So often we see aspiring coworking owners and operators looking to start their business without a good understanding of the coworking business model or how their space is going to reach and maintain profitability.
Creating a business plan before you go on the journey of starting a coworking space is the best way to map out your business strategy and how you intend on making money as a business.
A well-crafted business plan can help guide decision making and give you the confidence you need to succeed. Of course plans can always change, but having a strong starting point is critical to success.
In this guide, we’ll go through what a coworking business plan is, why you need one, and how to create a plan that covers all your bases. By the end of this article, you’ll have everything you need to be successful in crafting a comprehensive business plan.
What is a coworking business plan?
A coworking business plan is a document that outlines exactly how you will start your coworking space and create a sustainable and profitable business. If you are applying for a loan or looking to receive funding, then a business plan is not just a formality, it’s a necessity.
Even if you aren’t looking for funding, a business plan is a good way of getting your thoughts together and making sure you have a viable business long before opening your doors or securing your location.
Benefits of a well-crafted coworking business plan
In short, having a business plan for your coworking space gives you a greater chance of overall success. Creating a business plan before opening your coworking space is needed to:
- Get a loan or receive funding
- Guide short-term and long-term strategy
- Help you make important business decisions
Here is another way of looking at it. Let’s say Steve wants to start a coworking space. He finds a property to rent in his area and starts building out the space. He looks at some of the other coworking spaces in the area and uses it to inform what he offers and how he prices it. He opens his doors a year later and…crickets.
Because Steve didn’t have a business plan in place, he did not consider:
- Who he is targeting
- Whether this location is a good right fit for his market
- If the products he is offering are interesting to his target audience
- How he will acquire his first members
- If the cost of his services are be enough to be profitable on a monthly, quarterly, or annual basis
It may feel like having a business plan isn’t necessary, especially for small or rural spaces, but as you can see, it’s easy to get off track and make the wrong decisions without a solid plan of action in place.
You don’t just need a plan when starting a business however. You’ll also want to consider creating a business plan when you are looking to grow or expand your coworking business, as your business needs may change slightly from when you first opened your space.
What are the components of a business plan for a coworking space business?
Now that you understand the importance of having a strong business plan in place, let’s take a look at the components that make up the best coworking business plans.
Business plans are generally pretty standard, regardless of the industry. The typical components are:
- Executive Summary: summary of the document in its entirety
- Company Description: description of your company including the mission statement and objectives
- Market Analysis: write-up of the market, both local and more broadly
- Competitive Analysis: deep dive into your competitors, both local and more broadly
- Description of Management and Organization: outline your team and how the organization will operate together
- Breakdown of your Products and Services: description of what you will be selling
- Marketing and Sales Strategy: how you plan to market your space and acquire customers
- Financial Projections: a breakdown of your finances and your path to profitability
- Fundraising Strategy/Sources: how you will fund your business
Each section is roughly 1-3 pages long (remember, more does not necessarily equal better). When writing your plan, optimize for clarity and completeness, while still being concise. This article from Harvard Business Review is an excellent guide to creating a general business plan that can be applied to many different industries. Let’s take a look at each section below and how it relates specifically to coworking.
How to write a coworking business plan
Below we’ll break down each aspect of a business plan and how it applies specifically to your coworking space.
1. Executive Summary
The executive summary is a one-page overview that summarizes your entire business plan at a high level. It should cover who you are, the business you’ll be creating, how you’ll make money, and all other elements of the plan at large.
Focus on creating impactful sections across the board, and then come back to your executive summary at the end. Much like an introductory paragraph of an essay, it will be easier to write an executive summary at the very end.
2. Company Description
Think of your company description as the “About” page of your business plan. Here, you’ll describe your:
Why are you starting your coworking space? What do you hope your space will be able to achieve in the broader community? Consider your purpose for creating the space and weave it into your mission statement.
For Jason Jet, Founder at Grindhaus Studios, his mission is to give artists the tools and access they need to be able to scale what they do in an economical way. This guides how he makes all major decisions for his business.
If you’re a brand new space, the history of your company may cover your personal resume and the skills you’ve acquired that will help you be successful in your role as a coworking space owner and operator.
If you’re expanding your business, then the history will cover the history of your business up to that point, including all major milestones and successes.
Consider this section an opportunity to build the confidence needed to be successful in your business.
The biggest difference between your mission statement and your objectives is: your mission statement maps out why you do what you do, and the objectives map out what you hope to accomplish on a more tactical level.
Let’s take Jason as an example. If his mission statement is to give artists the tools they need to be successful, then his objective would be to create the number one coworking space for musical artists in the United States.
Overall, keep your company description clear and concise, and don’t get bogged down in the details. The mission statement could be two or three lines, and the history and objectives can easily be addressed through bullet points or brief paragraphs.
3. Market Analysis
Your market analysis will outline key facts and findings about the coworking market you’ll be playing in, including the local market and the coworking sector more broadly.
This is a very important step in creating your coworking business strategy, and something that you will want to do regardless of if you are creating a business plan or not. Here are some tips for completing a thorough market analysis of the coworking market:
- Look for reports from reputable sources in the industry, such as the Deskmag annual Global Coworking survey, to get important facts and figures related to the industry
- Find communities online, like the We Run Flex community, where people are discussing coworking trends and challenges on an individual level
- Talk to operators and gauge their experience and perspective on the industry to inform your findings
Some important elements to talk about are the growth of the market, current overall trends, and your target customer and how you came to that conclusion.
For example, based on your market analysis, you found that remote workers are making up 20% of coworking space occupants with that number expected to increase. Therefore, you intend to target your coworking space towards remote workers in your area.
Another tip for this section (and your business plan overall) – support all facts and findings with credible sources. If ever a question on where a number comes from pops up, be sure you are able to back it up.
4. Competitive Analysis
The competitive analysis of your business plan breaks down the competitors in your market. You’ll want to focus specifically on coworking spaces and flexible workspaces in the area where your business will be located, as well as broader competitors that may be a potential threat.
Let’s say Georgia is opening a coworking space in her home town of Vancouver. In her competitive analysis, she’ll want to mention all of the coworking spaces in Vancouver and how she will differentiate herself, as well as large coworking brands that are expected to move into Vancouver in the near future.
Your competitive analysis is ultimately about mapping out how exactly you will win in comparison to the spaces you’re going up against.
It’s worth mentioning that many coworking space owners and operators don’t like to think of themselves as having “competitors”. It is true that collaboration can (and does) exist in the coworking sector. However, understanding the other coworking spaces in your area is critical to understanding the viability of your business and should not be overlooked.
5. Description of Management and Organization
The description of management and organization section is an opportunity to describe the team of people you will have working with you, with a focus on their credibility and why they will help you be successful.
For many just starting off in the world of coworking, they may be a team of one or two. If that is the case, it’s worth mentioning how you will ensure success in your space in the absence of a larger team.
This could be a good opportunity to mention the coworking technology you will use to help you streamline operations and manage your space. Optix coworking software helps reduce overhead and take care of many of the day-to-day operations so that you’re able to operate a leaner team.
Integrating with an automated access control system like Kisi means you could have an even smaller team overall. This section would be a great opportunity to expand into these details, especially if you plan on operating as a small organization.
6. Breakdown of Your Products and Services
In your Products and Services breakdown, you’ll want to describe the products or services you’ll be offering in your space. For coworking businesses, this may look like:
- The core products you’ll offer (hot desking, drop-ins, private offices, virtual offices)
- Other additional services (childcare, marketplace, etc.)
- Amenities you’ll offer in your coworking space
- Opportunity for after hour event rentals or events in your coworking space
Finding the right mix of products to drive profitability in your space can be a challenge for new operators. We always recommend approaching it from a point of experimentation, starting with some kind of offering, and iterating on it from there.
We also have a comprehensive guide to coworking membership plans you can offer in your space if you’re looking for inspiration on what kinds of plans to offer and how to price them. All of this will be helpful in determining the breakdown of your products and services in your business plan.
7. Marketing and Sales Plan
Investors want to know you have a plan to promote your business. This section should outline the marketing channels you’ll plan to use and give a high-level overview of your overall customer acquisition strategy.
Marketing your space is a beast in and of itself, with a lot of pieces to figure out. We wrote a comprehensive guide to marketing your coworking space that includes 23 marketing ideas for you to refer to. Use this as a starting point.
Keep in mind that your marketing strategy should be centered around your customer – who they are, what messaging will resonate with them, and where you can reach them online and in-person. With your customer at the center of the experience, you won’t go wrong.
8. Financial Projections
Create a clear and accurate picture as to how much revenue you think you will be able to generate in your first years of business. The reality is, an investor will want to see opportunities for growth with your coworking business, so make sure your numbers are increasing, while remaining realistic.
Revenue projections is an imperfect science, but there are good places to start. The Coworking Growth Calculator by Coworking Resources can help you in creating some realistic financial projections, while giving you a better idea as to how much you can expect to make from your space.
9. Fundraising Strategy/Sources
Finally, the last section of your business plan is dedicated to how you will fund your coworking space.
If you have received any funding up to this point, you’ll need to disclose the information for transparency. If you are seeking funding, use this section as an opportunity to outline your strategy including how much you are seeking.
A business plan can be a powerful tool in growing a successful coworking space. However, they will only get you so far. This article does a great job at outlining the pros and cons of business plans if you’re curious on what your plan can (and can’t) do for you.
Remember, the success of your business will ultimately come down to the execution and implementation of your plan. Don’t treat your business plan like an end-all be-all. We’ve seen a wide variety of clients succeed after changing their plan significantly. Execution is the name of the game when it comes to growing a successful business, and it’s best not to lose sight of this.
Tips for writing a business plan for a coworking space
Ready to get started with crafting the perfect business plan? Follow these tips to ensure you create a cohesive plan for your coworking space from start to finish.
1. Always start with your research
The research you do around the market and your competitors should be the basis of your entire business strategy. You can’t know where to open and who to target without understanding the market first.
Be sure to answer some or all of these questions before beginning your business plan.
- What is the size of the market?
- What is the growth trajectory?
- What are trends in the industry?
- What is the primary demographic that it serves?
- Who are your direct competitors?
- How big are they (number of members, locations and revenue)?
- Who do they serve?
- What is their messaging and positioning?
- How do they differentiate themselves?
There are many ways to go about conducting research, as we discussed above. Coworking Resources also has a comprehensive guide on how to conduct a competitive analysis specifically in the coworking industry that serves as a great reference if you’re looking for a framework to start off with.
2. Crowdsource knowledge from the community
The wonderful thing about the coworking community is how willing people are to share their knowledge with one another.
If you’re feeling lost on where to start with your business plan, consider reaching out to a coworking operator who has opened a successful space in the past. This can give you a sense of how to approach the project.
You can also look at other successful coworking businesses and take inspiration from them as to their:
- Business model
- Marketing tactics
- Products and services
Every space is different, but gathering insight from other coworking spaces that have been successful can be a great place to start.
3. Think about who is receiving the business plan and what is important to them
As you go through the process of creating a business plan, you may find yourself becoming unfocused and unsure how to edit your information.
Put yourself in the shoes of who is going to be receiving your plan. Who are they? What do they care about? What information are they hoping to receive from your document?
Use this to help tailor your coworking business plan to fit their specific needs.
Pay special attention to the things that are going to drive business results including:
- Market research (is there room in the market to be successful)
- Competitor research (how saturated is the space and how will you differentiate yourself)
- Products and services (what is your business model and how will it generate revenue)
- Financial projections (is your business able to grow and scale over time)
Read your entire business plan from start to finish through the eyes of who it is intended for before submitting it.
4. Be conservative with your numbers
It’s easy to get excited with your numbers. You need to show that your business is going to succeed and you want the numbers to back it up.
The problem with overestimating these numbers is that it can set you up for a tremendous amount of stress later on if your business fails to meet expectations.
It’s best practice when creating a business plan to always be conservative with your numbers and remain realistic in your expectations. This includes:
- Financial forecasts
- Market size
This article outlines ten common mistakes people make when creating a business plan, including being unrealistic with numbers and forecasts.
It’s always better to underpromise and overdeliver rather than the opposite.
5. Set measurable objectives
Goals and objectives are an integral part of any business. Throughout your business plan, you will want to make sure you are creating clear KPIs and objectives to drive your business forward.
One way of creating measurable objectives is by following the SMART goal framework. SMART goals are goals that are:
- Specific (narrow enough to be achieved)
- Measurable (quantitative)
- Attainable (realistic in the given time frame)
- Relevant (furthers your overall business goals)
- Time-based (can be measured in an amount of time)
Here’s how to apply the SMART goal framework to your coworking business plan.
- Marketing Objective: Acquire 50 new hot desking users in the first 6 months
- Management Objective: Hire a part time community manager in the first 60 days of opening
Measurable goals can help move your business forward and ensure you’re staying on track to achieve them.
Plan for success with your coworking business
At the end of the day, a plan will only get you so far. Focus on executing on the plan and remaining flexible in order to ensure you’re giving yourself the greatest opportunity to succeed.
Looking to start a coworking business? Don’t miss out on these 15 essential costs of starting a coworking space.Want to learn more about Optix and how it can help you start your coworking business? Connect with a member of our team today.