Imagine 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 with the first steps.
We will go over the most important fixed monthly costs for a coworking business and the dollar estimates associated with these fixed costs.
The goal: Determine an average monthly budget for fixed costs so that you can take the first step towards building a full-scale financial plan for your business.
Setting Up Costs in Coworking
During the initial stages of launching your main goal is to get your space up and running.
The costs of setting up vary depending on the size of your space, 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.
Pricing estimates for these costs will vary greatly depending on the size and state of your space, but also the needs of your members.
Fixed Costs in Coworking
Rent & Taxes
Rent is the most substantial fixed cost of owning and operating a coworking space.
However, similar to the 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 estimates. To find a ballpark monthly rent figure for a given area or city, Google is 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 the 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, as they 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 as 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 personal space, internet and electricity and other “utilities” will take up a significant portion 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 enlist 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 some budget set aside for online advertising.
An office buzzing with people gets dirty quickly.
Cleaning services are often overlooked yet a significant monthly operating cost to consider.
A space that is well maintained and clean is a vital component of member experience as well. In short, no one likes to work in a dirty office.
That said, getting an estimate 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, commercial janitorial services can charge by the 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 and tea 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.
Every monthly, you will also need to budget for 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 technologies to help automate much of the day-to-day work in coworking, ultimately helping these businesses grow and thrive.
For example, a multitude of SaaS (software as a service) companies exists 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 solutions to operational hurdles such as automated billing, membership tracking, and inventory management.