Can you name at least one coworking space nearby? If you live in a major metropolitan area, the answer is probably “yes.” These numbers alone reveal the recent proliferation of coworking spaces in your own neighborhood: In 2018, there were 2,188 new coworking spaces that opened up around the world, 1,000 of which were in the United States. Today, there are an estimated 35,000 coworking spaces globally.
In case you aren't familiar, coworking spaces are shared workspaces that offer a combination of memberships and day passes to allow entrepreneurs and small businesses to use their resources. These resources typically include all the features of a conventional office, like desks, collaborative areas, meeting rooms, and even amenities like Wi-Fi, kitchens or break rooms. The only difference? Unlike private office space, you’re sharing this spot with other businesses and working professionals who are unrelated to your business.
Who Works in Coworking Spaces?
Today, more than 40% of all self-employed workers and small business owners use coworking spaces as their main office, making up the largest group of regular members. Why? For starters, the affordable upfront costs of setting up shop in a coworking space make economic sense for budget-conscious businesses that are just getting started. Coworking spaces also give small businesses the chance to tailor their office to fit their evolving needs, allowing them to easily scale operations up or down without committing to a lease.
The Endurance of the Coworking Space Business Model
If you look back to just a few years ago, these coworking spaces were considered a fast-growing movement. WeWork emerged onto the scene with force, bringing with them hip decor, cold brew on tap, and an opportunity for freelancers, startups, and entrepreneurs to ditch the coffee shop for more conventional office digs. Like a lot of fads, however, many people believed this was one trend that would eventually fade away.
Were they right? Not even close. In fact, today, coworking remains a high-growth industry that has disrupted traditional real estate and the way people work. It’s estimated that the number of coworking spaces is expected to grow at an annual rate of 6% in the coming years. And by 2030, the coworking space market is expected to represent 30% of all U.S. office stock.
So what do these stats tell us? For starters, it’s probably OK to assume that coworking spaces will be around for a while. That means this is a lucrative industry for entrepreneurs to either start a coworking space of their own or set up shop inside of one.
The Pros and Cons of Running Your Business In a Coworking Space
If you’re an entrepreneur or small business looking to explore your coworking space options, there’s a lot to consider when deciding if this space is right for you, your employees, and even your clients. Here are some of the unique benefits and disadvantages every entrepreneur should keep in mind before they swap a cubicle for an open coworking environment.
The Good: Coworking Space Pros
Signing a long-term office lease as a new business owner is risky. You don’t know how much growth you’ll experience over the next few years, and you could quickly outgrow a space you signed a five-year lease for. Coworking offices, on the other hand, offer membership rates that are often far more flexible and won’t lock you in for years at a time.
You can usually rent a spot month-to-month, week-to-week, or even pay-as-you-go, depending on your business’s unique situation and needs. If, after a year, you decide you want to move on from a coworking spot for something bigger or more centrally located, you can totally do that.
All the Amenities You Ever Dreamed Of
This is where a lot of coworking spaces distinguish themselves from traditional offices. The list of amenities is long, and they can vary wildly across different coworking spaces. Pool tables, foosball tables, free coffee and beer, yoga rooms, nap rooms, snacks, and standing desks are just some of the many amenities that you can find at coworking spaces. This list highlights some of the coolest coworking space amenities, and where you can find them.
Low Starting Costs
Another great benefit of coworking spaces is that they don’t require a lot of money upfront to snag a spot and get started. Typical office leases can cost as much as $3,000 a month for 1,200 square feet, but the real kicker is the large security deposit needed to seal the deal. That can equate to an entire year’s worth of that $3,000 a month rent. On the other hand, you won’t need to shell out huge starting costs to rent out a coworking space, which operates more like a club membership than a commercial property rental.
Pro Tip: If you're looking for other ways to cut down business startup costs, consider working with an online business filing company to incorporate. The business experts at Swyft, for instance, can ensure you're paperwork is filed accurately so that you aren't beholden to future fees due to errors that can often occur during the formation process.
Entrepreneurs know that flexibility is key in those first few years as a small business. If your business is growing rapidly, you can easily expand within a coworking space from a small office for three to four people, all the way to offices for more than 20 people. With traditional offices, you need to rent enough space to include your planned growth, and that can be something that’s hard to predict. The flexibility of coworking spaces, however, was made for growing startup businesses—accommodating additional employees is as simple as adding more memberships.
If you decide to invest in joining a coworking space, get ready to network—these spots are teeming with other entrepreneurs and small businesses, making it great for building new connections. If you’re a content marketing business, there may be a graphic designer at the desk next to yours who can whip up graphics for a killer new website. Or, if you’re launching an online retail store, you could meet a copywriter who can ensure your site’s product descriptions are fit to impress new consumers.
Conversely, offering your services to other members may get you new business without the hassles of marketing. Mingling with other business people on a daily basis is an ideal way to get positive word of mouth.
The Bad: Coworking Space Cons
Even though coworking spaces have a lower starting cost, they can get expensive after a while. Prices will vary by location, but even unassigned desks in prime locations can start at $300 per month, with fancier options such as reserved, dedicated workspaces topping $700 per month in cities like New York. That can add up pretty quick, especially when you’re still in the startup phase.
Limited Number of Locations
While there are many coworking spaces available, especially in big cities, the availability of traditional office spaces far outnumbers them (for now). If you are looking for your office to be located in a very specific area, or you’re looking for a specific type of building or space, you may not be able to find that dream location with a coworking space. In fact, 22% of workers think there are still too few coworking locations.
Lack of Privacy
Hate the sound of someone chewing and slurping their coffee? Do you need complete silence to get a task done? If you said yes to any of these, a coworking space may not be for you and your business. Coworking spaces are packed, and with more communal arrangements, the open style rooms can be noisy and distracting. Although a lot of coworking offices offer separate meeting rooms, there’s always a chance conversations with your colleagues and clients may be overheard, too.
Anyone who’s worked for a startup or small business knows that true 9-5 hours are a myth. If you know that late nights and irregular work hours are a part of the gig, coworking spaces might make that tough for you and your employees. That’s because most of them are open from 9-6. And while this isn’t a problem for a lot of people, most entrepreneurs or start-up founders know that they’re always on the lock.
So, Is Coworking Right for You?
Coworking isn’t the norm quite yet, but all signs point to it heading in that direction. If you’re still wondering if the coworking bubble is going to burst, here’s a short answer: it is not going to go pop or run out of steam anytime soon. And why would it? Coworking’s success reflects how our work culture is changing and evolving.
As you prepare to launch your business, choosing your company’s location is an essential step in getting things off the ground. If a coworking space sounds like the right fit for you, check out this list of some of the country’s top coworking spaces to see if there’s one that’s as unique as your business.