If you’re turning away demand or receiving consistent inquiries from nearby areas, you’re getting strong signals that you should add locations to your coworking business. But is that enough? No. Before you start looking for new spaces, make sure it’s time to grow by measuring objective key performance indicators. Then, take a strategic approach to grow smarter, not just bigger.
Here are tips on how to scale strategically.
Know your existing location
To confirm your sense that it’s time to add a new location, take a deep dive into your business. Your current location should be financially stable, with a consistent positive cash flow and comfortable earnings before interest, taxes, depreciation, and amortization (EBITDA) margins. Occupancy should be strong with consistent growth, month over month; member retention above 85% is a good indicator that your product will keep members in your space. If all looks good, secure funding or reserves before expanding.
If you’ve been on-site at your location, look hard at whether its success is mainly because you’re always there to manage day-to-day business and resolve challenges. You can only give one location that level of attention, so if you’re still critical to the daily operation, you’re not ready to expand. Build out replicable processes, especially for sales, onboarding and community management.
Then, invest in a strong team who can create and enforce clear standard operating procedures. The biggest mistake providers make is scaling too fast without a solid team in place. If you plan to scale, be willing to sacrifice profits and invest in key team members who will support you as you grow. Other common missteps include underestimating build-out costs, over-projecting revenue, and failing to understand the market.
Know where you’re going
Understanding your brand identity and whether it aligns with your target audience is crucial for long-term success. For example, if you’re entering a high-net-income area, your users will probably expect a premium Class A building with elevated hospitality and five-star service. A more moderate market with a blend of white- and blue-collar businesses typically calls for a Class B building and a more moderate price point.
Consider the local competition, pricing trends, demographics, business density, and the presence of startups or remote workers. Also look at population trends, competitor saturation, and average household income.
However, don’t rely solely on formal data; spend as much time as possible on the ground, visiting buildings, talking to local brokers, and meeting with potential members. Look into considerations that will matter to your users, such as parking availability, walkability, and proximity to major highways or transit. Walking a building or a neighborhood can tell you more about these factors than any spreadsheet.
Every market has nuances, so don’t assume that what works in one will work in another. And don’t be afraid to go against common wisdom. We have two locations less than seven minutes apart, which is generally frowned upon because of the risk they’ll take business from each other. But they serve two completely different types of members at different price points and are performing well.
Scale deliberately
In most cases, you should plan to get one new location running smoothly before adding the next. However, if you have strong leadership in place and the capital to support it, adding multiple locations can offer economies of scale. But you must have proper systems in place and staff who can handle the load.
As you scale, you’ll need a more diversified product mix, such as virtual offices, day passes, flex desks, and team suites. You may adjust pricing depending on market affordability. Amenities should reflect member feedback and local demand. Form partnerships with coffee vendors, wellness providers, IT support, and other vendors to serve your members.
Maintaining service quality across locations is tough. If you acquire an existing space that’s been poorly run, you’ll have to work to rebuild members’ trust by repairing things like bad culture, training or replacing unreliable staff, fixing broken infrastructure or addressing other pain points. Clear procedures, excellent training, and regular site visits can turn things around.
And again, you can’t assume that what works in one location works everywhere. When we took over one location in disarray, we installed new leadership, upgraded amenities and focused on service; we hit full occupancy within 12 months. On the flip side, we launched another location without a strong sales lead in place; it took twice as long to ramp up. The lesson: Your people matter more than your furniture or your floor plan.
Now what?
Success is all about your members and what your team delivers to them. Look at member satisfaction, profitability, staff performance and retention, measured with net operating income, member satisfaction scores, churn rates, and team engagement. Growth in referrals and multi-location memberships are also big signs that you’re doing something right.
Culture is a key driver of success in coworking spaces. It’s often the X factor that determines whether a potential hire will choose you or go across the street. Start building an appealing culture by hiring people who align with your core values and then overcommunicate your mission. Provide teams with your brand guidelines, conduct consistent onboarding programs, and hold regular all-hands meetings to ensure alignment. Just as important is instilling a “Yes” mentality in every team member. You never want to say “No” to a member.
Your goal should be to do whatever you can (within reason) to wow your members and deliver a working environment they won’t find anywhere else. That’s what will keep the brand experience consistent and exceptional across every location.
Scaling is exciting but also demanding. Never forget that coworking is a hospitality business at its core. Culture, community, and customer service are what sets you apart. You can’t automate heart and hustle, so make sure they remain at the center as you grow.
