One of the most pressing questions facing Coworking space operators is whether or not to expand their business. That can mean expanding their sole location, or opening new ones. While the Coworking market is still trending upwards, there are many factors to consider before growing. Let’s take a look at some of the keys to deciding whether expanding your Coworking operation is ideal.
Diverse Offerings
One of the most telling signs whether your Coworking model is truly successful, is diversity in your offerings. What this means is, are you offering open space, private offices, and various different memberships? And is there demand for all these options?
Basically, if you are a thriving open space location, but either do not have private offices or they’re largely vacant, it may not be ideal to expand now. Or vice versa. When you can satisfy diverse sections of the market, feel free to check off a big key to expanding.
Also, if you are thriving in just one sector of Coworking, its important to expand if possible within your space. Add several offices if you have the space to do so. Reconfigure space for open desks and individual or collaborative working. Cater to as many skillsets and demographics as possible in your space.
Finally, answer a very basic question. Are you turning potential members away? If so, you know it’s time for a change, either in your current space or via expansion.
Operating to Perfection
If you have any hiccups in operation, or any lingering questions as to how to streamline your business, then expansion likely isn’t an option right now. That being said, there’s nothing wrong with figuring all these intricacies out as you go along. Factors such as the membership options we just touched on, which Coworking software to power your space, and automating your billing, are aspects of operation you must have nailed down before expanding.
In other words, if running your one space to perfection hasn’t happened yet, let’s not try another just yet.
The contrasting viewpoint to this, is that many operators (or business owners in any field) don’t want to put all their eggs in one basket. Diversification is very important. So operators tend to want to expand quickly. One Coworking space could be running smoothly, but a change in rent, a gradual shift in population, or a large competitor moving in nearby, could all drastically change your MRR (monthly recurring revenue).
Profitability
Simple enough, right? Are you profitable? If so, this is a huge step in deciding to expand. If not, we know achieving profitability can take time. It doesn’t mean you’re doing anything wrong necessarily, this is just a slow process at times, especially depending on the market. Always compare your membership prices, your rent, and your buildout costs because a new location may not have the same break-even timeframe.
Make sure you’re maximizing your profit potential. If you’re maximizing your square footage, you can then determine how much profit you stand to gain. Keep in mind, if you wait to expand until the point you’ve absolutely perfected your first location, you’ll turn profit quicker on the expansion project(s).
Location
We cannot stress enough the importance of your location. It consistently comes up as one of the vital factors in a member determining what Coworking space to join. So if your location is perfect, and you are drawing new members consistently due to ease of access, visibility and other factors, it’s not a given you’ll duplicate that success in another area of town.
The caveat of course, is expanding in the same neighborhood. Factor in potential cannibalism and saturation if you’ll be too close, but just make sure your expansion is taking you into an area where you’re positioned for as much success as the thriving space you already have.
According to Statista, a large number of operators are planning to expand one way or another in the next year.
- 27% plan on expanding within their current space, by adding more desks, for example.
- 8% said they plan on moving to a new, larger location.
- 37% said they plan on opening a new location.
Only 1/3 of operators surveyed said they had no expansion plans.
So while there are many factors to consider, its clear the market is trending toward larger spaces, toward operators with multiple spaces, and of course, the raw number of members continuing to increase.
To find out more about how Yardi Kube is the platform of choice to help you scale your operation, click below.