October 19, 2017
Learn the four reasons why you should open your next coworking location, sooner rather than later.
As with any other type of business, it’s important to define your business goals. One of the primary questions you should be asking yourself is “Should I expand? Does it make sense to open multiple coworking spaces?”
As it turns out, there are many different reasons why it might be worth considering getting that second location off the ground. Here are four reasons why operating more than one venue could be a worthwhile business opportunity to evaluate.
1. Expand early to establish your brand as the go-to coworking option in your local community
Coworking as an industry is exploding rapidly, with good reason. As more freelancers flood the job market and more employers offer remote work options, the demand for flexible workspace will continue to increase. This means that more coworking spaces will open to meet this demand, forcing coworking businesses to become hyper clear on what they’re offering their members beyond simply wifi and a space to work.
Early market penetration leads to a measurable increase in your overall ROI. In fact according to a survey referenced in Harvard Business Review,
“The average rate of return for [businesses with market] shares of more than 40% is two-and-a-half times the average for those with shares of 10% or less. Put another way, a difference of 10 points in market share is accompanied, on average, by an increment of about 5 percentage points in ROI.”
This means that if you have the overhead to expand quickly and thereby establish a larger share of the local market early, the investment could pay off in the long run.
2. Decrease the average travel time to one of your venues from a prospective members’ home
According to the 2017 DeskMag Global Coworking Survey, one of the top factors a prospective member considers when choosing their coworking space is ‘Accessibility to my home.’ In fact, this was the only factor in the top ten to see an increase in response compared to the top ten responses in 2016.
This suggests that as coworking becomes a more popular business model and more coworking spaces open, the wealth of options is leading prospective members to focus on minimizing their commute time. Therefore consider adding additional venues in locations that are close to public transit and/or in the heart of a residential area.
3. Increase your profit potential
At the end of the day, coworking is a business with a relatively definable maximum for MRR (or monthly recurring revenue) since the primary revenue stream is renting finite resources (i.e. desks and offices). This means that once you’re maximizing your square footage, it’s pretty easy to determine how much profit you stand to gain.
Once you have a model that works, extrapolating that model into a new, second venue will be easier for you than it was to get your first location off the ground. This means shorter lead time, better ROI, and higher potential for overall profit.
4. Mitigate the impact of unexpected risks
Everyone’s heard the popular idiom “Don’t put all your eggs in one basket.” If your coworking business only has one location, you’re doing just that. All it takes is a flood, an unexpected change in rent, or some other hard-to-predict event to potentially derail your entire business and cause your MRR to come to a crashing halt. By operating multiple venues simultaneously, you ultimately mitigate the potential risks faced by any single location.
Considering a coworking expansion? Make sure you have a coworking management software that can keep up with the needs of your business. Schedule your Optix demo today to learn more about how Optix can support your (soon-to-be) multi-venue operation!