3 following investments for maximum profits

  • Offices on rent over desks: Approximately one out of every nine coworking spaces leases out over 60% of its capacity as private offices. There is a trend towards private offices, which are frequently requested, as well as dedicated workstations, which are also required. This helps you generate more revenue than you can generate from desks.


  • Strengthen Vertical Integration – Vertical integration aims to improve the number of transactions per subscriber by meeting all of the member’s needs. You may do this by making strategic alliances and acquisitions with companies that provide the majority of your consumers’ demands.


  • Long-Term Planning: Whatever plans you create for your venture, you must have a long-term vision in mind. The longer space is in function, the better it operates statistically. According to the second Global Coworking Survey, 72% of coworking spaces begin to make significant profits after more than two years in business.


Membership plans

Your monthly income strategy is supported by membership plans. Pricing membership plans is critical to ensuring that the company earns enough income to pay its expenditures and earn a profit. The membership price approach of a coworking space should be determined by the local market, facilities and services provided, and target demographic.


By now it is quite obvious how much of a herculean task it can be, to run a coworking space successfully. It is nearly impossible to run it without a hierarchy of individuals teamed up and designated with responsibilities to ensure a smooth and satisfactory functioning of the space. Roles you should consider are community managers, IT professionals, Sales and marketing team, administrative staff, and maintenance staff. This is a basic and the bare minimum. You should plan this considering the scale of your venture.

Contingency Planning

Coworking spaces, like any other business, may experience unforeseen obstacles such as changes in the local economy, legal or regulatory concerns, or unanticipated maintenance or repair needs. It is critical to have a contingency plan in place and to develop a financial cushion to weather any unforeseen challenges that may impair the business’s financial health. The coworking space may be better prepared to respond to disruptions, lessen the financial effect of such interruptions, and limit the potential for long-term financial harm by implementing a contingency plan. Contingency planning may also assist in the identification of possible hazards and the development of solutions to manage those risks before they arise.

Final Thoughts

Considering the current scenario, it is a good time to get into the game. But there are also, a lot of already well-established players. The first thing you need to get right to enter the game is your financial estimation and planning. We hope this detailed list of considerations you should rigorously work on helps you with your planning.

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button
error: Content is protected !!