Copyright © 2024 Venture X. All rights reserved
How much does it cost to start a coworking space?
The way we work has changed. Pandora’s box was opened when we were forced to work from home for months on end in 2020 and the world of business didn’t collapse in on itself. It’s now hard to look back on how we did things before and think of returning there as progress.
The truth is that hybrid working models (splitting time between home working and a central workspace) offer too many benefits to both employer and employee to ignore – it’s the future that just arrived a little earlier than expected.
One of the more notable side-effects of the change in our working habits is that coworking spaces (and flexible workspaces, more broadly) have now been thrust into the spotlight. These spaces, which revolve around the concept of flexibility and scalability, now appear tailor-made for the hybrid model that so many businesses are adopting.
They are the perfect solution when you want to stay agile, generally operating on flexible leases and featuring spaces that can shrink and grow with your team. And they also improve on many elements of the traditional office, usually cultivating an environment that’s more modern, feature-packed, and invigorating. That might be why the number of coworking spaces is set to double in the next three years.
A lot of money is pouring into the coworking sector right now, mainly because there’s a lot of money to be made by capturing the growing demand. But if you’re considering setting up a coworking space of your own, it’s first important to be aware of the costs of doing so. We’re here to break down roughly how much it costs to start a coworking space in the UK, before talking about how becoming a Venture X franchise owner is an alternative that offers a lot of benefits.
Finding the right space
First of all, and perhaps most importantly, you need to find the right property to house your coworking space. The capital costs involved with securing a suitable commercial property will generally be the largest expense in the entire process, so it’s important that this step is taken seriously.
There are a number of considerations to make when choosing the right property for a coworking space, including:
- A location that suits your target demographic
- Transport links nearby to enable easy commuting
- A large enough space to ensure your margins aren’t razor-thin
- Natural lighting that facilitates a comfortable working day
- An area that isn’t too over-crowded with competition
- A good energy efficiency rating to reduce ongoing bills
Finding a single property available on the market that fulfils all of these criteria is difficult enough, but it becomes especially challenging when you start to look in the most popular urban areas, where properties such as these are in high demand. And that high demand results in a premium price tag, reflected in the difference between the monthly rental cost per square foot of prime office space in London (£65) versus less competitive urban areas like Leeds (£34).
That should make it clear enough that choosing the right area to set up your coworking space is a critical element of your overall business plan – it will be a key determining factor in the success and profitability of your venture for years to come. It also makes it difficult to say, even roughly, how much it will cost you to rent your chosen commercial space for a year, given the variance in cost in different areas.
However, using Manchester as a middle-ground urban example, you would expect to pay around £375,000 per year to rent 10,000 square feet of prime office space in the city centre.
Fit-out and decoration
Finding the right space is only the first step – next you have to fit it out, buy all of the equipment you’ll need to provide an excellent working experience to your members, and decorate to create an impression. This is another significant cost that can snowball if it’s not managed efficiently, especially if you’re planning on launching an ambitious coworking space full of the most up-to-date tech and designer furniture.
Continuing with the 10,000 square feet example, we can start to get a rough idea of just what kind of cost the fit-out and decoration stage will incur. The general rule of thumb is that 100 square feet per person is ideal, so let’s assume that you’re aiming to create a workspace that accommodates up to 100 people. That means you’ll need roughly:
- 100 desks and chairs
- Furniture and equipment for 3+ meeting rooms
- Lighting for all 10,000 square feet
- A lobby space with plush furniture
- Kitchen facilities and appliances
- 5+ toilets
That’s without considering all of the additional extras you might want to build into your space, such as meeting pods, security equipment, access control technology, and any other office equipment such as printers. It also doesn’t take into account the cost of the labour required to fit out the space, or the time you’ll have to put into overseeing it.
Again, there’s such a huge variance in the quality and extent of fit-outs in coworking spaces that there’s no easy cost range to land on here. However some estimates put the fit-out cost of a mid-range office space in London at around £105 per square foot, meaning we’ll say you should expect to pay around £1,060,000 in total to get your coworking space in shape.
Pre-launch marketing
It’s all well and good having a workspace that’s beautiful and functional, but if no-one knows about it, you’re not going to be very successful. It’s also typically advised that you secure occupiers and customers in advance of opening, smoothing the transition into operation and ensuring that you’re earning revenue from day one. That makes pre-launch marketing an important consideration, and another major expense to add to the list.
Before you get started with any marketing, though, you’ll need a website to act as a destination for digital leads. For a simple website with limited interactive functionality, you should expect to pay £1000-2000 for the build, and an additional ~£200 annually for domain renewal and hosting.
With a website built, you can start to consider how to get people to visit it – focusing on building a sales funnel that points towards a conversion action. There are a wide range of marketing channels to consider leveraging, but the most important ones include:
- SEO – Search engine optimisation to rank organically for target keywords such as ‘coworking london’
- PPC – Pay per click advertising on search engines to target similar keywords to SEO, with a greater impact in the short term
- PR – To secure coverage in relevant local and industry publications, getting your name in front of the right crowd and securing backlinks to your website
- Social media – Organic advertising and direct lead discovery on social media sites like Facebook and LinkedIn
The cost of marketing will depend on how aggressively you want to capture leads. If you’re keen to drive revenue as quickly as possible, your spend in effective short-term channels like PPC will likely be fairly high, whereas if you’re content with taking a longer-term organic approach, you will pay a more reasonable amount. Generally, though, you should budget at least £2000 per month for marketing a moderately-sized coworking space, or £24,000 per year.
Operating costs
Finally, there are the ongoing costs that are associated with regular operation of your coworking space. These include, but are not limited to:
- Staff wages
- Utility bills
- Internet and phone lines
- Cleaning costs
- Office supplies
- Refreshments
- Software
There are certain costs that you certainly don’t want to skimp on, such as finding the right staff to make sure your coworking vision is achieved and choosing internet that’s more than enough to provide a fast and stable connection across the whole space. Others, like software and refreshments, can be minimised by just focusing on the essentials and avoiding nice-to-haves.
Operating costs for a coworking space are far too variable to predict accurately, but you can expect them to be well in excess of £5000 per month, or £60,000 per year.
Venture X Franchise as an alternative
So it’s clear that, in total, it costs a lot of money to open and operate a coworking space. Although the market is growing and it’s arguably a better time than ever to enter it as a new coworking operator, it’s still a sizeable investment that carries risk.
That’s why franchise arrangements like the one offered at Venture X make sense for coworking. As a Venture X franchise owner, you get to achieve your dream of opening a coworking space but mitigate a lot of the challenges of doing so. And since Venture X is already an established brand that’s been recognised as one of the fastest growing coworking brands in the world, there’s far less risk involved.
Ours is a tried and tested franchise model, with 45 workspaces already open across 30 countries. We offer all of our franchise partners full and comprehensive training, and they receive ongoing support from the Venture X team in areas like selecting the right location, fitting-out the space, and running the marketing campaign. You also get to reap the benefits of joining a popular brand with a well-defined position in the market.
You can read more about the Venture X franchise opportunity on our homepage, by downloading our free brochure, or by booking a no-obligation call.
A guide to the franchise business model
Roughly one in seven businesses worldwide are franchises, contributing $2.3 trillion to the global economy every year. Some of the biggest companies in the world run a franchising model, from McDonalds to Hertz, which might make you wonder – why is it such a popular way of operating?
In a nutshell, the franchise model offers prospective business owners a way of achieving their goal while avoiding many of the pitfalls that come along with setting up a new venture of their own. It’s an excellent way to get experience running a business, as franchise owners will typically receive guidance and support from their franchisor while also benefitting from the smooth on-ramp provided by gaining access to an established business model and brand.
Venture X is the one of the fastest growing franchises in the world, so we know a thing or two about how it all works. Here’s a summary of everything you need to know about the franchise business model, and why it’s worth considering over starting a new business of your own.
What is the franchise business model?
The franchise model is a method of operating a business involving a legal and commercial agreement between two parties – the franchisor and franchisees. The model revolves around the owner of a franchise business, the franchisor, receiving payment from a third party, the franchisee, in exchange for their use of the business model and brand.
In other words, the franchisee pays the franchisor a fee to operate as part of their business and have licence to use the franchisor’s trading name and operating strategy. You can think of it like a typical multi-location business, but instead of the managers of each location being employed by the business itself, they are the owners and sole operators of their own location. The details of the franchise relationship is typically outlined in a franchise agreement – a contract that outlines the guidelines within which the franchisee must operate their franchise.
Theoretically, and most often in practice, the relationship between the franchisor and franchisee is mutually beneficial. The former gets to achieve expansion on a scale that’s usually beyond what can be accomplished without bringing on board franchise partners, while the latter gets to own and run a business that’s already established and successful. That’s part of the reason that franchising is growing in popularity as an operating model.
Types of franchise agreements
Franchises can exist in practically any type of business – spanning sectors like retail, hospitality, property, and more. But in any sector, there are a number of types of franchise agreements that can be struck between franchisors and franchisees. These are typically defined as:
Single unit franchise
A single unit franchise agreement involves the franchisee purchasing the rights to operate as part of the franchise business with a single location. In the case of Venture X, this would mean owning and operating one workspace.
Multi-unit franchise
A multi-unit franchise agreement is for franchisees who want to own more than one location in the franchise business. Using the example of Venture X again, a multi-unit franchisee might own two, three, or even four workspaces across the UK and Ireland.
Master franchise
A master franchise agreement goes beyond the scope of the other two types, allowing the franchisee to not only own and operate their own franchise location but also to become a sub-franchisor and enlist more franchisees in their region. For instance, Venture X UK & Ireland is possible through a master franchise agreement with Venture X, meaning we are able to enlist new franchisees ourselves.
Benefits of franchising
The franchise model offers benefits to both the franchisor and the franchisee – that’s one of the reasons it’s so popular in a diverse range of sectors across the world. But you’re probably mostly interested in the benefits to the franchisee, so here are some of the main reasons you’d consider a franchise agreement over starting a new business of your own:
Brand recognition
In contrast to starting a new business, which is akin to beginning your journey from the ground floor, franchisees get an instant head-start by joining an established brand that, in most cases, will already have a customer base and some level of recognition in their sector. This means that there’s no need to develop a brand from scratch or build your reputation – you become a part of an already respected business.
Advice and support
Especially beneficial for people who are inexperienced in running a business or operating in a specific sector, the franchise model usually incorporates significant support in the form of initial training, veteran advice, and ongoing assistance. This means franchisees can draw from years or decades of learning and develop their understanding of the ins and outs of the industry quicker than would ever be possible by themselves.
Access to network assets
Economies of scale exist everywhere, and this economic principle applies significantly to the franchise business model. When you join a franchise, you usually get access to the resources and assets of the network. Instead of having to source your own suppliers, partners, and materials, you get to utilise the collective resources of the entire business.
Minimised risk
Running a business is inherently risky. In fact, around 60% of new businesses fail within their first three years. But the stats show that the story is quite different with franchises, with the British Franchise Association showing that 93% of franchisees were running profitable businesses and less than 1% of franchisors were closing due to commercial failure. That’s a stark difference, and is testament to the power of the other benefits of franchising.
The Venture X Franchise opportunity
Venture X is the fastest growing coworking brand in the world and a leading franchisor, with 60 Venture X locations already open across eight countries, and 130 franchise deals signed in total across 30 countries. Venture X UK & Ireland is now looking for new franchisees to partner with, offering the opportunity to join the exciting coworking sector, which is growing with no signs of deceleration.
One of the things that makes becoming a Venture X franchise partner so compelling is that our business model has already been proven in multiple locations and countries around the world. Our proven pathway will get your franchise up and running quickly and efficiently. We’ve done the groundwork, ascertained what your ideal client wants, and figured out how to meet that demand, reducing the time and capital required by you.
Opening a Venture X franchise will also give you a head-start over your competitors. We provide you with full training before you start and provide access to trusted suppliers and ongoing support as you open and grow. And Venture X franchisees aren’t just limited to one revenue stream – there are a whole host of additional products and services which can provide benefits to your engaged client base and increase the profitability of your investment.
You can find out more about the Venture X franchise opportunity by requesting more information here.
A guide to opening a coworking space
Coworking has come a long way from its humble beginnings, and is now a significant sector of the commercial property industry and an integral part of the way we work. The growth of the flexible workspace sector has been rapid over the last 10 years, and it shows no signs of slowing down, with The Instant Group predicting that up to 12.5% of the entire office market will be flexible by 2023.
That leaves a lot of room for new market entrants – if the pie is growing, more people can have a slice. In other words, now is potentially a great time to consider opening a coworking or flexible workspace. But it’s no walk in the park to get a coworking space off the ground, especially when you’re starting from scratch.
Venture X is the fastest growing coworking brand in the world, with 45 locations open and an additional 130 franchise agreements across the world. We know how to start a coworking space and, more importantly, how to make it successful. Outlined below is our guide to opening a coworking space the traditional way, alongside notes on how becoming a Venture X franchisee makes the journey simpler and more fruitful.
Market research
The first step when creating a business of any kind is to carry out in-depth market research, and it’s no different when entering the coworking market. Market research should be oriented around building your understanding of the sector, how it works, who the main competitors are, and what the target market looks like. The findings from your market research should make it clear what opportunity is open to being captured, and therefore how likely you are to make your coworking space a success.
As a Venture X franchisee, you start your journey by working with our real estate services team to carry out market research. With access to our in-house tools and techniques, you’ll get clear insights into the market in your region and how fierce the competition is.
Business planning
Next, it’s time to put together a business plan. This will be your guidebook to the rest of your journey, laying the foundation for every other decision you’ll make. Putting together a business plan involves tying many strands into one thread – you need to consider every aspect of your business, including:
- What you aim to achieve
- How your brand will be positioned
- What limits your finances will pose
- Roughly where you’ll set up
- How you’ll market your workspace
While you don’t have to make final decisions on any of these factors at this stage, it’s important to get a sense of where you’re headed and what it will require to get there.
As a Venture X franchisee, the requirements involved in creating a business plan are significantly lessened. You’ll be part of an already established brand, the financial situation is clear, you’ll have support in choosing a location that makes sense, and you’ll benefit from an established approach to marketing. You’ll still have to do some planning of your own, but you’ll get a lot of support along the way.
Financing
Sound financial planning is essential to the success of your coworking space. First of all, you need to figure out where you’ll get the money from to start up. This can involve using your own capital, seeking external investment, or a combination of both. You’ll have to pay close attention to the repayment plan on any financing you take, as it’ll affect your profitability for years to come. You also have to determine what pricing structure works for you by projecting revenue, ensuring that you’re making a comfortable enough margin to make ends meet.
As a Venture X franchisee, you don’t have quite as many financial decisions to make. The investment size starts at £500k, which covers you for the franchise fee, fit-out of your chosen space, marketing, working capital, and all of the initial training and support available from Venture X. You also have the opportunity to add additional revenue streams to your workspace’s financial plans, including car parking, meeting room hire, catering, and much more.
Location selection
With your finances sorted, you can move on to unpacking the findings of your market research that relate to location and picking a city or region that suits your business plan. Selecting the right location to build your coworking space is an important part of the process, as it will intrinsically affect your addressable market. You then need to decide whether to renovate an existing space or build from scratch, depending on your budgetary constraints, before you can get to work bringing your ideas into the physical world.
As a Venture X franchisee, you’ll get support in finding the perfect location for your franchise workspace from our real estate services team. They can utilise their own locational data and market research techniques to help inform your decision, ensuring that you’re making a sensible choice.
Fit-out and marketing
The really exciting part of opening a coworking space starts here, as you get to begin designing, fitting-out, and marketing your workspace. Your choices in this stage will be informed heavily by your chosen brand positioning and other elements of your business plan – you should know by now who it is you’re targeting and this is your chance to design the perfect workspace for them. However, it’s also an expensive stage of the journey, as you’ll have to cover the costs of renovations, any required building work, electrics, furniture, equipment, and more. You also have to consider how to roll out your marketing plan to generate interest in your workspace before it exists – it’s important that you fill seats before launch to ensure a smooth transition into operation.
As a Venture X franchisee, you’ll be supported throughout the fit-out or renovation stage by our consultants, who can guide you in the process of creating a cohesive Venture X space. While you’ll have less choice in the overall appearance of the space, there’s still plenty of room to make your mark. We also provide full initial marketing services to get your campaigns up and running and begin to generate interest in your space, and you’ll get access to our tailored marketing plan that’s tried and tested on other Venture X locations.
Launch
Finally, you’re ready to launch your workspace. It’s massively satisfying to see your dream space come to life, so take the time to enjoy it. It’s always a good idea to host a launch event, too, attracting potential customers and generating a buzz around your new contribution to the local business ecosystem.
Opening a coworking space the Venture X way
As you can tell, opening a coworking space is a massive undertaking. The road to getting your workspace open and filled is a long one, and there are plenty of potential speedbumps that’ll slow you down or make things difficult.
The Venture X franchise route offers a different choice – you’ll be following a path that’s already laid out for you using our proven model for opening coworking spaces, meaning the risk involved is much less threatening. You’ll also get to become a part of the fastest growing coworking brand in the world, and reap the rewards that come with that including instant brand recognition and access to our systems and bank of knowledge.
You can find out more about the Venture X franchise opportunity by downloading our brochure, full of all of the facts and figures that prove why becoming a Venture X owner could be your first step into the future.