what is a coworking space

What is a Coworking Space

What is a Coworking Space | Is it an Effective Business Model

Coworking spaces have gained popularity as one of the most convenient workspace options for startups and small businesses. Its services are a blessing for people who can’t afford traditional offices and are looking for a cheaper alternative. But what is coworking? How can it be an effective business when most consider it to be the cheaper option? 

To clear your concerns, in this article, we’ve gone into detail on what is a coworking space and how it can serve as an effective business model.

What is a Coworking Space?

What is a Coworking Space - business

Simply put, a coworking space is where people from different companies come to work in a single shared space. Any startup worker or small business owner looking to save cash can easily rent an office here for a limited time. Additionally, these spaces offer a flexible short-term lease without any hidden costs, so there’s no risk of going over budget.

Besides the workspace, coworking spaces also provide access to other necessary amenities that are standard in office environments. They include high-speed WiFi, office printers, a conference room, etc. 

Is a Coworking Space an Effective Business Model?

Now that you know the basics of ‘what is a coworking space’, you’re probably wondering how effective a business like this is. How does a business benefit from housing other businesses? Well, to answer your question, there are several factors that contribute to a coworking space business model, some of which include:

Membership Fees Structure

A lot of coworking spaces are earned by selling memberships to people and businesses based on the duration of their stay. This means the period at which each business can rent a space can range from daily passes to monthly or yearly memberships. 

A membership fee like this attracts most small businesses since they have the option to pay for their required time and space. You could even sweeten the deal by offering rewards or discounts to frequent customers’ memberships. It’s a great way of fostering customer loyalty and making a profit from businesses using your facilities. 

Diverse Revenue Streams

What is a Coworking Space - business

Another reason coworking spaces are an effective business model is that they can generate revenue from various sources. As mentioned before, you’re offering tenants amenities besides just an empty space, so you can charge them for those as well. Besides office spaces, you can offer other rents like private offices, conference rooms, event spaces, etc. 

Additionally, you can provide equipment rentals that are most likely required in a business setting. Some examples include video and audio equipment, telephone lines, printers, etc.

Cost-Effective Option

Coworking spaces provide start-ups and small businesses with a cost-effective alternative to traditional office leases. Most traditional offices have high upfront costs that most small businesses can’t afford. Thats not to mention the security deposits, advance rent and the cost of setting up an office. 

Businesses can benefit from a coworking space as it’s a comparatively cheaper option and requires no long-term commitments. They can adjust the amount of workspace and equipment they use based on their current needs while saving on costs. This proves to be an attractive and convenient benefit to small and startup businesses, encouraging them to remain for extended periods.

How Profitable is a Coworking Space?

Once you understand what is a coworking space and how it needs to operate, it can be a significantly profitable business model. However, the effects aren’t instant, so it may take a few months until you see some payoff. In fact, 72% of all coworking becomes profitable after more than 2 years in operation.

Remember that this statistic doesn’t mean you’re guaranteed a profit. Various factors contribute to the success of a coworking business. Some of these include:

  1. Location
  2. Pricing Strategy
  3. Market Competition
  4. Occupancy Rates


Now that you know what is a coworking space, you can use the knowledge to build an effective business model. With a membership fee structure, diverse revenue sources, and cost-effective pricing, you can foster a profitable business. Just be sure to consider factors like market competition, occupancy rates and the location.