To have an idea of the profit a coworking space business is expected to make, you should clearly define the services such a business offers. A coworking space business provides well-equipped and secured coworking facilities where entrepreneurs, startups, freelancers, developers, businesses, and teams can meet to work independently, as well as socialize and collaborate on projects.

With that in mind, we can estimate what a coworking business that offers the services listed above is expected to make as profit yearly. But you must note that there is no one mold-fits-all when it comes to how much profit a coworking space business is expected to make. We are going to look into some factors before giving an estimate of how much profit a coworking space business can make yearly.

Factors That Affect How Much a Coworking Business Can Make Yearly

1. The Size of the Coworking Space Facility and the Number of Working Space Available

No one can conveniently state the profit a coworking space business is expected to make yearly if you don’t know the size of the facility and the number of clients the facility can accommodate per time.

A coworking business that operates from a small facility is expected to make far less than a coworking business that operates from a large facility that is specifically designed for coworking purposes. If your facility is large enough, it can accommodate more people and that will mean increased revenues.

  1. The Location of the Coworking Space Facility

The location of a coworking space is a major factor that will determine the profit the business is expected to make. For example, a coworking space that is located in the business hub of any city or state will definitely make more than a facility located in a city such as Boise, Iowa, or some other remote city.

  1. The Type Services that are available in the Coworking Space Facility

Another important factor that will determine how much profit a coworking business is expected to make is the type of services offered by the coworking space business. The core business offering of a coworking space is renting or leasing fully furnished office space to businesses on a part-time or as-needed basis.

But that does not in any way stop such businesses from providing complementary services such as daycare services, business support services, offline and online library subscription, and renting of conference rooms. You should note that a coworking facility that provides these extra services will make far more than a coworking space facility that only provides basic services.

  1. The Management Style of the Coworking Space Business

Another key factor that will determine the profit a coworking space facility is expected to make is the management style of the business. Trust me, the results you will get when you are a good manager will be different from a coworking space facility with poor management.

The idea is that a good manager will not just retain their old customers, they will also keep getting new clients especially through recommendations, and that no doubt will greatly influence the profit the coworking facility owner will make annually.

  1. The Business Approach of the Coworking Space Business

There are different business approaches that a coworking space owner can choose from and no doubt it will greatly influence the amount of profit they will make. We know that a coworking space facility owner may decide to operate only from one location and their marketing alone, or they may decide to go into franchising and partner with key stakeholders in the industry. A coworking space business that works with other businesses will surely make more profits than a coworking space business that only operates from one location.

  1. The Advertising and Marketing Strategies Adopted by the Business

Another key factor that will determine the profit a coworking space owner can make yearly is the advertising and marketing strategies adopted by the business. Trust me, several advertising and marketing strategies can help a business increase their profits, howbeit, you may be expected to spend more.

But the results you will make will far outweigh the amount you spent on advertising and marketing. Of course, you don’t expect a coworking business that is engaging in aggressive advertising and marketing to make the same profit as a coworking space that is passive with its advertising and marketing.

  1. The Number of Years the Coworking Space Business is in Existence

Lastly, another key factor that will determine the profit a coworking space owner is expected to make yearly is the number of years the facility is in existence. In business, the number of years you are in existence will go a long way to determine the profit you will make especially if the business is well–managed.

This is because over the years you would have been able to gain the trust of your clients and they can always renew their leases, and also recommend clients to you. For example, in your first fiscal year (FY1) you might make a profit of two hundred thousand dollars ($200,000), in your second fiscal year (FY2) you might make a profit of three hundred and twenty thousand dollars ($320,000) and in your third fiscal year (FY3) you might make a profit of three hundred and fifty thousand dollars ($350,000).

Please note that coworking space facilities usually calculate their profits based on the number of clients occupying the available workspace, average billable hour rate for services provided, and an average number of hours provided each month per client.

The Profit Margin Per Square Foot of a Coworking Space

It is important to state that coworking spaces are leased at rates of 60 to 70 percent higher (per square foot) than other office spaces in the market hence coworking spaces will make more money per square foot. On average, taking different locations and facilities into consideration, coworking spaces rake in $4 per square foot of profit.