March 21, 2022
Failing to plan is planning to fail. If you haven’t thought about creating a coworking business plan before, now would be a great time to do so.
This guide will give you a good jumping off point for creating your business plan specifically in the coworking and flexible workspace industry.
What is a coworking business plan?
A coworking business plan is a document that outlines how you will start your coworking business. It is a formality if you are applying for a loan or looking to receive funding.
Even if you aren’t looking for funding, it’s a good way of getting your thoughts together and making sure you have a viable business before opening your space.
Why do you need a business plan for a coworking space?
Creating a business plan before opening your coworking space is needed to:
- Get a loan or receive funding
- Guide your short-term and long-term strategy
- Help you make important business decisions
If you are applying for an SBA loan or looking for investors, you will absolutely need a business plan.
You can also create 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 coworking business plan?
Business plans are generally pretty standard. Most business plans, regardless of what industry you’re in, will have the same components:
- Executive Summary
- Company Description
- Market Analysis
- Competitive Analysis
- Description of Management and Organization
- Breakdown of your Products and Services
- Marketing and Sales Strategy
- Financial Projections
- Fundraising Strategy/Sources
Each component is roughly 1-3 pages long depending on the section. This article from Quickbooks is an excellent guide to creating a general business plan that can be applied to many different industries.
Below, we’ll look at each section and how it relates specifically to coworking.
1. Executive Summary:
This is a one page overview that summarizes the entire document at a high level. It’s best to save writing this until the very end.
2. Company Description:
Here, you’ll describe your business’s:
- Mission statement
- History (general founders information if you’re brand new)
Keep this page clear and concise, and don’t get bogged down in the details. The mission statement should be one or two lines, and the history and objectives can easily be addressed through bullet points.
3. Market Analysis:
Your market analysis will outline key facts and findings about the coworking market you’ll be playing in.
You’ll want to talk about the growth of the market, current trends, as well as your target customer and how you came to that conclusion.
4. Competitive Analysis:
This section breaks down the competitors in your space, specifically coworking spaces and flexible workspaces in the area where you are located. The best way to present this information is in a table that can be easily referenced.
5. Description of Management and Organization:
This 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.
6. Breakdown of Your Products and Services:
Here, you’ll want to describe the products or services you’ll be offering with an emphasis on how you are different from your competitors.
For coworking businesses, this may look like:
- The products you’ll offer (hot desking, drop-ins, private offices, virtual offices)
- Other additional services (childcare, marketplace, etc.)
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.
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.
People want to see opportunities for growth with your coworking business, so make sure your numbers are increasing, while remaining realistic.
9. Fundraising Strategy/Sources:
If you have funding already, 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 business. However, they will only get you so far. This article does a great job at outlining the pros and cons of business plans.
The success of your business will ultimately come down to the execution and implementation of your plan.
What are some tips for writing a business plan for coworking?
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.
These are some of the questions that need to be answered 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?
Pro Tip: When doing your market research, make sure you keep it ultra relevant to you and your business. It’s more important to understand the ins and outs of the market that you’ll be playing in (ie. the size of the coworking industry in the US and New York City vs. the global industry).
There are many ways to go about conducting research. Coworking Resources has a comprehensive guide on how to conduct a competitive analysis specifically in the coworking industry that serves as a great reference.
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 done it 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:
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 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? Check out the video below.