Coworking Spaces Can Be Ideal for Entrepreneurs
Have you ever thought about working in a coworking space? Coworking is defined as the sharing of office space by (typically) self-employed, independent professionals who wish to work together in a communal, collaborative setting rather than the traditional employee-only office. This model has a lot of advantages that may make it ideal for many entrepreneurs.
The Growth of Coworking
The advantages of being a self-employed contractor are well known—being your own boss, having the flexibility to choose your hours and place of work, and the ability to deduct business expenses from income tax are all powerful incentives. Statistics indicate that self-employment is on a steady rise and by 2027, more than 50% of the U.S. workforce is expected to consist of freelancers, independent contractors, and on-demand workers.
The rise in self-employment has led to an explosion in demand for co-working spaces, particularly from millennials in tech industry startups. The number of coworking spaces was up in 2018 by 16% in the U.S. and 36% elsewhere. Multi-billion dollar tech superstars such as Uber and Instagram were incubated in coworking spaces.
Depending on your finances and family situation, working from home can be advantageous, but it can also leave you isolated or subject to distractions that can impact your productivity. If working from home is not suitable, but you don't need or can't afford traditional private office space, perhaps it is time to investigate the benefits of coworking.
Coworking Spaces Are Ideal for Low-Cost Startups
Renting traditional commercial office space normally requires signing a lease of from two to 10 years in length (five years is typical). A deposit is also generally required. Depending on the state or provincial laws and how the lease agreement is structured, breaking out of a commercial lease can be difficult and expensive, particularly if space is not in high demand.
On the other hand, coworking space is treated more like a club membership—space is typically rented by the month, with some providers offering weekly, hourly, or even pay-as-you-go options. From a cash flow perspective, coworking space is ideal for startup entrepreneurs looking for a professional workspace without the high upfront costs and long-term commitment.
The flexibility of coworking space can also be an advantage to a growing startup business. Accommodating additional employees is as simple as adding memberships.
In the U.S. or Canada, pricing for coworking space can be anywhere from a few hundred dollars a month to thousands, depending mainly on the following factors:
- Location: Area real estate costs. In expensive locales such as Silicon Valley or New York, coworking space costs can be dramatically higher.
- Building space and amenities: Expect to pay more if your coworking space resides in a Class A building that includes amenities such as parking, on-site security, café, gym, etc.
- Desk space: Membership fees are higher for reserved seating (as opposed to "hot desks") and much higher for a private office.
- Extra membership benefits: Some coworking providers offer benefits such as 24-hour access, conference rooms, an on-site receptionist, and services such as mail delivery, secure bike lock-ups, showers, use of participating sites in different locations, workshops and educational events, discounts from corporate partners, specialty coffees and snacks, and more.
The more expensive coworking spaces generally cater to established businesses or well-financed startups, rather than solo entrepreneurs.
Coworking Facilities Are All-Inclusive
One of the other major advantages to coworking is avoiding all the other private office space startup costs including furniture, utilities, additional lease service charges, and appliances (coffee machine, fridge, microwave, etc.). Finding an appropriate private office space can also be very time-consuming.
Coworking space users sign a membership agreement that sets out fees, space usage rules, and any other legal aspects that govern the provider-member relationship. This agreement includes details about any all-inclusive amenities.
A coworking space membership typically includes:
- A desk and chair (depending on the membership level, this may be any available desk, a dedicated desk, or even a private office)
- High-speed internet (wired or Wi-Fi)
- Access to a shared printer/scanner/copier
- Bookshelf space
- Free coffee, tea, and kitchen facilities, including a fridge and microwave
- The use of a conference room (on a reservation basis)
Another appealing feature of coworking spaces, particularly for millennial entrepreneurs, is fewer responsibilities. Building management is responsible for maintaining and cleaning the premises. The all-inclusive nature of coworking also greatly simplifies accounting and tax preparation, as all services are consolidated into a single monthly invoice.
Coworking can greatly ease the path to starting a new business and also provide flexibility when your business is growing. You can add team members at any time without the costs and commitment of commercial lease space.
Coworking Offers Collaboration and Synergy
Unfortunately, one of the downsides to being a self-employed freelancer is the isolation—many contractors work from home and don't get the synergy and social interaction that working in an office with a group of like-minded people can offer. Depending on your family situation, a home environment can also be very distracting, as can other locations where entrepreneurs sometimes choose to work such as coffee shops or malls.
A coworking environment can provide:
- A flexible, convenient, and professional work environment that encourages productivity.
- The necessary separation and balance between work and life that many people require.
- Positive social interaction—the human touch and sense of community (some are even dog-friendly).
Coworking Connects You With Valuable Contacts
Coworking spaces are ideal environments for networking with other entrepreneurs, especially for startups. Need assistance with bookkeeping, a web designer for your business website, a photographer to cover your next event, or someone to help with your social media marketing campaign? The expertise you need may just be a few desks away.
Further, offering your services to other members may get you new business without the marketing hassles. Mingling with other business people on a daily basis is great for word of mouth and is a much more effective (and less expensive) way to gain new business than advertising.
For summer students and interns, coworking can also be a great way to meet potential employers.
Is Coworking Right for You?
While coworking has many benefits, it's not necessarily for every entrepreneur or business. A startup business that has sufficient capital from the owner(s) or access to debt or equity financing may prefer leasing commercial office space for a number of reasons:
- Professionalism: Having its own premises may give a business a more established, professional appearance to customers—signage, office layout, furniture, etc., can all be customized to your requirements.
- Confidentiality: Private office space is more suitable for certain types of businesses, particularly those dealing with sensitive materials or issues of client confidentiality. In an open coworking environment, other entrepreneurs may be able to overhear telephone conversations with clients or see information on neighboring computer screens.
- A quiet environment: If you prefer a quiet work environment with minimal interruptions, then a coworking space may not be suitable. Background noise from phone conversations, socializing, and music can be distracting and detract from your productivity.
- You already work collaboratively: Collaboration and networking are some of the main benefits of coworking, but an established business may not need either.
- Control over the physical environment: Coworking space users may have minimal choices when it comes to ergonomic issues such as desk space and seating. Lack of control over lighting, room temperature, and proximity to windows are other potential downsides of a shared workspace.
- The "vibe" may not be to your liking: For example, if you run a graphic-design business, you are unlikely to have much in common with a group of accountants in the same space. You may also be more comfortable working alongside people of a certain age range or gender.
Most successful businesses that are in a growth phase and have or expect to have a dozen employees or more will probably eventually want the privacy and security of renting their own office space, but for solo entrepreneurs and other micro-businesses (and particularly for startups), the low cost and flexible nature of coworking makes it a very attractive option.