Co-Working Spaces Can Be Ideal for Entrepreneurs
Have you ever thought about working in a coworking space? Co-working, defined as the sharing of office space by (typically) self-employed, independent professionals who wish to work together in a communal, collaborative setting (as opposed to the traditional model where office space is occupied by employees of a single organization), has a lot of advantages that you may not have thought of. In fact, coworking space can be ideal for entrepreneurs.
Self-Employment Is on the Rise and Co-Working Fits the Bill for Many Freelancers
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 to choose self-employment, especially given that the traditional "job for life" that many of our parents and grandparents enjoyed has all but disappeared.
Statistics indicate that self-employment is on a steady rise and by 2020, 40 percent of the workforce in the U.S. and 45 percent of the workforce in Canada will consist of freelancers, independent contractors, and on-demand workers.
The rise in self-employment has led to an explosion in demand for coworking space, particularly from millennials in tech industry startups. According to deskmag's 2017 Global Coworking Survey, the number of coworking spaces is growing by 22 percent per year, and the number of coworking members is growing at 40 percent per year. 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 and/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.
Co-Working Space Is 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/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.
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.
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, on-site receptionist and/or admin 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, etc.
The more expensive coworking spaces generally cater to established businesses or well-financed startups, rather than solo entrepreneurs.
Co-Working 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 appropriate private office space can also be very time-consuming.
A co-working 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 WiFi)
- 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)
One of the other main attractions of coworking space, particularly for millennial entrepreneurs, is fewer responsibilities. Building management is responsible for maintenance and cleaning of 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.
Co-Working Offers Collaboration and Synergy
Unfortunately, often 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 that entrepreneurs sometimes choose to work in such as coffee shops or malls.
A co-working 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 also dog-friendly).
Gaining New Business and 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 be just a few desks away.
Conversely, offering your services to other 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 and is a much more effective (and less expensive) way to gain new business than advertising.
For summer students and interns, coworking can be a great way to meet potential employers.
Is Co-Working Right for You?
While coworking has many benefits, it is necessarily not suitable 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 commercial leased office space for a number of reasons:
- 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.
- Private office space is more suitable to certain types of businesses, particularly those dealing with sensitive materials and/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.
- If you prefer a quiet work environment with a minimum of interruptions to stay focused, then coworking space may not be suitable. Background noise from phone conversations, socialization, music, etc. can be very distracting and detract from your productivity.
- 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/air conditioning, proximity to windows, etc. are other potential downsides of a shared work space.
- The "vibe" may not be to your liking. For example, if your business is graphics design 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.