The growth of the flexible workspace industry in the past several years has been rapid, and there are no signs of it slowing. In fact, some projections estimate that the number of flexible offices and coworking spaces will continue growing at the same pace in the coming years. Instant Offices go as far as to predict that up to 35% of offices will be flexible in some way by 2023.
These projections should signal two things to operators – bets are being placed on increased customer demand for coworking spaces, and competition in the market is sure to grow with that demand. One of those things is good for operators, the other one not so much.
So if you’re thinking of creating a coworking space to capitalise on growth in the sector or re-evaluating your business from the ground up to improve on the fundamentals, your first priority should be putting together a business plan to ensure you’re strongly positioned to beat competitors.
With that in mind, we’ve put together a business plan checklist for the coworking space model to help you lay the foundation needed to create a successful, profitable, and long-lasting coworking space.
Coworking space business plan
- Determine your aims
The first step in any business plan should be to accurately and concisely determine what your aims are. What’s the vision you’re trying to execute? Why do you want to open a coworking space? Do you plan to stick with one location or expand into a chain? Are you aiming to reach profitability quickly or prioritising long-term success?
Through thoughtful and considered brainstorming, you should establish targets, revenue expectations, KPIs, and ideal growth rates. They might not necessarily be realised, but it’s incredibly helpful to have a reminder of what you’re setting out to achieve.
Nailing down what your aims are at this early stage will help you to stay on track throughout the remainder of the business planning process. A list of aims put down in writing gives you a concrete set of goalposts, and hopefully at least a vague idea of how much work/time it’ll take to get there.
- Carry out market research
Next, it’s important to carry out extensive research into the current state of the coworking market to know what kind of space you’re entering. Coworking market research will help you to build an understanding of how big your opportunity is, how much competition you’ll be facing, what your potential customers want from a coworking space, and much more.
There are lots of different forms of market research, including techniques like key driver analysis, price sensitivity analysis, mass surveying, and focus grouping. Which methods of research you use depends entirely on what you’re trying to discover.
Market research should make up a significant part of your business planning process – the more time and effort you put into this step, the smoother the rest of the planning will go. The output of your market research will play a large part in informing the rest of your business decisions – treat it accordingly.
- Identify your brand positioning
Using the results from completing the first two steps of your business plan, the third step is to identify and outline your brand positioning strategy. What positioning strategy you choose to adopt will be influenced massively by two leading factors – what your core aims are and what gaps you spotted in the market through your research.
A solid brand positioning strategy will ensure that you stand out in the market, rather than blending in with the hundreds of other local operators who are vying for the same customers as you. The positioning you choose will bleed into so many factors of your business, including what segment of the market you target, what features and amenities you offer in your space, how you operate on a day to day basis, and how you advertise.
It’s a core part of any business strategy, but is especially important in high-competition sectors where sticking with the status quo is a death sentence.
- Create a financial plan
To determine the feasibility of your business plan and assist you in projecting financials, you’ll next need to outline what your financial strategy is. That’s a vague brief, but there’s a lot of scope for exploration here.
Creating a financial business plan for a coworking business space will force you to consider lots of different factors including what your overhead costs will be, how much revenue you’ll need to break even, and what that looks like in terms of market capitalisation. By forecasting revenue over a three, five, or even ten year period, you can also get an idea of how your projected growth strategy will affect revenue, and therefore profitability.
It’s essential to keep in mind that flexspace locations generally take up to two years to reach a steady level of occupancy and revenue. That makes marketing and awareness spend a critical component of any financial plan.
There are plenty of detailed guides to writing the financial section of a business plan online that can help you cruise through this step. Remember, if you make a discovery during this stage of the process that changes the entire plan, that’s a success not a failure.
- Outline location strategy
Having a solid financial plan will give you great insights into how costs will affect revenue and growth, which means you should be ready to start seriously considering what you can afford in terms of location.
It might be that your entire business plan or your business aims revolve around a certain location – maybe you’re passionate about bringing coworking to your hometown, or you’re particularly interested in cornering a specific segment of the London market. In cases like those, you’ve got a big head start on your location strategy.
However, if you haven’t thought too much about location so far in the business planning process, now’s your chance. There’s a lot to consider in a coworking space location strategy, from cost/benefit analysis to making sure your location is fully future-proof against changes to the way we work. We’ve written a full guide to tackling location strategy in the flexible office market which should help you answer all the questions you need to answer.
Beyond the macro-location strategy, there’s also the matter of picking the actual property. There are a lot of factors that go into deciding what space makes sense for you to occupy, but one of the key things to think about is size.
How big your coworking space is will have knock-on effects on your revenue ceiling, but it’ll also dictate the boundaries of what’s possible from a positioning perspective. For example, if you choose a very small space that only has capacity for 10 desks, you’re highly limited in the environment you can create.
A small space can be dominated by a few individuals, feel too close to a home environment to be worth the cost to customers, or even put hard limits on just how ‘thriving’ a community you can establish.
With that in mind, when you’re choosing a site for your coworking venture, think carefully about how the size, shape, and surroundings relate to your overall strategy.
- Develop marketing plan
As a startup coworking space operator, you’ll most likely be entering the market with no established leads, no brand recognition, and a lot of competition to beat. That makes considering marketing a hugely important part of your business planning process.
Developing a full marketing strategy ahead of time can help you to hit the ground running when it comes time to launch, getting customers through your door and kickstarting cashflow as early as possible.
It’s essential that you consider all channels available to you and the costs and benefits involved in each and how they interact through cross-channel marketing. Most importantly, don’t overlook the importance of digital marketing in the flexible office sector.
- Get ready for launch
Finally, you’re ready to put all of the steps of your business plan together and move forwards towards working on the details of your big moment – the launch. This is arguably the most exciting part of any coworking space business plan, as you get to consider all of the important intricacies like placemaking, events, and outreach.
The business plan you’ve put together will become your operations guide, helping you to stay on track throughout your launch journey and proving its value as you get closer to meeting the aims you established at the very start of the process.
Getting help with a coworking business plan
The seven steps above are just an outline of what a business plan for coworking spaces should look like. It’s a great starting point but, understandably, lacks a lot of the detail that makes a business plan so valuable in the first place.
If you’re about to start the business plan process for your coworking space, getting the help of an expert in the sector can make sure you don’t miss any key steps, make false assumptions, or get overwhelmed by the sheer scope of the project.
Get in touch with us if you’d like to hear more about how Spaces to Places can help you extract the most value from a business plan, and continue to support you as you launch into operation.