Co-working spaces are the latest commercial property trend that you will come across if you are looking for a business space. Calling it a trend might be downplaying its significance slightly as an increasing number of budding entrepreneurs prefer this type of work setting.
Now, thinking of starting your very own co-working space business might seem very lucrative at first, but you must first have a clear idea about what it actually entails before you go through with the execution of this particular business idea.
What is a co-working space?
A co-working space is a collaborative, flexible, self-directed and voluntary style of work. This space is based on mutual trust and the participants share common core values.
Unlike a typical office, a co-working space has different employers (working on their own businesses) under the same roof.
Apart from budding entrepreneurs, co-working spaces are also rented out to freelancers and independent contractors i.e. people who do not have a consistent desk job or need to travel most months of the year. It is also rented by business owners who prefer to work in isolation.
In order to build a place which is suitable for the above target audience you need to research certain specific aspects. This research will help you to design an appropriate place such that your co-working space is in demand and earns good profits.
So let’s look into the aspects that you need to carry out research on.
Location acts as a foundation
If you are offering work space to employers at the outskirts of a city then lesser number of employers would be interested in renting your space. The main reason being they will get lesser growth opportunities and foot traffic.
On the other hand, if your space is right in the heart of the city then employers can easily rent your place. Your biggest advantage is that you get to decide the rent and they have lesser power to negotiate.
Besides, a bad location increases your maintenance costs. For example, you have to pay additional transportation costs to the food agency serving food in your canteen since the location is far away from the city. Lack of availability of common resources is yet another reason why you should pick a location in the interiors of the city.
Consider Cubicle size
If you have small cubicles in your co-working space then you cannot charge high rent from employers. Besides, the overhead costs of electricity bills, operation costs, maintenance costs, personnel costs and such other costs would be much higher. And, all these costs will be charged to you.
Contrary to this, if your space has large cubicles, you can charge comparatively higher rent to your prospective tenants. They will get a greater number of desks and your overhead costs also will be covered within it.
Minimum Operation cost
Since it would likely be a huge working space, you will need a certain amount of manpower to shoulder operational tasks, such as managers, maintenance guys and many such other people. But, remember that just like how too many cooks can spoil the broth, hiring too many people can hamper the smooth functioning of essential tasks.
Besides, if you a hire huge workforce it will eat into your profit margins. Therefore, maintaining minimum operational costs will eventually prove to be the most lucrative option for you.
Competitive Price Model
One of the key motives to run any business is to earn profit. Since, the business world is growing more competitive with each passing day you must research about prices offered per square foot by each of your rivals.
If your pricing is on the higher side than your competition, it is possible that you won’t be approached by many employers. And, if you offer extremely lower prices than you might end up incurring significant losses.
Therefore, carry out detailed competitive analysis and then finalize rates for the co-working space you are offering to prospective employers. Possibly, create the right blend between the price quoted and the services provided.
Usually, look to set a negotiable pricing strategy because expect most employers to haggle and it provides some with a sense of satisfaction if they think that they are getting something at a comparatively lesser rate.
While building this space, you may have to get in touch with contractors and architects in order to design the kind of space you are looking for. Construction finance is an option if additional capital is required to complete the project. This way, the construction of your space will not come to a standstill.
Initially, many employers may not approach you but if you offer appropriate services along with the right pricing strategy, you can expect business to pick up with time.