Becoming well-versed in the costs associated with the operation of your space is essential to remain sustainable and profitable. One must be mindful of the recurring costs that can eventually become hurdles to your growth. To be a successful operator you must have an awareness of various factors including rent, operating costs, agreements with landlords, peak utilization, as well as whether to offer more open spaces or private spaces. Here are three very important things you should know about the Coworking costs.
(For more information, you can check out our ebook on this subject, The Cost of Coworking. )
Here are Three Facts on Coworking Costs
The Most Important Expense is the Master Lease
You will rise or fall because of your lease. A poor negotiation can spell a death sentence for your space. It doesn’t’ even matter if your place is profitable. It’s better to break even on a space that is manageable than thrive in an unsustainable situation.
The latter will have you at the mercy of your members not to mention you won’t be recession-proof by having to keep up with an exorbitant rent.
By the numbers, rent makes up for 40% of expenses whereas operating costs and staff wages account for a combined 30%.
It’s important to negotiate in a manner that mitigates risk and guarantees that your landlord will not compete with you by opening a Coworking space of their own.
Making the most of your space
Keep your eyes on your peak utilization. Being able to make the most of these times during the day will be the bread and butter of your success. It’s especially important to stay on top of the frequency of peak usage.
Furthermore, understanding age demographics within your space is critical to your growth. Most people in Coworking are under the age of 40.
Members of a younger age group may prefer to work in open spaces. However, you must always meet the demand for private spaces as they are significantly more profitable to the growth or your space.
In some situations, you will find that having as much as 50% of private offices within your space can attract a more profitable clientele.
New Ways of Services and Sales
It’s ideal to add more to the membership experience. Keep in mind that it takes 1-2 years, on average, for a Coworking space to become profitable. Because of this, you want to focus on making your early relationships as lasting as possible.
What is critical to achieving this is by adding more to your memberships. This can perhaps be accomplished by offering special incentives and deals with neighboring businesses.
Another approach is to train a community manager, preferably with a hospitality and customer service background, to assist with make the best possible experience for your members.
The community manager is a position that is continuing to grow in importance. It is getting to the point that your space will not be able to grow without one.
For more questions on mastering Coworking costs. You can find more information in our ebook, The Cost of Coworking.