Coworking is now ingrained in our workplace culture, reshaping the way people work and influencing other markets. With the growing numbers of freelancers, remote workers and companies choosing to put their employees in coworking spaces, the need for such spaces is rising steadily. The sector is also good at retaining existing members, proving consistent and sustainable demand.
This trend is only going to grow in the upcoming years, so now might be a good time to consider investing in a coworking space. Here are a few things to consider to get you started:
When deciding to invest in a coworking space, begin by choosing the type of a coworking business you’re most interested in.
One option is to invest in a coworking space franchise. It’s one of the newer concepts in the franchise industry, yet more and more entrepreneurs are choosing it as an investment. The main benefit of a coworking franchise is obvious — brand name recognition, which will elicit trust in clients and make obtaining them easier. If choosing a coworking space franchise as your investment opportunity, make sure to do thorough research and consider several factors, such as startup costs, training, the amount of funding the business already has and brand name.
For a more established franchise space that has already accepted a couple rounds of funding, it is important for you to know who the other investors are, who is on the board, or at least who is making the key strategic decisions. This requires some research into the history of the business itself and maybe some investigative work.
Alternatively, you might consider investing in a smaller local coworking brand by approaching the owners of a successful coworking office in your area and discussing their long-term goals, as well as opportunities to use your capital for their growth. Ask the owners if they are interested in taking on a investment and if they are don’t be afraid to ask for a business presentation. This might be the easiest way for you to get started in the coworking industry.
If you’re feeling up for it, you can create your own coworking brand, which will require a lot of research into the existing market, as well as a clear vision of what your coworking space can bring to the table and how it can differentiate itself from the competitors.
Once you pick the type of coworking business you’d like to invest in, you need to create a coworking space financial model, which will help you define how your business can succeed financially. As coworking spaces come in all shapes and sizes, it’s important to understand what exactly you’re willing and can afford to offer, in order to generate revenue.
When working on your coworking space financial model, it’s important to have a clear vision of your business model, the type of members you’d like to attract and the benefits and amenities you’re willing to offer them. This will help you define all the potential revenue streams and maximize profit.
Another key thing to consider, as with any real estate investment, is the location of the coworking business. Prime urban locations are beneficial but come at a higher cost. As an investor, the popularity of the business location can make all the difference in determining the success or failure of the space. Most coworking members come from within a 30-mile radius of the business they frequent. So when you are choosing a local coworking space to invest in, it might be prudent to talk with the manager and members alike to gauge for yourself whether the space is on an upward trend.
Once you are certain that the space you plan on investing in has a solid financial plan and a strict budget, you can move on to discussion about the customer acquisition strategy with the management team of the business.
One of the first things you should consider before investing in a coworking business, is the overall mission. What values is the business built on? What is the target audience and do you as an investor identify with the customer base? The widely recognized core values of coworking spaces are community, openness, collaboration, sustainability and accessibility. But as the industry widens, we’ve seen a steady rise in spaces with smaller and smaller niche groups. Today coworking spaces are often defined by their missions to revolutionize specific industries or customize the work experience for a certian group of people. For example, the number of women-only coworking spaces has boomed in the past couple of years, as well as spaces dedicated solely to artists and musicians, LGBTQ communities, craft/construction businesses, and much more.
The list of member categories is endless and the coworking industry is showing the flexibility needed to cater to various categories of customers. As an investor you should connect with a space that you truly identify with, rather than just looking at numbers and metrics. While the financials should be your motivating factor to invest, putting your money behind a business you truly believe in will give you much piece of mind when hard decisions need to be made down the road. Contrary to popular belief, investing is an emotional act, so it’s worth your while to think about how the coworking space affects the local community and businesses, and what value is gives to its memberst.
If you’re investing in an existing coworking business, it’s important to establish a good working relationship with the owner of the space. This partnership will come with a huge set of expectations, responsibilities and even potential complications, but establishing a positivie dynamic with the management team is essential for overall success.
To avoid conflicts in the future, it’s best to define what type of business partnership you want to build from the very beginning. How much input do you want to have in thecoworking business? Are you going to be the type of investor who finances the business and steps aside, allowing the owner to grow and develop the space? Or do you want to have a more active role in the workings of the business? How much freedom will your business partner have, and how much and how often will he or she be answering to you? What business decisions will you have a say in as a private angel investor? These are all important questions to answer at the beginning of your partnership because these factors will directly affect the success of the space.
Whether you choose to invest in a coworking space franchise or a small independent brand, make sure you are well acquainted with the financial plan,have a good relationship with the other investors and the business owners, identify with the mission, and a solid understanding of your level of involvement in it. With these basics in place, you’ll be ready to take on your first coworking space investment.