Firstly, successful coworking spaces provide a conveniently-located work station within a community. Initially, it’s less about being a permanent member of a community. Most coworkers are freelancers who enjoy their independence. They are looking for a way out of their isolation and are seeking communication with others. However, for a longer lasting membership they nonetheless need to be convinced by all the other benefits of coworking, such as making new contacts, starting new projects, and finding mutual support.
Many coworking space operators still have their own jobs and projects – this is often why they start a coworking space in the first place; to provide them with a workspace and reduce their isolation as well as their rent. But working in the space alongside other coworkers as a member (and not as a boss) is also a good way to retain the perspective of their customers. The founders of Office Nomads, for instance, hired an office manager, which allowed them to remain as member instead of bosses.
Jean-Yves Huwart from The Hub Brussels reported that many members only want access to the community, and don’t specifically need a place to work. Instead, they want only to take part in the events and internal communications of the coworking space.
At Indy Hall, a coworking space in Philadelphia, about one in four members don’t utilize their desks; rather, they make use of their membership in a community to make contacts and find support. In cities where the coworking concept has already gained popularity, some people want to buy membership only for the sake of the associated image. The name of the coworking space can carry cache in conversations.
However, a desk-free membership is also recommended as good option to stay in touch with former members - an alumni membership, for instance.
Specialization, workshops and niche services
Many coworking spaces offer regular workshops. Often these can be organized at no extra cost. But they help the space stand out in the neighbourhood and attract new members. Workshops strengthen links within the coworking community, and can also help spaces to partner with external institutions in specialized areas, which sometimes pay rent for the use of a coworking space for their workshops.
Offering extra workshops and networking opportunities helps show your coworkers that they have more to gain than just desk space. If they leave the coworking space, they lose not just a desk, but also access to an important network.
There are also coworking spaces which optimize their services for certain target groups. Although this helps to focus on a specific niche, the downside is that it reduces the potential customer base. In New York for instance, Paragraph and Brooklyn Writers Space offer silent areas with desks that don’t allow any communication or eye contact in order support writers or journalist in their work. What usually could be unhealthy for a coworking space - reducing interaction - works perfectly for these spaces. Furthermore, they also connect their members to an organized network of professionals in their niche.
Another frequent source of income is renting rooms to outside groups who are looking for interesting locations for meetings and events. Many coworking spaces establish themselves as a center of community events. These can take place in the evenings, when coworkers have gone home. In addition to the extra revenue from renting rooms, spaces may also gather new members from this form of public advertising.
Some coworking spaces earn part of their revenue from larger partners and sponsers. Sometimes this takes the form of simple advertisements within coworking spaces (without choking the coworkers with flyers). In other cases they seek to make contact with the coworkers to stay abreast of new ideas and developments, and to spread information about their services. Examples of these include TechHub in London or New Work City in New York, which are partially funded by Google and Pearson publishers.
A classic method of fundraising is to approach large investors, who expect a rapid return on their investment. Some coworking spaces have been able to establish themselves using this method. It is not a sustainable income, but it can help during the first months. Unsurprisingly, it’s also easier for already-successful coworking spaces to attract investment. So NextSpace, a Californian coworking space, was able to convince two investors to fund their concept. They now have about $425,000 to open three more coworking spaces in California.
Some cities face problems in filling empty buildings in old industrial areas. Neighbourhoods like to reactivate empty stores to avoid degrading the whole area. Coworking spaces and their positive impact on the labour and real estate market provide a good option for public institutions which want to sustain a neighbourhood. A partnership could be based on reduced or free rent in public buildings. NYU incubator, General Assembly and the new branch of Sunshine Suites in New York City are good examples of this. Another interesting example is Gangblank in Arizona, which doesn’t rent out space for money. Instead, members share their knowledge and skills with public institutions which need their experience. They get a workspace in return.
Donations and other generated income for non-profit spaces
Some customers of coworking spaces work in non-profit businesses, so why shouldn’t space operators follow the same concept? Non-profit doesn’t always mean no income. Generally a non-profit group needs to meet certain criteria, such as having a membership base, a constitution with a mission statement, and regular meetings of the responsible leaders. An example is Space12 in Austin, a coworking space operated by a church that survives only on donations.