Business Overview


As the pace and structure of the workplace changes, businesses small and large are looking for new office solutions that meet their evolving needs. Coworking space businesses meet these needs by renting out office space in flexible formats. The coworking space sector is thriving, growing at an average rate of 23 percent annually since 2010.

Who is this business right for?

Anyone who enjoys interacting with people and is passionate about entrepreneurship might like running a coworking space business. People skills are essential, as this business model is largely built on networking and developing a community. A passion for new businesses helps business owners better connect with many of their clients, who will tend to be entrepreneurs or work for startups.

What happens during a typical day at a coworking space business?

A typical day at a coworking space business is full of hustle and bustle.

The essential work of the business is making sure the lights are on -- quite literally. Clients use coworking spaces as offices, and they expect the lights to be functioning, roof to not be leaking and internet access to be connected. Should any utility or maintenance issue present itself, resources must be immediately devoted to resolving the problem as quickly as possible.

Assuming there is no imminent building crisis, running a coworking space involves keeping the area clean, socializing with clients and meeting potential clients. Of course, there are bills to pay and administrative matters to see to. Also, business owners might be teaching a class or hosting some other event on any given day.

All of this is surrounded by the activity of the clients who are using the coworking space as an office. The cumulative activity is one of the main draws of this business, as it helps everyone present stay motivated and focused.

What is the target market?

The target market for a coworking space business is business owners and professionals in the area. Some larger coworking spaces cater to large corporations with traveling employees, but most new spaces focus on serving entrepreneurs, solopreneurs and small business owners in the local community.

How does a coworking space business make money?

A coworking space business’ primary source of revenue is subscription fees, which clients pay in exchange for being able to use the space. Many coworking space businesses rent meeting rooms, offer classes and hold events for additional sources of revenue.

What is the growth potential for a coworking space business?

A coworking space business may have a single location or it can grow to be an international company. Dallas Fort Work in Dallas, Texas and The CommonSpot in Ithaca, New York are two examples of coworking spaces that have one location. WeWork is one of the largest coworking space businesses in the world, with dozens of locations spread across many countries.

When a successful coworking space is ready to expand, opening an additional location is usually better than expanding a current location. Adding a location, either in the same city or another city, helps the coworking space reach more potential clients in different neighborhoods or metropolises.

Getting Started


What are some skills and experiences that will help you build a successful coworking space business?

While coworking space business owners should be familiar with the basic principles of running a business, networking is the most essential skill that business owners must have. Business owners need to be well-connected with both fellow entrepreneurs and local service people. Knowing entrepreneurs is how business owners will find clients, and knowing service professionals will ensure any problems that arise can be addressed quickly.

Networking is a skill that almost every business owner can further develop, and there are many ways to work on this skill. There are books on the topic, such as Networking for People Who Hate Networking and Networking Like a Pro. Platforms like Future Learn and Udemy have online networking courses. Most importantly, there’s no substitute for attending local networking events held by other businesses or organizations.

What are the costs involved in opening a coworking space business?

The startup costs associated with opening a coworking space business are manageable. The primary costs include leasing a commercial space and purchasing:

  • furniture
  • networking equipment
  • decorations
  • miscellaneous items (e.g. trash bags and toilet paper)
  • insurance

For a modest coworking space, these expenses can be kept under $20,000 (and sometimes under $10,00). Alex Hillman started a coworking space with 1,800 square feet and about 20 members for $6,000. He opened a second location that was nearly triple the size and had more extensive networking equipment for $18,000.

The best way to keep costs manageable is by starting with a relatively small space (e.g. 1,800 square feet instead of 4,500 square feet). This will help keep costs low while still allowing business owners to find a prime location, use state-of-the-art equipment and have nice decor. These latter items shouldn’t be skimped on because they’ll significantly impact how many people consider using the coworking space.

What are the steps to start a coworking space business?

Once you're ready to start your coworking space business, follow these steps to ensure that your business is legally compliant and avoid wasting time and money as your business grows:

  1. Plan your business. A clear plan is essential for success as an entrepreneur. A few important topics to consider are your initial costs, your target market, and how long it will take you to break even.
  2. Form a legal entity. Establishing a legal business entity prevents you from being personally liable if your coworking space business is sued.
  3. Register for taxes. You will need to register for a variety of state and federal taxes before you can open for business.
  4. Open a business bank account. A dedicated checking account for your coworking space business keeps your finances organized and makes your business appear more professional to your customers.
  5. Set up business accounting. Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
  6. Obtain necessary permits and licenses. Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
  7. Get business insurance. Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
  8. Define your brand. Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
  9. Establish a web presence. A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.

Select your state below for an in-depth guide on completing each of these steps in your home state.

Where can I find a business mentor?

One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.

Having a support network in place to turn to during tough times is a major factor of success for new business owners.

Recommended: Fizzle.co offers video courses and a supportive online community of like-minded entrepreneurs. Try one month membership for for free.

What are some insider tips for jump starting a coworking space business?

The startup funds required for opening a networking space can be raised before actually opening a coworking space by selling discounted memberships in advance. Alex did this (raising around $4,000), as did Matt Dudley and team at the Skillery. Matt and his team managed to raise $9,471 before opening day by selling prepaid memberships, and they collected another $10,000 through a unique lifetime membership offer.

Growing Your Business


How to promote & market a coworking space business

Many coworking space businesses offer trial memberships, and this is where Matt and team found marketing success. They charge $50 for a weekly membership, which is credited on client’s first invoice if they sign up. The fee is nominal so potential clients’ risk is low, but it’s not free. Not being free is key, as it shows that the service has a value.

Recommended: Get started with local advertising for your business with a $300 credit from Yelp.

How to keep customers coming back

A coworking space business’ long-term success depends on its ability to built a community of clients. Publishing a newsletter, having photo boards and hosting regular events help everyone get to know each other and benefit from the groups cumulative knowledge.

How and when to build a team

A coworking space business requires a small team of members from the outset. Spaces are usually open around-the-clock, so someone always needs to be on call for emergencies.

Legal Considerations


State & Local Business Licensing Requirements

Certain state permits and licenses may be needed to operate a coworking space business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.

Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, check out our informative guide, Sales Tax for Small Businesses.

For information about local licenses and permits:

Certificate of Occupancy

A coworking space business is generally run out of an office space or lounge type space. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO).  A CO confirms that all building codes, zoning laws and government regulations have been met.

  • If you plan to lease a location:
    • It is generally the landlord’s responsibility to obtain a CO.
    • Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a coworking space business.
    • After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
  • If you plan to purchase or build a location:
    • You will be responsible for obtaining a valid CO from a local government authority.
    • Review all building codes and zoning requirements for your business’ location to ensure your coworking space business will be in compliance and able to obtain a CO.

Reduce Personal Liability

Structuring your business as a limited liability company (LLC) ensures your personal assets are protected in the event your business is sued.

What is an LLC?

Form an LLC in 5 easy steps

Earning Potential


How much can you charge customers?

Because coworking space businesses provide flexible office solutions, they frequently have multiple subscription options. For instance, clients may pay by the day, week or month. The average cost for a monthly membership is $195. Many spaces charge more for a dedicated desk, an office or a locker. Some spaces charge for use of a meeting room, while others including meeting room use in their standard fee.

What are the ongoing expenses for a coworking space business?

The ongoing expenses for a coworking space generally run several thousand dollars a month. They include lease payments, employee salaries, high-speed internet costs, utility costs and equipment maintenance fees.

How much profit can a coworking space business make?

A coworking space business can generate a solid profit, and it can do so quickly. Alex’s space was breaking even within three months and returned his personal investment of $10,000 within 15 months. Once established, a space that has just 100 members could bring in around $20,000 per month (based on average monthly membership fees of $195).

How can you make your business more profitable?

Classes can serve as an important side revenue. Matt explains that the Skillery’s well-attended classes sell between 20 and 30 tickets, with half of the proceeds going to the class instructor. These tickets generate some revenue, and they also provide leads for potential new clients.

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