The free calculation tool predicts the profitability of new coworking spaces
- Deskmag’s 2017 survey found that only 40% of coworking spaces are profitable
- The fixed entry costs associated with coworking are high (leases, layout, design), while the return is low in the first year
- Craig Baute has developed an online coworking calculator that can help new and established operators project a ccosts and income
Despite the multi-billion dollar valuations of workspace brands like WeWork and Ucommune, coworking isn’t a big deal. In fact, in many cases it is quite the opposite.
Deskmag’s 2017 report found that only 40% of coworking spaces are profitable, while Cushman & Wakefield’s Coworking 2018 The report warned that “scale is the only way to improve volumes and margins”, due to sky-high real estate leases and fixed operating costs.
Despite this, coworking continues to grow at an impressive rate with new spaces springing up like mushrooms all over the world.
In December 2017, Emergent Research and GCUC have published their coworking forecasts for the next five years, citing expectations of rapid and continued growth between 2018 and 2022. Their research suggests that the number of global coworking spaces is expected to increase by an average of 16% each year, from 14,411 in 2017 to just over 30,000 in 2022.
There is still plenty of room for growth, but the ultimate challenge for new spaces remains: fixed entry costs are high and the return is low for the first year.
Calculate to be successful
Is this true for all spaces? Or can new coworking spaces be profitable in 12 months? Some of these answers are not in feasibility reports costing thousands of dollars, but rather in a free online self-generated calculator.
Craig Baute is a coworking consultant and founder of the Denver coworking space Creative density, which he opened in 2011. Over the past year, he has developed an online calculator designed to give new operators cost and revenue forecasts in the first 12 months of opening a business. space.
Launched in March of this year, the calculator produces a report giving an overview of key costs such as rent, utilities, furniture and staff, and according to Craig, it can be presented to third parties as part of a loan or investment request. The calculator provides a guideline on the potential income estimated by the 13e months, after a year of opening the space.
It is a great opportunity for new operators and already more than 150 people have used it. But that begs the question: why provide a free tool to help others that could ultimately generate more competition for your own space?
âI like the philosophy of freelance colleagues and I want these spaces to be successful, so locals can find the right community,â says Craig. âCoworking helps create micro-communities, allowing people to work where they want to live. “
His idea for the calculator came from firsthand experience of the difficulties associated with starting a space, combined with the knowledge that independent spaces, whether in Denver or any other city or town in the world, can enrich communities. local communities and stimulate regional economies.
“Small operators fly blind”
It’s not easy to start a space, and many are forced to close in the first year.
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âFeasibility studies start at around $ 3,000 and go up to $ 10,000. New operators can’t afford it, so they don’t, which means they’re flying blind, âsaid Craig.
âThen you have real estate, furniture, furnishings, connectivity, kitchens – it all costs thousands of dollars. Add to that that small spaces don’t have the reserves to invest in marketing, they don’t expect chairs to cost thousands of dollars, and it all adds up. They end up undercapitalizing which means the business cannot grow.
“I wanted to create a free tool based on realistic data and my own experiences over the past 9 years to help them understand the resources and loans they might need to get started.”
Denver Coworking Alliance
In addition to leading Creative Density and consulting, Craig also started Denver Coworks – a coworking alliance and a passport that covers the 15 (and more) coworking spaces in the city.
Her thought, like so many other regional alliances of workspacesis that a rising tide lifts all boats and workspace operators who collaborate and share knowledge are more likely to be successful. So, since 2012, Craig has been involved in the launch of every new coworking space in Denver.
As for Craig, his own coworking journey began in 2009 when he graduated in Michigan, and found himself looking for work during what was considered the worst financial crisis since the 1930s.
“I was a desperate guy in a recession!” he said. âI was looking for work and I came across coworking in 2009, just as it was starting, which was really at the right time.
Craig came up with the idea of ââcreating a coworking space and took the time to research the demographics of cities across the United States and find potential coworking locations.
âI didn’t want to be the first coworking space in a city, so I targeted mid-sized cities where I would be the second or third space. I created a lead generation website and decided that whichever city had the biggest increase, I would move.
âDenver, that was it! “
Since then, Creative Density has grown twice and Craig is now looking for innovative ways to advance the brand through franchising, with a number of deals currently “in the works”.
âIt’s an exciting experience! he said. âIt allows us to diversify and do something neat for local communities, while also making a good comeback. He falls in this beautiful place. It’s about building a business that pays the bills and of which franchisees and members can be proud.
As for the calculator, Craig is currently marketing it organically through coworking groups, and the word is spreading quickly.
âAbout 85% of the people who use it are in the United States, but we’ve had people using the calculator all over the world – Colombia, Kenya, China, Mexico, the Middle East – everywhere.
âIt’s really exciting to reach all of these places and help people get started on new coworking businesses. “
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