Coworking is intriguing. Although at first glance these large spaces may seem unstructured and a source of friction, this is not the case. Coworking space operators juggle many parameters to optimise and make the use and management of the space comfortable. Coworking is synonymous with collaboration and sharing. But it is also a viable business model, which makes it an excellent concept. So how does coworking work? What makes it so successful today? Whether you’ve recently decided to start a coworking space or are already running one, this article is for you.
The simplest definition is “a space that supports a group of people from different companies, working independently or collaboratively”. Coworking spaces are open to the public, without any membership rules.
Coworking goes beyond the space itself. It is a philosophy rooted in bringing professionals together to work together, regardless of their industry. Coworking environments provide a setting that encourages focus as well as networking opportunities.
Coworking is more than just a good atmosphere and accessible office space. Space as a service is a business model. That means it has to generate a profit. If you were wondering why you should start a coworking business instead of another, here is a good reason.
Like a gym, coworking space operators sell memberships by the month or year. This has two main advantages. Firstly, it provides a stable and reliable cash flow through recurring fees. Secondly, it provides a baseline for determining work capacity and thus being able to make accurate predictions.
Most coworking space operators sell monthly subscriptions to fully satisfy space capacity. The likelihood that all people with a subscription will show up on the same day, at the same time, is marginal. To this end, a 200-seat coworking space may sell up to 250 memberships (125% of total capacity), with the expectation of 150 members at any given time (75% capacity). This is a balancing act based on space usage patterns and membership figures.
Usually, memberships are sold at a very attractive price to one-off users – the aim is to encourage one-off subscribers to buy full memberships. Membership packages may also include certain options, such as faster Internet access or seating on demand.
Not everyone wants or needs a coworking membership. Someone who only uses the space a few times a month will opt for the pay-per-use model. It is more difficult to predict the demand of these users, but the revenue is higher per person.
If a coworking space expects 75% occupancy by its members at any given time, the remaining spaces serve two purposes. First, they welcome an influx of other members (new, curious…). Second, they serve walk-in customers. The walk-in model applies pricing by the hour, by type of workspace or by equipment. The objective here is to fill unoccupied offices.
The main problem with walk-ins is that they are unpredictable. If your coworking space is 100% occupied, you will have no choice but to turn away a walk-in, even if they are willing to pay 20 times the subscription price. That said, walk-ins can be regular customers, even if they don’t opt for a membership.
It is difficult to explain coworking without mentioning the infrastructure required to accommodate each person using the space. This is the heart and soul of what makes coworking successful.
No matter which formula a member chooses, he or she will always have to register with an administrator. The mission of this person is to connect members to the network, to allocate them an office, but also to provide them with all the relevant services they need in the context of their coworking activity. The information collected by this agent provides a real-time picture of the occupation and use of the space. It also highlights valuable data such as the number of members versus walk-ins, daily revenues, remaining occupancy time and types of space available.
Without this centralized management system, coworking spaces do not work. There is no way of knowing who is where, for how long or which spaces are open.
Now you know the secrets of a successful coworking space. Analysing your space usage data is the best way to optimise the management of your coworking business.