436. DON’T REVERSE ENGINEER THE COWORKING SPACE YOU LOVE

What if the coworking space you love is not actually profitable?

There is a pattern I see over and over with people who want to open a coworking space. You visit one you like, the flex desks are full, the meeting rooms are in use, the design is great and the staff is warm. You do the back-of-the-envelope math on the way home, decide the model works, and set out to build your own version of it.

The problem is that you cannot see a profit margin on a tour. Most coworking spaces are not killing it, and most operators are working on a profit margin problem that is either a revenue problem or an expense problem or some combination of both.

In this episode, we explore why reverse engineering someone else’s space is so risky, and what to build from instead: your own why, and the benchmarks that actually produce a profitable space.

We talk about:

• Why a space that looks busy and beautiful tells you nothing about its profit margin
• What you cannot see on a tour, including what members actually pay against list price, occupancy, staffing levels, rent, and CAM
• Why a revenue problem is much harder to fix than an expense problem
• The questions to answer before you model anything: your why, your goals, how involved you want to be, and what profit the business needs to produce
• The benchmarks to know cold, from revenue and rent per square foot to payroll as a percentage of revenue and your lead-to-tour and tour-to-close ratios
• How to see your own trade-offs, whether that is free lattes, a gym nobody uses, or a space that costs more than your pricing can recover
• Which levers in your pro forma will break the model if you move them, and what discounting and over-hiring do to your plan after you open

Use the space you love as inspiration and put it on your Pinterest board. Then get to know the benchmarks well enough that you can course correct when things do not go according to plan, because they will not.