. Coworking space business model is about creating a private workspace for the communities such as freelancers, work from home professionals, startups with limited employees, independent contractors and research fellows in exchange for the monetary fee.
When coworking idea was first started by Brad Neuberg in 2005 at San Francisco. His only motive was quoting his words, “the freedom and independence of working for myself along with the structure and community of working with others”.
Now, it’s been 13 years this idea has turned into profitable opportunities for many startup companies. Does this commercial idea would ever go down or will it grow stronger? Let’s find out! But before that, if you have an idea in your mind for creating a coworking space rental platform? Get our RentALL script – Airbnb clone which is ready to customize for any marketplace need.
How coworking space business model is different from incubators or accelerators?
An incubator is a place where startups are nurtured by giving office space, mentorship, training, investment support, and other shared resources until the startup idea is fully developed. It is like taking care of the baby bird until it is ready to fly and take care of his own.
The accelerator comes into play after the startups have a clear vision and roadmap for the goals.
They provide mentorship, office space, investment in return of equity.
Coworking space business model is apart from these two. It provides office space and community connections for the startups, freelance workers and other working professionals who want to work together and yet be independent. They should provide a monetary fee to the renters depending upon the resource and the size of the space.
China is expected to grow about 5000 around 2020 by the China Money Network. This result in having the highest coworking space around the world.
Seeing the future growth in coworking space, Penang state government(Malaysia government) have decided to convert a very old historical building to coworking space.
In India, coworking space rental is popular in cities such as Mumbai, NCR, and Bangalore. The big players in the industry are The Office Pass, Spring House Coworking, Awfis Space Solutions, 91Springboard, CoworkZone, InstaOffice, WhyWorks, BHIVE Workspace WeWork.
How profitable coworking space business model?
As there is an increase in coworking space, it crops a question whether they actually make a profit out of it. Yes, they do in fact.
The three important people in this business are the landlords, coworking operators, and professionals.
The coworking trend has attracted many real estate people by renting the space to the coworking operators. Sometimes the landlord himself enters the market and self operate the shared space.
It benefits the owners by not incurring to loss by closing the deal faster. And also, attracting bigger MNC for higher revenues.
Even though there is a rise in demand for the coworking space, the second Global Coworking Survey shows that nearly all spaces are profitable only after one or two years in the business. Most revenues are generated by renting out desks, where the price is varied according to a different package. Another way is to rent meeting rooms and event spaces to non-membership people.
Factors such as:
- Opening a coworking space in big cities increase the revenue
- Bigger space, refreshments and a space to thrive different communities would increase the membership subscription.
- Advertising and word-of-mouth play an integral part in expanding the business.
Working professionals such as freelancers and work from home professional benefit from quiet spaces. They also have the opportunity to interact with people without getting succumbed to loneliness.
Providing helping hand to startups
Do you know Instagram founder – Kevin Systrom and Mike Krieger, emerged from the coworking space? They formulated the idea ‘Photo sharing app’. And within one and a half years after launch, Facebook acquired the company for 1 Billion US dollars.
The coworking space provides benefits such as:
- Providing office space
- Networking with professional and exchanging new ideas
- Meeting new clients
- Flexible working hours
How to Improve your coworking space?
If you are a owner of a coworking space, you should keep your creativity high and careful eye on your marketing plans. With new-age startups are coming up with variant business ideas, founders expect their company culture to match up with their space environment. So, make sure to keep changing the environment with new objects that elevate your interior design. Other things you can make your space better is to:
- 1. Keeping your space green with small plants.
- 2. Selecting suitable furnitures for the space
Having said all this, Finally, it is safe to say that the trend of coworking space business model is going to rise tremendously in the coming future. The demand is high but the supply is not met. The number would increase drawing the attention of big corporates, investors and the government who sees it as a grand opportunity to encourage new ideas, talents and making a profit.
The working model might change according to domain leveraging comforts to the working class.