Startup cost
$50k–$500k
TRUiC Business Ideas
How to Start a Coworking Space Business
Decision Snapshot
Coworking Space
Idea Score
50
Profit margin
29%
Break-even
4 mo–12 mo
Time to launch
12 wk–36 wk
Demand trend
Stable
5-yr failure rate
—
Capital intensity
Very high
Time commitment
Flexible
Part 1 - How to start a Coworking Space business - Background
As the pace and structure of the workplace changes, businesses small and large are looking for new office solutions that meet their evolving needs. Coworking space businesses meet these needs by renting out office space in flexible formats. The coworking space sector is thriving, growing at an average rate of 23 percent annually since 2010.
Our guide is in 3 parts:
- Part 1 - How to start a Coworking Space business - Background
- Part 2 - Our planner tool to see if this idea is the right fit for you
- Part 3 - Action plan to get started
What are the costs involved in opening a coworking space business?
The startup costs associated with opening a coworking space business are manageable. The primary costs include leasing a commercial space and purchasing:
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furniture
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networking equipment
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decorations
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miscellaneous items (e.g. trash bags and toilet paper)
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insurance
For a modest coworking space, these expenses can be kept under $20,000 (and sometimes under $10,00). Alex Hillman started a coworking space with 1,800 square feet and about 20 members for $6,000. He opened a second location that was nearly triple the size and had more extensive networking equipment for $18,000.
The best way to keep costs manageable is by starting with a relatively small space (e.g. 1,800 square feet instead of 4,500 square feet). This will help keep costs low while still allowing business owners to find a prime location, use state-of-the-art equipment and have nice decor. These latter items shouldn’t be skimped on because they’ll significantly impact how many people consider using the coworking space.
What are the ongoing expenses for a coworking space business?
The ongoing expenses for a coworking space generally run several thousand dollars a month. They include lease payments, employee salaries, high-speed internet costs, utility costs and equipment maintenance fees.
Who is the target market?
The target market for a coworking space business is business owners and professionals in the area. Some larger coworking spaces cater to large corporations with traveling employees, but most new spaces focus on serving entrepreneurs, solopreneurs and small business owners in the local community.
How does a coworking space business make money?
A coworking space business’ primary source of revenue is subscription fees, which clients pay in exchange for being able to use the space. Many coworking space businesses rent meeting rooms, offer classes and hold events for additional sources of revenue.
How much can you charge customers?
Because coworking space businesses provide flexible office solutions, they frequently have multiple subscription options. For instance, clients may pay by the day, week or month. The average cost for a monthly membership is $195. Many spaces charge more for a dedicated desk, an office or a locker. Some spaces charge for use of a meeting room, while others including meeting room use in their standard fee.
How much profit can a coworking space business make?
A coworking space business can generate a solid profit, and it can do so quickly. Alex’s space was breaking even within three months and returned his personal investment of $10,000 within 15 months. Once established, a space that has just 100 members could bring in around $20,000 per month (based on average monthly membership fees of $195).
How can you make your business more profitable?
Classes can serve as an important side revenue. Matt explains that the Skillery’s well-attended classes sell between 20 and 30 tickets, with half of the proceeds going to the class instructor. These tickets generate some revenue, and they also provide leads for potential new clients.
Day-to-Day and Growth
What happens during a typical day at a coworking space business?
A typical day at a coworking space business is full of hustle and bustle.
The essential work of the business is making sure the lights are on — quite literally. Clients use coworking spaces as offices, and they expect the lights to be functioning, roof to not be leaking and internet access to be connected. Should any utility or maintenance issue present itself, resources must be immediately devoted to resolving the problem as quickly as possible.
Assuming there is no imminent building crisis, running a coworking space involves keeping the area clean, socializing with clients and meeting potential clients. Of course, there are bills to pay and administrative matters to see to. Also, business owners might be teaching a class or hosting some other event on any given day.
All of this is surrounded by the activity of the clients who are using the coworking space as an office. The cumulative activity is one of the main draws of this business, as it helps everyone present stay motivated and focused.
What are some skills and experiences that will help you build a successful coworking space business?
While coworking space business owners should be familiar with the basic principles of running a business, networking is the most essential skill that business owners must have. Business owners need to be well-connected with both fellow entrepreneurs and local service people. Knowing entrepreneurs is how business owners will find clients, and knowing service professionals will ensure any problems that arise can be addressed quickly.
Networking is a skill that almost every business owner can further develop, and there are many ways to work on this skill. There are books on the topic, such as Networking for People Who Hate Networking and Networking Like a Pro. Platforms like Future Learn and Udemy have online networking courses. Most importantly, there’s no substitute for attending local networking events held by other businesses or organizations.
What is the growth potential for a coworking space business?
A coworking space business may have a single location or it can grow to be an international company. Workantile in Ann Arbor, Michigan is an example of a coworking space that has one location. WeWork is one of the largest coworking space businesses in the world, with dozens of locations spread across many countries.
When a successful coworking space is ready to expand, opening an additional location is usually better than expanding a current location. Adding a location, either in the same city or another city, helps the coworking space reach more potential clients in different neighborhoods or metropolises.
What are some insider tips for jump starting a coworking space business?
The startup funds required for opening a networking space can be raised before actually opening a coworking space by selling discounted memberships in advance. Alex did this (raising around $4,000), as did Matt Dudley and team at the Skillery. Matt and his team managed to raise $9,471 before opening day by selling prepaid memberships, and they collected another $10,000 through a unique lifetime membership offer.
How and when to build a team
A coworking space business requires a small team of members from the outset. Spaces are usually open around-the-clock, so someone always needs to be on call for emergencies.
Part 2 - Is a Coworking Space business the right fit for you?
Business Evaluation & Strategy Tool
We'll walk you through the four pillars every business needs: Points of Leverage, Marketing Strategy, Financial Model, and Personal Compatibility. At the end you'll see a personalized report and your action plan below will be tailored to your answers.
Step 1 of 4 — Points of Leverage
Every viable business has natural advantages. Below are common leverage points across four categories. Pick the ones that apply to your Coworking Space business. We've pre-suggested a few based on your idea — review and adjust.
Step 2 of 4 — Marketing Strategy
Without a way to connect with customers, even great businesses fail. Pick the channels you plan to use to reach your customers.
Step 3 of 4 — Financial Model
Enter your monthly baseline costs — the minimum overhead to keep the business running. Then we'll calculate how many sales per month you need to break even.
Step 4 of 4 — Personal Compatibility
A business that doesn't fit your life will fail no matter how good the numbers look. Tell us how this business fits you.
Your Coworking Space Evaluation Report
Complete the four pillars and your personalized summary will appear here.
Points of Leverage
Marketing Strategy
Financial Model
Personal Compatibility
Part 3 - Action plan to launch your Coworking Space business in 90 days
Nine concrete steps to take you from idea to open business, grouped into 30-day phases. Complete the planner above and we'll highlight what's most important for your situation.
First 30 days — Foundation
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Form your legal entity
An LLC keeps your personal assets separate from business debts and lawsuits — the most common reason small business owners choose this structure. Sole proprietorships and partnerships do not provide this protection.
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Get an EIN and register for taxes
Apply for your free Employer Identification Number through the IRS, then register for any state or local taxes that apply to your business (sales tax, franchise tax).
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Open a business bank account and credit card
A dedicated business account is required to maintain personal asset protection. Mixing personal and business finances ('piercing the corporate veil') can void your LLC's liability shield.
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Set up business accounting
Recording expenses and income from day one makes tax filing easier and lets you see when the business is actually profitable. Use software (QuickBooks, Wave) or a part-time bookkeeper.
Days 30–60 — Compliance & Risk
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Get permits and licenses
State and local requirements vary widely. Brick-and-mortar businesses typically need a Certificate of Occupancy; service businesses may need specific professional licensing; food businesses need health permits.
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Get business insurance
General Liability Insurance is the most common starting point. If you'll have employees, most states require Workers' Compensation. Specific industries need additional coverage (product liability, professional liability, etc.).
Days 60–90 — Launch
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Define your brand
Your brand is how customers perceive and remember you. A clear name, logo, and visual identity make every later marketing decision easier and protect you legally as you grow.
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Create your business website
Every legitimate business needs a website. Social media pages are not a substitute — you don't own the platform. Modern website builders mean you can launch a clean site in a weekend without a developer.
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Set up your business phone system
A dedicated business number keeps your personal life private, makes the business look legitimate, and lets you route calls professionally. Cloud phone services start under $20/month.