Imagine for a moment you are planning a personal monthly budget.
The first step is to consider your current fixed costs, big and small. For example, rent, utilities, transport, groceries, etc.
Similarly, when creating a monthly budget for your business, you need to consider all the essential fixed costs of operating your business.
Mapping out a financial plan for your coworking business can appear overwhelming at first, but this article will help you with the first step in the right direction.
We will go over the most important fixed monthly costs for a coworking business and the dollar estimates associate to these fixed costs.
The goal of this article is to help you determine an average monthly budget for fixed costs so that you can take the first step towards building a sound financial plan for your business.
SETTING UP COSTS IN COWORKING
During the initial stages of your business you will have to get your space up and running.
The costs of setting up vary depending on the size of your space and initial community, and the current condition of the space.
In coworking, some common start up costs to consider are: insurance, office furniture, interior design, paint, carpentry, plumbing, electrical work, wireless internet & IT system, hardware & set-up, kitchen supplies, cleaning supplies, etc.
It’s difficult to give pricing estimates for these setting up costs as they will vary greatly depending on the size and state of your space and also the needs of your members.
FIXED COSTS IN COWORKING
Rent & Taxes
Rent will be the most substantial fixed cost of owning and operating a coworking space. However, similar to housing market, your monthly rent will vary greatly depending on the location and size of your space.
If you’re drafting a financial plan you’re probably looking for some solid estimate figures. To find a ballpark monthly rent figure for a given area or city, Google will be your best friend.
You’ll want to look up “average commercial rent per square foot in X” and fill in the name of the city in question. Unlike rent for personal housing, commercial rent is quoted by square foot.
Coworking Space Employees
The second biggest cost to consider when opening your coworking space is staffing.
The size of your operation will determine the number of full time and part time staff needed. However, it’s crucial to budget at minimum for one community manager. A community manager will play a vital role in the daily operations of your business.
To give you an idea of what a high-profile coworking business offers competitive compensation for this role, according to Glass Door, a community manager at WeWork receives an average yearly salary of 60k per year, but can go as high as 73k per year.
Internet & Electricity
Similar to a personal space, internet and electricities and other “utilities” will take up a big chunk of your monthly fixed costs. When it comes to a coworking business, the larger the space, the more costly utilities become.
When it comes to internet service, the monthly fixed price will also vary as a function of the internet service and speed you select.
For example, a DSL connection is less expensive than a broadband connection. The following website Cost Owl, provides some estimates on monthly internet service costs.
VARIABLE OPERATING COSTS
Marketing & Paid Advertising
If you’re focusing on organic marketing and promotion, that’s a great start.
However, you may want to explore enlisting the help of an experienced marketing professional well-versed in SEM/SEO (paid and organic search) to boost your marketing and advertising efforts.
Regardless of who takes care of executing an advertising strategy - meaning, you can do it yourself, and not pay a freelancer, but you will still need a budget for paid online advertising.
An office space buzzing with busy people will get dirty very quickly.
Cleaning services are an often overlooked yet significant monthly operating cost to consider.
A space that is well maintained and clean is a vital component of a happy member experience as well. In short, no one likes to work in a dirty office.
That said, getting to an estimate figure for this monthly cost can be tricky.
Professional cleaning service fees vary depending on several factors such as location, office size, and type of cleaning required.
Moreover, some professional janitorial services charge by square foot, while others charge by the hour, and some even charge a flat monthly fee. Check out Cost Owl’s helpful information on commercial cleaning company costs.
Coffee & Supplies
A cup of coffee is an iconic symbol of the office.
It has become standard practice to offer employees free coffee throughout their workday.
Subscription services have slowly become the norm for the delivery of frequently used products such as coffee.
Signing up for this type of service would be the simplest and most cost-effective way of getting your monthly coffee supply delivered hassle free.
According to Cost Owl, providing your members with daily coffee will run you between 50$ and 125$ per employee per year. The yearly cost varies depending on the quality of the coffee you select.
On a monthly basis you also need to budget to purchase various other kitchen and office supplies. For example, milk, sugar, tea, fruits, paper plates, and other miscellaneous supplies.
Management & Business Software
As the coworking trend explodes, software companies are stepping up to create and develop novel technologies to help automate much of the day-to-day work in coworking, helping these businesses grow and thrive.
For example, a multitude of SaaS (software as a service) companies exist to help entrepreneurs with everything, from guest management, billing, conference room booking, accounting, lead tracking, KPI tracking etc.
For example, coworking space software Spacial provides coworking managers with offers solutions to all operational hurdles such as automated billing, membership tracking, and space management.