How to Start a Coworking Space in 2024

With the coworking industry set to grow 30% by the year 2030, there’s a reason why we’re seeing more and more aspiring coworking owners and operators enter the market.

After helping coworking owners and operators start successful businesses for nearly a decade, we’ve learned what it takes to be successful in the flex space industry. 

We’ll help you figure out the foundation of starting your coworking business, so you’ll be set up to succeed in the flex industry and beyond. If you’re considering opening a coworking business in your community, this is the guide for you. 

Starting a coworking space can broadly be divided into four key steps:

1. Determine your business strategy 
2. Define key operational pieces
3. Develop a sales and marketing strategy
4. Build a strong community and experience

We’ll unpack each of these steps in this guide, including what you need to do for each and why it’s critical to your overall success.

Determine your business strategy 

First things first, you’ll need to figure out all of the essential foundational elements of your coworking business. This includes how your space will make money, if and when you’ll need a business plan, and where your space will be located.

1. Figure out your why

The first question to ask yourself before starting a coworking space is why.

Why do you want to start this business? What motivated you to choose coworking? Your reason for starting a coworking business will guide many of the future decisions that you make. Maybe you want to:

• Build a community of mission-driven people
• Make use of a pre-existing, underutilized space like KoWorks
• Create a place where entrepreneurs can network and grow
• Capitalize on the the hybrid work trend

Kia Rahmani, Optix founder and CEO, started a coworking space after spending time in incubators in Silicon Valley. He wanted to create a collaborative space for start-ups in his hometown of Vancouver, Canada, much like he experienced in California.This was his why.

2. Create a business plan

Here’s a mistake we see far too often: aspiring coworking owners starting their business without a clear plan for how their space is going to make money. Considering 50% of coworking spaces are not profitable, this is crucial to consider. 

Creating a coworking business plan will help you:

• Get a loan or receive funding
• Guide your short-term and long-term strategy
• Help you make important business decisions

For those who aren’t looking for funding, a business plan is a way of making sure you have a viable business before opening your doors. If you are applying for a loan or looking to receive funding, then a business plan will be a necessity. 

3. Determine your business model

The primary way coworking spaces make money is by selling space in the form of hot desks, dedicated desks, meeting and conference room rentals, and private offices

However, there are a few other coworking revenue models to consider including:

• Additional amenities like gym and childcare facilities
• Workshops and paid events for members
• Virtual mailbox services
• Renting the space for external programs and events after hours
• Renting resources like TVs, podcasting equipment, and additional hardware
• Food and drink services

You don’t need to figure all of your revenue streams out right away. However, you should know what the breakdown of your space will be in terms of desk to office to meeting space ratio. Today, private offices are in demand.

4. Figure out how you will fund your coworking space

When it comes to starting a coworking space, there are three main sources of funding:

• Self-funding: investing your own personal money into your business
• Investors: venture capital from investors. It will usually require you to give up a share of the company (equity) in return for an agreed upon sum of money
• Loans: borrowing money and paying back interest. There are many different loans available including a small business loan or a loan from a bank

Each form of funding comes with its own pros and cons. For that reason, many operators will mix multiple sources of funding to start their coworking space.

Funding models for coworking spaces: pros and cons

5. Pick the right location

Refining your coworking location strategy is a huge first step in opening your coworking space.

A location strategy consists of:

• The city you want to open in
• The type of building you’re looking for
• The size of the space you want
• The price range you’re willing to pay
• The demographic you’re looking to target

Select the top cities you want to open in and research everything from demographics to job growth. Make sure that the city and space you’re choosing to open in is aligned with what your target customers want, as well as the kind of community you’re looking to build.

6. Design your coworking space

When designing a coworking space, you need the space to be functional but inspiring, practical but welcoming, professional but homey, the list goes on and on. 

When we think about designing a coworking space, these are the critical steps we recommend taking.

1. Start with your business model
2. Figure out what your needs are
3. Configure a floor plan
4. Begin the buildout
5. Find the right furniture
6. Deploy the right tech
7. Stay agile and embrace experimentation

The biggest requirement is ensuring you create something that supports people in being their best, most productive selves.

7. Define your target market

Defining your target market, or ideal customer profile is a fundamental part of starting any business. This includes:

• What is their demographic (age, gender, occupation, income)
• What do they care about
• What problems do they have
• Why do they want a coworking space

It can be helpful to draw this person out or create a battlecard to help you remember who they are. This buyer persona tool from HubSpot can help bring your ICP to life so they’re always fresh in your mind.

Define key operational pieces

An important part of starting a coworking space is figuring out how it’s going to operate — or as we like to say, “the meat and potatoes” of your business. Operations are always subject to change, but aligning on some key operational pieces early on will help you run your business as efficiently as possible.

8. Align on your initial membership plans and pricing

Structuring and pricing your coworking membership plans will set the tone for how your business generates revenue.

These are some of the most popular plans we see. 

• Community plan: access to the virtual community and all events
• Hot desk plan: 8-20 days a month of hot desk use, 5-10 hours of meeting room rentals a month
• Private office: 24/7 access to their own secure office, meeting room rental allocation
• Virtual mail plan: access to virtual mail services and discounts on meeting rooms and desk bookings
• Weekender plan: Unlimited weekend access to hot desks

How you price these plans will depend on the market, your competitors, the amenities you offer, and how much money you need to generate each month for profitability.

9. Build out your team structure

Depending on the size and scale of your operations, you may need to hire staff for your coworking space.

The most common position that coworking operators hire for is a community manager. A community manager is responsible for engaging the community, managing bookings, and ultimately making people feel welcome and safe. The average cost of a full-time community manager is around $55,000 USD a year.

Other potential hires for a new coworking space:

• Cleaning staff
• Freelance developer to build and manager your website
• Finance officer or bookkeeper
• Virtual assistant

10. Plan out your coworking technology ecosystem

Technology is a huge part of the modern coworking space, but knowing where to start can be daunting. This is how we suggest building your coworking technology ecosystem:

• Start light: build the foundation of your stack with only the tools that you need and increase complexity as you grow
• Go high reward first: start with tools that will support the most time-intensive tasks, like managing bookings and invoicing
• Integrations are key: look for tools that work well together and integrate as much as you can
• Think about the future: go for tools that will be able to scale and evolve with you and your business

The most important thing to consider when you’re opening your first space is, what are the essential tools I need to run my business. Start with the essentials and expand as you grow.

11. Select your coworking space software

Part of an effective technology ecosystem is a great coworking space software.

Coworking platforms like Optix helps automate all of the day-to-day operations of running your business, effectively helping you engage your members and grow your business.

While you can implement coworking space software at any time, it’s easiest to get it up and running in your space at the beginning.

These are a few questions to ask yourself before getting started:

• What are my coworking space’s biggest operational challenges?
• What will best support my members?
• What other tools will I be using and will they integrate with my software?
• What kind of support will I be provided with long-term?

Wondering how software can help you start a coworking business? Reach out to a member of the Optix team today to get started.

Develop a sales and marketing strategy

Time and time again we hear from operators that the biggest challenge in their coworking business is acquiring new members and filling their sales funnel. For that reason, we highly recommend thinking about your marketing strategy as early as possible including how you will attract the kind of members you’re targeting. 

12. Create an initial member acquisition strategy

Getting your first coworking members is an exciting challenge that will take some experimentation to get right. One of the more effective strategies we see for early-stage operators is promotional pricing.

Here, you price your membership plans at a cheaper rate for a set period of time in hopes of attracting new members. Then, you promote this discounted price using:

• Digital ads
• Social media
• Street teams
• In-person events
• Local business partnerships

The goal of this acquisition campaign is to generate buzz and bring people into the space, in hopes of building a lively community. Consider it a temporary tool to get people in the door and prove the value of the space itself.

13. Map out a long-term marketing plan

While offering a steep discount is a good way to get people in the door in the beginning, it isn’t a sustainable way to acquire customers. Having a solid marketing plan for your coworking space is essential to long-term growth.

A good marketing plan will include:

• Market research
• Target market
• Goals and objectives
• Strategy
• Marketing tactics
• Budget

Think about how many members you want to acquire in the next year. Now think about how you are going to get them. The most effective channels we typically see for coworking spaces is SEO and Google ads, but the potential for creativity is endless.

14. Outline exactly how you will differentiate yourself 

Creating a differentiated offering for your space can help you combat the competition and keep your membership growing long-term – even when bigger chains are marching into your market.

Differentiation can be as elaborate as building a niche coworking space tailored to a hyper-targeted client base, or as simple as hosting really great events or having a well-defined brand.

Consider what will make your space different from your competitors, and what will make people choose your space over others. See if you can leverage these insights to create a desirable community that people choose — every time.

15. Create a sales strategy

Sales and marketing go hand-in-hand. Here are some questions to ask yourself when building out an effective sales process at your coworking space:

• How will you capture leads?
• What will you do with leads once they come through?
• How will you ensure you’re following up with your leads?
• Who will manage your customer relations?
• How will you incentivize deals to close?

Consider implementing a CRM system in your coworking space to help manage your sales and marketing processes. You can also use Automations in Optix to automate lead communication and help move people through the sales funnel. 

You can automatically send email communications to leads with Optix including tour reminders, special discounts and offers to help convert more prospects into members.

Build a strong community and experience

You’ve developed a business plan, designed your coworking space, and built out a stellar marketing plan that has members pouring in your space. Now it’s time to start to build the community you’ve always dreamed of.

16. Determine what kind of community you want to build

The number one reason people seek out coworking spaces is for community. Having a strong community element in your coworking space will help you attract and retain members. It can be the difference between a business and brand.

First, spend some time thinking about what a coworking community means to you. For some, building a coworking community means bringing people together to network and make new connections. For others, it means providing a safe space to express themselves.

Then, you can start thinking about the kind of community you want to build.

17. Connect with the greater local community

Coworking spaces and more often becoming hubs for the broader community. Connecting with the local community can help you build awareness of your coworking space, while getting a better understanding of what the needs of the community are.

• Go to local meet-ups at coffee shops or community centers
• Develop relationships with the businesses next door
• Develop an online community of local entrepreneurs on Facebook

The chances of you succeeding long-term are much higher if you start with the people first.

18. Develop strategies to engage your community

Community engagement is a hot topic for operators. At the end of the day, building an engaged community comes down to understanding your members and what they want from you.

Tactics to engage your coworking community:

• Organize monthly in-person events with complimentary food and drinks
• Send out a weekly newsletter sharing community news
• Set up a community feed in your space for members to connect
• Celebrate member birthdays, space anniversaries, and other significant days
• Set up webinars and virtual lunch-and-learns for members

19. Think about how to deliver an exceptional user experience

Coworking operators are in the hospitality business. At the end of the day, it’s all about how you create an unforgettable experience for your members. There are many ways that you can go about doing this:

• Complimentary, locally roasted coffee and organic tea
• A branded, white-labeled app that aligns with your brand
• Ergonomic office chairs and plush couches
• Office supplies available

Think about how you want to be treated at a hotel or service experience and give that to your members.

20. Never stop experimenting

The most important thing to remember when starting your coworking space is that everything is an experiment. You have a hypothesis of what will and won’t work. Test that hypothesis, but remain open to change! As you learn more about coworking and your members, you’ll find that your offering will naturally evolve over time – and that is perfectly okay.