How to open a Coworking space in under Rs 5lakhs!
I am sharing my experience of starting and running a co-working space from scratch. My motive behind this posts is to help people, who wish to open a co-working space and share my insights on how one can build a profitable business with limited resources and time.
Rising Indian startup ecosystem, skyrocketing rents, long lease agreements, all these forced young companies to look out for an alternative when it came to spending a huge chunk of money on office rentals. This gave birth to a huge wave of Co-working spaces operating in India. Starting from 2008-2009 to present day, more and more individuals are turning up towards entrepreneurship.
Indian has 150+ co-working spaces, spread across major Tier 1 cities which I expected to grow even further as more business owners and freelancers opt for “easy on pocket” office alternatives.
Why did I decide to open a co-working space?
Ehh!! I have answered this question zillion time!! But guess what, I have been honest in conveying my motive behind opening this space i.e “ to make money and fund my other startup “ ( Still culture stays our 1st priority ). Yes, that sounds like an out of place logic, but that WORKS!!
It’s been almost 6 months I am operating in this business and the “Business is GOOOD!!!”. We cracked our operational break-even cost within first 3 months and went profitable from the 4th month itself.
With 3 big-sized profitable bootstrap startups onboard and a few mid-sized IT business, the culture which has been created has exceeded all my expectations so far. Going at this pace, we are positive about breaking even by the end of 2017.
"Let me share my experience and strategies which I applied while building the coworking space".
Here is the plan which I followed while doing the competitive analysis for Co-working spaces in New Delhi :
Step 1: Analyse your competition ( how I did it )
Knowing your competition is the first thing you should do in any business. This helps you in making your strategies going forward and will help you in making better financial decisions.Here is the plan which I followed while doing the competitive analysis for co-working spaces in New Delhi.
This is very critical yet ignored by many. You just have to know the brains which are working behind the scene, “you just have to”. This will help you analyze the perspective with which the other founder is playing at.
With impeccably talented founders running the top and the most loved co-working spaces in Delhi such as Innov8, 91springboard, and few others. There are few co-working spaces which are run by not so entrepreneurial minded people. We decided to not to enter in the top space since it required a huge amount of money and the top co-working spaces were run by extremely intelligent people. Thus we opted for the lower priced segment.This gave us a gap to win over the later segment in terms of culture and building relationships amongst your members.
Product and Service Offered
Regardless of where and how you operate a co-working space, your space has to be super good and must do justice to your price. In fact, we made sure our facilities was 2X good and at 2X lesser price from your competition, this is 4X value for money on the table for your users.
After looking at various co-working spaces around Delhi/NCR, we understood the value derived by the members in each of these individual space. We then only focused on one thing and that is how we can be better than the others.
Overall Space Dynamics:
Having shared my concerns about being better than the others in terms of culture, price, The infrastructure has to be flawless. We always made sure that our infrastructure was at par or even better than what user expected us off. We tried and researched about what problems did people face in different co-working spaces.
The price segment at which you operate brings in a different set of expectations from people. Always try to surprise them with better facilities. Know their problems and just focus on those problems. ( can’t get a jacuzzi built for them btw ).
Average Cost Of Operations:
This is where your cold calling starts. Locate the areas where your competition is operating, call the local real estate dealers and have an idea of the ongoing rentals. Then calculate electricity consumption per unit. Then calculate the staff required per/sqft, Internet cost etc. Add all these and you will get an average monthly cost of how your competition is operating.
Compare the cost of your top competitors and do a brief analysis of their expenditure. Now compare it with your strategy and financial planning. ( If it's not better than them, DON’T DO IT).
Step 2: Shortlist A Few Hot Locations
Location plays a vital role while planning to open a co-working space. This can be a huge game changer if you play the right cards. Below is the step-by-step details of how we planned and found our location.
Select 4 Top Location:
Even While the whole city seems to be an opportunity to do business, each location plays a crucial role in the success of a co-working space. Plan your location which acts as a nucleus to cities business network, transportation, and overall trade. You just have to be where the heart of the city is.
I owned and sold a restaurant 3 years back in my college, where I had a hard time making it profitable just because of the location. The location is everything!
Office Space and Area Opportunities:
When you have squared upon a few location, analyze the best possible seating arrangements that can be tried to maximize overall benefits. Have a few sketch in place for every location before selecting one.
We made a mistake by over optimizing the space by putting in more areas to monetise. We realized the problem quickly and cut down our capacity by 15%.
Space Restriction of Each Location:
Identify the space restrictions each location has and evaluate how will it affect your operations in future. Having an idea about the things that might create a hindrance in operations will be extremely beneficial for your company.
Our restriction was more of our own self-created. Playing at the lowest rates in the market puts huge pressure on operations. Always make a 1-year plan for both expenditures as well as your revenues.
Space Benefits of Each Location
With restrictions comes the benefits of the selected locations. Knowing the overall benefits space has such as transportation connectivity, Bank and financial institutes locations, electricity/internet supply issues etc, will be the key factors upon which you can play your pricing.
With knowing what you are good at and how good your services are, you will always win the negotiation regardless of whom you are negotiating with. Stand your ground if you 100% sure and believe in what you have to offer.
Competition Analysis By Location
Know the price and facilities at which your competition is operating in your selected locations. Analyze the facilities and location Advantages and disadvantages your competition has.
Pretty simple! Outdo them by 2X at least in every dynamic.
Step 3: Build Infrastructure - The Lean Way
Fixed Assets: No need spend a fortune
Always try and avoid buying furniture such as tables, chairs etc directly from the showroom. This high-end store generally charges 40-60% more than the actual product cost.
we got everything built from scratch at our own location ( thanks to the grace period given by our landlord before our lease). We sourced everything from raw material to labor, all by ourselves. Though it might be tiring, but this surely saved us a huge chunk of money.
Technology Requirements: Spend as you scale
Try to provide the basic facilities at first if you are starting a coworking space on a budget. Scale everything as your coworking members increase.
we bought an only specific number of chairs and internet bandwidth initially. As our user increased, we made sure our we scaled our infrastructure side by side as well.
Space Aesthetic: Make them look pretty cool
Make it look neat and tidy. Avoid making it too swanky. Always try and provide an energetic vibe across the whole co-working space.
We were super lean on providing the best aesthetics we could. We took ideas from everyone including our users. This helped us in knowing what they actually wanted.
Step 4: Marketing Budget - ZERO
This is where we saved a lot of money. Actually, we spent none.With occupancy at 70%, our marketing spend is ZERO till date. Let me tell you how.
Facebook Hack: Understand where your customer engage
We tracked all the facebook startup groups which were active in our city. We tried to track all the individuals who were active in these groups and sent cold messages to generate leads.
We tracked facebook events and tried to find people who went to these startup events, those who were on the “ going list “ and those who liked the event pictures were sent cold messages, promoting our co-working space.
Quora Hack: Just have a valuable conversation
That is an orthodox approach in promoting your company. Research related keywords, search related questions, answer them in a sensible and just don’t spam. Quora is sorted.
Nah! Nothing much here to add, google quora hacks and think backward.
Previous Entrepreneurial Network
I was fortunate enough to be a part of a startup fellowship that helped me in connecting with individuals who were just amazing in what they did. I just threw a group message on WhatsApp and humbly asked them to spread the word.”Worked wonders”.
This helped me a lot in understanding the mindset of mid-segment companies who are running strictly on a budget.
Note: Always keep your co-workers in a constant feedback loop. This will help you immensely in understanding their problem and their needs. Have conversations with not just the founders but all their team members.
I hope I have cleared a lot of your doubts and have brought value to your time. I would love to assist or help anyone who wishes to open a coworking space. If you think I have missed out any segment or an issue has been left unaddressed, please let me know in the comments.