June 6, 2018
3 Questions to Ask Before Expanding your Coworking Business
Expanding a coworking operation takes research, determination and precision timing. We’ve worked with a number of successful coworking brands to support them in their scaling efforts and together with one of our clients, BLOC, have put together our top three questions to ask before expanding your business.
1. Why do I want to scale my business?
Your first coworking space is running beautifully. You’ve ironed out the glitches, built a thriving coworking community, and have a profitable model that you’re thinking about scaling. You have natural drive to succeed and are keen to jump into planning mode but before you do, stop and ask yourself: Why do I want to scale my business?
Perhaps you want to position your brand as the leader in a specific market. This approach, also known as competitive positioning, is about carving out your own niche and claiming market share. Alternatively, maybe you are looking to increase your profit potential, but keep in mind, this comes with significant costs.
You may want to expand for geographic reasons. Having members drive long distances to get to your location isn’t always ideal. You may want to have other locations to service the areas you’re missing or have a large percentage of your members coming from. 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.’ If you have prospective or current members asking about other locations, make sure you mark down where they live or the neighborhood that they’d be excited about you opening a new location in.
Every small business is delicate during a growth spurt—let’s face it, expansion can be risky—so having a clear idea of exactly why you’re scaling your coworking business is the first step to negating any potential pitfalls.
2. Is now the right time to scale my business?
Timing can be everything, so take a good look at your first location and ask yourself if everything is actually functioning as beautifully as it is in your mind. Here are some questions that you may want to ask yourself:
- Is your coworking space fully utilized? If you’re unsure, it’s time you start measuring your utilization. Optix analytics provides venue managers with a clear picture of the venue’s utilization, both at a birds-eye view and a granular view, broken down by each space. However, being full doesn’t always mean you should or shouldn’t scale – it depends on how flexible your space is and if you can adapt to change. Can you turn hot desks into dedicated desks or convert unused private offices into meeting rooms? This could be a potential way to unlock some underutilized spaces in your current location.
- Are you turning potential new members away? If you don’t have enough space or don’t have availability of the spaces that they are requesting (i.e. private office spaces), this could be a great indicator for you that now may be the right time. Make sure you are capturing what space type or membership they are interested in so you can reach back out to them in the future.
- Do you have the right team in place? Expanding to a second location can easily take your focus away from your first location. If you are planning on leading your expansion efforts, ensure you have the right team in pace to continue managing your first location.
- Do you know your numbers? Knowing your numbers is key. How much does it cost per square foot per member per membership level and what can you do in the new space to maximize that? What are your fixed costs and how long will it be until you’re cash-flow positive? The devils are in the details and knowing your original space inside and out will be KEY to growing to two or more locations.
- Do you have the right software and tools in place to help you scale? Optix supports multi-venue management and enables a smooth transition from one location to multiple.
3. How can I build on what I’ve learned at my first location?
There’s no denying it, setting up your first location came with its own set of challenges. Hopefully things have settled down and you can now look at the finely-tuned machine that is your first location as a testing ground for expansion to your second location.
What are the keys to success at your first location and can they be put in place at your second location? A great place to start is by speaking with your current members. They value being part of your coworking community and they will appreciate the opportunity to give you some feedback. You can also use this as an opportunity to collect a testimonial if they have positive things to say, and build social proof on your website. Creating a culture where members feel comfortable not only telling you what they like but also what they think can be improved on is also important. Learning about the areas where you are lacking will help you to ensure you aren’t in your next location.
Optix Analytics are also powerful and can take a lot of the guesswork out of deciding what space configurations and plans to put in place at your new location. Plan Analytics will allow you to see which of your plans contribute most to your monthly recurring revenue and Booking Analytics will help you to understand what spaces and space types your members prefer to use—and when. This is priceless information when it comes to looking at taking on that second location.
Opening a second coworking space is exciting. It feeds your entrepreneurial soul and you’re building your business in a big way. So take some time to stop and ask yourself these three questions first. That way you can ensure that your second coworking space is a solid success—and not just a temporary growth spurt.