23 data to include in the business plan of your coworking space

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Ever pondered what the ideal occupancy rate should be to ensure your coworking space thrives?

Or how many memberships you need to sell each month to meet your financial goals?

And do you know the optimal space utilization ratio for maximizing your coworking area's potential?

These aren’t just interesting figures; they’re the metrics that can determine the success or failure of your venture.

If you’re crafting a business plan, investors and lenders will scrutinize these numbers to gauge your strategy and viability.

In this article, we’ll explore 23 crucial data points every coworking space business plan must include to demonstrate your readiness and capability to succeed.

Occupancy rate should ideally be above 70% to ensure profitability

A lot of web agencies and freelancers rely on coworking spaces, and for these spaces to be profitable, an occupancy rate above 70% is often necessary.

This is because the fixed costs such as rent, utilities, and maintenance remain constant regardless of how many desks are filled. By maintaining a higher occupancy rate, coworking spaces can ensure that these costs are spread across more members, making it easier to cover expenses and generate profit.

Additionally, a higher occupancy rate can lead to a more vibrant community, which can attract even more members.

However, the ideal occupancy rate can vary depending on factors like location and the specific business model of the coworking space. For example, a space in a prime city location might need a higher occupancy rate to cover its higher costs, while a space in a less expensive area might be profitable with a lower rate. Ultimately, understanding the unique needs and costs of each coworking space is crucial to determining the right occupancy rate for profitability.

Monthly membership churn rate should stay below 5% to maintain stable revenue

Insiders often say that a monthly membership churn rate should stay below 5% to maintain stable revenue in a coworking space.

When the churn rate exceeds this threshold, it can lead to a significant loss of members, which directly impacts the revenue stream. A high churn rate means that more members are leaving than joining, making it difficult to cover fixed operational costs like rent and utilities.

Keeping the churn rate low ensures a steady flow of income, allowing the business to plan and invest in improvements and expansions.

However, this rate can vary depending on factors such as location and target market. For instance, a coworking space in a bustling city center might experience a different churn rate compared to one in a suburban area, as the needs and expectations of members can differ significantly.

Allocate 10-15% of revenue for community events and networking activities to enhance member retention

Most people overlook the fact that allocating 10-15% of revenue for community events and networking activities in a coworking space is crucial for enhancing member retention.

These events create a sense of belonging and community, which is essential for members who might otherwise feel isolated. By fostering connections and collaboration, coworking spaces can differentiate themselves from traditional office environments.

Moreover, these activities can lead to increased member satisfaction, which directly impacts retention rates.

However, the percentage of revenue allocated can vary depending on the size and location of the coworking space. Smaller spaces in less competitive markets might allocate less, while larger spaces in urban areas might need to invest more to stand out.

Target a break-even point within 24 months to be considered viable

It's worth knowing that targeting a break-even point within 24 months is often seen as a benchmark for the viability of a coworking space.

This timeframe allows the business to cover its initial startup costs and begin generating a profit, which is crucial for long-term sustainability. Achieving this milestone within two years demonstrates that the coworking space can attract and retain enough members to cover its operational expenses.

However, this timeline can vary depending on factors such as location, market demand, and the size of the space.

For instance, a coworking space in a high-demand urban area might reach break-even faster due to a larger pool of potential clients. Conversely, spaces in less populated areas might take longer to achieve this goal, requiring more time to build a stable member base.

Office space should be utilized at least 60% of the time during business hours to maximize efficiency

Maybe you knew it already, but office space in a coworking environment should be utilized at least 60% of the time during business hours to maximize efficiency.

This level of utilization ensures that the space is being used effectively, balancing between availability and occupancy. If the space is underutilized, it can lead to unnecessary costs and wasted resources, while overutilization might result in a lack of availability for members when they need it.

However, the ideal utilization rate can vary depending on specific factors such as the size of the coworking space and the nature of the businesses using it.

For instance, a smaller coworking space might aim for a higher utilization rate to cover operational costs, while a larger space might focus on providing more flexibility and comfort. Additionally, businesses with fluctuating demands might require different utilization strategies to accommodate peak and off-peak times.

Reserve 1-2% of revenue for technology upgrades and maintenance annually

Believe it or not, reserving 1-2% of revenue for technology upgrades and maintenance annually is crucial for a coworking space to stay competitive and efficient.

Technology is the backbone of any modern coworking space, enabling seamless communication, security, and productivity for its members. Regular upgrades and maintenance ensure that the space remains equipped with the latest tools and systems, which can significantly enhance the user experience and attract more clients.

However, the exact percentage of revenue allocated can vary depending on the size and specific needs of the coworking space.

For instance, a larger coworking space with more members might need to invest more in advanced security systems and high-speed internet, while a smaller space might focus on basic IT infrastructure. Ultimately, the key is to assess the unique requirements of your coworking space and adjust the budget accordingly to ensure that technology remains a valuable asset rather than a liability.

Offer a variety of membership plans, with hot desks, dedicated desks, and private offices, to cater to diverse needs

Experts say offering a variety of membership plans in a coworking space is essential to meet the diverse needs of different users.

Some people might prefer hot desks for their flexibility and cost-effectiveness, while others might need dedicated desks for a more permanent setup. Additionally, businesses or individuals requiring privacy and exclusivity might opt for private offices.

This variety ensures that the coworking space can accommodate freelancers, startups, and established companies alike.

In specific cases, a freelancer might choose a hot desk to keep expenses low, whereas a small team might need a dedicated desk to collaborate effectively. By offering these options, coworking spaces can attract a wider range of clients and adapt to their changing needs over time.

Ensure a minimum of 1.5 square meters per member for comfortable working conditions

Few web agencies' guidelines suggest ensuring a minimum of 1.5 square meters per member for comfortable working conditions in a coworking space.

This space allocation helps maintain a comfortable environment by preventing overcrowding, which can lead to distractions and reduced productivity. It also allows for personal space, which is crucial for focus and creativity.

However, the ideal space can vary depending on the nature of work and the specific needs of the members.

For instance, a team working on collaborative projects might require more space for group discussions and shared resources. Conversely, individuals who primarily engage in independent tasks might need less space, focusing more on quiet and privacy.

Allocate 3-5% of revenue for digital marketing to attract new members, especially in competitive markets

Please, include that in your business plan.

Allocating 3-5% of revenue for digital marketing is crucial for coworking spaces to attract new members, especially in competitive markets.

In these markets, potential members have numerous options, so a strong digital presence helps your space stand out. By investing in digital marketing, you can effectively reach and engage with your target audience, showcasing your unique offerings and community.

This percentage can vary depending on factors like the size of your coworking space and the level of competition in your area.

For instance, a smaller space in a less competitive market might allocate closer to 3%, while a larger space in a bustling city might need to invest up to 5% or more. Ultimately, the key is to tailor your marketing budget to your specific needs and market conditions to ensure you're maximizing your reach and attracting the right members.

Internet speed should be at least 100 Mbps to meet the demands of modern businesses

A precious insight for you, internet speed should be at least 100 Mbps to meet the demands of modern businesses in a coworking space.

With multiple businesses sharing the same network, a high-speed connection ensures that everyone can work efficiently without experiencing lag or downtime. This speed supports video conferencing, large file transfers, and cloud-based applications, which are essential for today's business operations.

However, the required speed can vary depending on the specific needs of the businesses using the space.

For instance, a tech startup developing software might need more bandwidth compared to a small marketing firm primarily using email and web browsing. Ultimately, understanding the unique requirements of each business helps in determining the appropriate internet speed for a coworking space.

Provide 24

This is insider knowledge here, coworking spaces often offer 24/7 access to accommodate the diverse schedules of their members.

Many freelancers and entrepreneurs work unconventional hours, so having the flexibility to access the space at any time is crucial for their productivity. Additionally, businesses with international clients may need to work outside of typical office hours to communicate effectively across different time zones.

However, the level of access can vary depending on the specific coworking space and its policies.

Some spaces might offer 24-hour access only to certain membership tiers, while others might have restrictions on weekends or holidays. It's important for members to understand the terms of their membership to ensure it aligns with their work needs.

7 access to cater to different working schedules and increase membership appeal

Most of the web agencies' coworking spaces offer 24/7 access to accommodate diverse working schedules and enhance their membership appeal.

Many professionals, such as freelancers and remote workers, have non-traditional work hours and require flexible access to their workspace. By providing 24/7 access, coworking spaces can attract a wider range of members who need to work outside the typical 9-to-5 schedule.

This flexibility is particularly appealing to international teams who may need to collaborate across different time zones.

However, the demand for 24/7 access can vary depending on the location and target audience of the coworking space. In urban areas with a high concentration of tech startups, there might be a greater need for round-the-clock access, whereas in smaller towns, the demand might be less pronounced.

Establish a referral program to incentivize current members to bring in new clients, aiming for 10% of new memberships from referrals

Not a very surprising fact, but establishing a referral program in a coworking space can be a game-changer for attracting new clients.

By incentivizing current members to bring in new clients, you tap into the power of word-of-mouth marketing, which is often more effective than traditional advertising. This approach not only helps in acquiring new members but also strengthens the community bond among existing members, as they feel more involved in the growth of the space.

Aiming for 10% of new memberships from referrals is a realistic and achievable target that can significantly boost your overall membership numbers.

However, the success of such a program can vary depending on factors like the location of the coworking space and the type of clientele it attracts. For instance, a space in a bustling urban area might see more success with referrals compared to one in a quieter, less populated region, and a space catering to tech startups might have different referral dynamics than one focused on freelancers or artists.

Ensure a member-to-staff ratio of no more than 50:1 to maintain high service quality

This valuable insight highlights the importance of maintaining a manageable member-to-staff ratio in coworking spaces to ensure high service quality.

With a ratio of no more than 50:1, staff can provide personalized attention and address individual needs effectively. This balance allows for efficient management of resources and ensures that members feel valued and supported.

However, this ratio can vary depending on the specific services offered and the size of the space.

For instance, a coworking space with advanced technological amenities might require a lower ratio to ensure proper maintenance and support. Conversely, a space with fewer amenities might manage with a slightly higher ratio, as long as the quality of interaction remains high.

Offer flexible lease terms to attract startups and small businesses wary of long-term commitments

This insight highlights the importance of offering flexible lease terms to attract startups and small businesses to coworking spaces.

Startups and small businesses often face uncertain financial futures, making them wary of committing to long-term leases. By providing flexible options, coworking spaces can become more appealing to these businesses, allowing them to scale up or down as needed without the burden of a lengthy contract.

In some cases, a startup might experience rapid growth, necessitating a quick expansion of their workspace, which flexible leases can accommodate.

Conversely, a small business might need to downsize or pivot, and a flexible lease allows them to do so without incurring penalties. Ultimately, offering flexible lease terms can be a strategic advantage for coworking spaces, as it aligns with the dynamic needs of their target clientele.

Allocate 5-7% of revenue for interior design and ambiance improvements to enhance the workspace environment

This data does not come as a surprise.

In a coworking space, the environment plays a crucial role in attracting and retaining members. Allocating 5-7% of revenue for interior design and ambiance improvements is a strategic investment to create a welcoming and productive atmosphere.

Such enhancements can lead to increased member satisfaction and potentially higher occupancy rates, which in turn can boost revenue.

However, the percentage of revenue allocated can vary depending on factors like the size of the coworking space and its location. For instance, a larger space in a competitive urban area might require a higher investment to stand out, while a smaller space in a less competitive market might get by with a lower percentage.

Ensure a diverse range of amenities, such as meeting rooms, phone booths, and relaxation areas, to meet varied member needs

Yes, ensuring a diverse range of amenities like meeting rooms, phone booths, and relaxation areas is crucial in a coworking space to cater to the varied needs of its members.

Different professionals use coworking spaces for different purposes; some might need quiet areas for focused work, while others require collaborative spaces for team meetings. By offering a variety of amenities, coworking spaces can accommodate individual work styles and preferences, enhancing overall productivity and satisfaction.

For instance, a freelancer might prioritize access to private phone booths for client calls, while a startup team might need large meeting rooms for brainstorming sessions.

Moreover, the demand for specific amenities can vary based on the industry or business type of the members. By understanding these specific needs, coworking spaces can tailor their offerings to provide a more personalized and effective working environment.

Regularly update community management software to streamline operations and improve member experience

Did you know that regularly updating community management software can significantly enhance the efficiency of operations and the overall member experience in a coworking space?

By keeping the software up-to-date, coworking spaces can ensure they are using the latest features and security measures, which helps in maintaining a smooth and secure environment for all members. This is crucial because outdated software can lead to operational inefficiencies and potential security vulnerabilities, which can disrupt the member experience.

Moreover, updated software often includes new tools and integrations that can help streamline tasks such as booking meeting rooms, managing memberships, and processing payments, making it easier for both staff and members to navigate daily operations.

However, the specific needs for updates can vary depending on the size and nature of the coworking space. For instance, a larger coworking space with multiple locations might require more robust software solutions to handle complex scheduling and member management, while a smaller space might focus on features that enhance community engagement and networking opportunities.

Target a net promoter score (NPS) of 50 or higher to gauge member satisfaction and loyalty

This data suggests that aiming for a Net Promoter Score (NPS) of 50 or higher is a strong indicator of member satisfaction and loyalty in a coworking space.

In the coworking industry, a high NPS reflects that members are not only satisfied but are also likely to recommend the space to others, which is crucial for organic growth. A score of 50 or above is generally considered excellent, indicating that the majority of members are promoters rather than detractors.

However, the ideal NPS can vary depending on factors such as location, target market, and the specific services offered by the coworking space.

For instance, a coworking space in a competitive urban area might need a higher NPS to stand out, while one in a less saturated market might find a slightly lower score acceptable. Ultimately, understanding the specific needs and expectations of your members is key to setting a realistic and effective NPS target.

Provide at least one networking event per month to foster community and collaboration among members

This data point highlights the importance of hosting at least one networking event per month in a coworking space to enhance community and collaboration among members.

Regular networking events provide members with opportunities to connect with others, which can lead to collaborative projects and shared resources. These events also help in building a strong sense of community, making members feel more engaged and supported in their work environment.

However, the frequency and type of events may vary depending on the specific needs and preferences of the coworking space's members.

For instance, a space with a diverse membership might benefit from a variety of event formats, such as workshops, casual meetups, or industry-specific gatherings. On the other hand, a coworking space with a niche focus might prioritize events that cater to the specific interests and goals of its members.

Ensure a current ratio (assets to liabilities) of at least 1.5:1 for financial stability

Actually, maintaining a current ratio of at least 1.5:1 is crucial for a coworking space to ensure it can cover its short-term liabilities with its current assets.

This ratio acts as a buffer, providing a cushion against unexpected expenses or fluctuations in revenue, which are common in the coworking industry. A higher ratio indicates that the business is in a better position to handle financial uncertainties and continue operations smoothly.

However, the ideal current ratio can vary depending on the specific circumstances of the coworking space, such as its size, location, and business model.

For instance, a larger coworking space with a diverse client base might be able to operate with a slightly lower ratio due to its stable cash flow. Conversely, a smaller or newer coworking space might need a higher ratio to account for greater financial risks and less predictable income streams.

Offer virtual office services to capture remote clients and additional revenue streams

It's very common for coworking spaces to offer virtual office services to attract remote clients and create additional revenue streams.

By providing services like a professional business address and mail handling, coworking spaces can appeal to businesses that operate remotely but still need a physical presence. This not only helps in capturing a wider client base but also allows coworking spaces to diversify their income beyond just renting physical desks and offices.

However, the demand for virtual office services can vary depending on the location and target market of the coworking space.

In urban areas with a high concentration of startups, there might be a greater need for such services as businesses look for cost-effective solutions. Conversely, in regions where remote work is less prevalent, the demand might be lower, requiring coworking spaces to tailor their offerings to meet local needs.

Monitor and aim to reduce energy consumption by 10% annually to lower operational costs and promote sustainability

A lot of coworking spaces aim to reduce energy consumption by 10% annually to lower operational costs and promote sustainability.

By monitoring and reducing energy use, coworking spaces can significantly cut down on utility expenses, which are a major part of their operational costs. This not only helps in saving money but also aligns with the growing demand for environmentally friendly business practices.

However, the impact of energy reduction can vary depending on factors like the size of the space and the number of members.

For instance, a larger coworking space with more members might see a more substantial reduction in costs compared to a smaller one. Additionally, spaces that already use energy-efficient appliances and lighting may find it more challenging to achieve further reductions, but they can still benefit from innovative solutions like smart thermostats and automated lighting systems.