9/30/18

Coworking Profit and Loss Overview

Are coworking spaces profitable? If you design an appropriate strategy to build your coworking business, it will bring you good revenue. We have previously discussed this topic - click here to read our article about how profitable coworking spaces can be. Here are also several other business models that may have encountered roadblocks and losses (click here to get more information.) And now let’s focus on foreseeing all coworking profits and losses so that you can understand if the game is worth the candle.

In this article, you will find an overview of the profits and losses of running a coworking space. You’ll also get to know what factors can help you decide if you should go ahead or not. Did you know that40% of the coworking spaces around the world are profitable according to the statistic? What’s even more exciting, the percentage has increased for 4 years running (it was 32% back in 2013.)

On the contrary, there are fewer coworking businesses that are losing money now. In 2013, there used to be 36% unprofitable coworking spaces while now there are only 26%. It is true that this business is comparatively new to the market. Apparently, coworking space owners are quickly learning how to get revenue from their business. Why would you want to go through trial and error if you can learn from their mistakes and build a profitable business right from the start?

5 Common Coworking Profits

The owners of coworking make money selling a number of services.

1. Renting out desks to various creative entrepreneurs and freelancers - this makes approximately 36% of revenue

2. Selling coworking membership (about 18%.) We recommend you to design combined membership plans for different kinds of your target clients.

3. Rent out meeting spaces - this service brings a 10% of revenue

4. In-house classes and workshops make around 8%

5. Offering virtual office services (approximately 2% of income).

Other revenue streams include selling tickets to the internal events as well as providing public support, and other services.

5 Common Coworking Losses

There are certain expenses which are inevitable if you are building a coworking business. 40% percent of all losses are associated with renting the place - loss #1. Secondly, the owners of the coworking spaces spend money on marketing and experience huge expenses as a result - loss #2. However, they are difficult to calculate as they depend on the owner and the available budget. 15% of losses are operating costs - loss #3. Also, you will have to pay salaries to your employees - loss #4. Coworking space maintenance will make you lose about 6% (loss #5). Another 6% will be spent on the equipment for your space to make all the necessary appliances available for your visitors. This also includes installing efficient software in your coworking space such as keyless access control and so on.

Please take into account that these are average numbers, and your coworking profits and losses may be different. You should also calculate when your working space is going to break even. For instance, WeWork company was operating at a loss for a year. It gained £13.6 million in revenue and experienced a net loss of £14.4 million. This happened because WeWork was renting out desks for the lower price than it paid to the landlords.

Nevertheless, today WeWork is a profitable business bringing enormous revenue. What is more, 35% of coworking spaces start bringing income in half a year. Therefore, it is essential to act strategically and realize that your coworking company has to go through the period of losses which is going to last from 6 months to 1 year. But make sure that your coworking business plan includes a clear step-by-step strategy on how to make your space profitable as soon as possible.

What are other essential factors apart from the coworking profits and losses you should consider before you open a new space?

Crucial Factors in a Coworking Business

The owners of coworking make money not only to achieve their ambitious goals but also to make a positive change in the world. These people are often empowered by a particular community. Why not make use of it when you start your own business? The more members you get, the more profitable your business will become. So tailor your future space to the needs of your community. For instance, it can be a women-only coworking space to avoid sexual harassment at work.

If you build a niche-specific business relying on the community you want to contribute to, you skyrocket your chances to get the ROI. It will be easier for you to establish long-term relationships with your members, especially given that you already have the necessary connections in that niche.

Building a network of the like-minded people will also help you to scale your business quickly. You'll be able to provide not only the desks and office amenities, but hold exciting events and invite famous speakers to empower your community and help it grow.

Moreover, you might consider a big city as the location for your future coworking space.  Location matters, so it's better to increase your chances and get as many members as you can. There are obviously more people in a big city than in a small town.

Do profound research based on the factors mentioned above and shape your future business success today!

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