The coworking industry is projected to hit $40 billion by 2030, and competition is heating up fast. In many urban hubs like New York, London, Chicago, Bengaluru, Hong Kong, and Tokyo, global coworking chains have already staked their claim.
But does that mean there’s no room left for independent operators or newcomers? Should you rethink opening your own coworking space?
Absolutely not. With a smart financial strategy and a clear value proposition, you can carve out your niche and thrive, even in the most competitive markets. This guide will show you how to master the financial side of running a coworking business and build lasting profitability in any economic climate.
Master budgeting
When you run a coworking space, the main source of income is memberships. This means that your profitability is highly dependent on the number of people who use your services and your pricing strategy.
Depending on the size, equipment, and location, the monthly costs for running a coworking space can range between $50,000 and $500,000. But, to turn a profit, you must cover the costs and have something extra. This may not happen in the first year of activity, according to the Global Coworking Survey.
This is why you need to learn how to budget. Designing a budget is all about how you allocate the revenue to cover the operating expenses, but the way you do these allocations also matters.
Some business models need a stricter budgeting framework, while others do well with less structure and more focus on specific areas.
Here are three budgeting frameworks that can be of help when running a coworking space:
1. Zero-based budgeting
This technique is stricter and more intensive than traditional budgeting, but it’s also more cost-effective. Instead of building your budget based on last year’s expenses and revenue, you start over for each new cycle. You justify every cost, line by line, and decide what stays and what goes.
This keeps costs intentional and aligned with current priorities and helps identify any bloated areas. It also makes it easier to identify areas where outsourcing may be the better alternative.
2. The 50/30/20 model
If you prefer a more flexible budgeting framework, the 50/30/20 model is both simple and easy to track. It proposes allocating 50% of your revenue to operations (rent, staff, and utilities), 30% to growth initiatives (marketing, member experience, and tech), and 20% to reserves or reinvestment.
With this framework, operations are covered, you have some reserves, and you have enough resources to test new ideas for growth.
3. Two budgets
In this case, you keep two separate budgets: one for fixed costs (rent, utilities, full-time salaries) and one for variable costs (supplies, marketing spend, event catering). The goal is to improve cost control when money is tight.
By separating costs into two main categories, it’s easier to tell which expenses get out of control and where you can cut without impacting essential, long-term obligations. It’s also easier to calculate the true cost of operations and see if your pricing strategy is effective.
Generate recurring revenue and offer exceptional customer experience at your shared or coworking space
Keep inflows predictable
In an ideal world, your business would be at 100% occupancy all the time. But this rarely happens in coworking spaces that are not placed in the middle of a big economic hub like London, New York City, or Tokyo. Even these spaces don’t run at full capacity all the time.
You will have slow months and unexpected expenses. Meanwhile, your operational costs stay the same (or worse, grow!).
To plan for these periods, it’s good to have some contingency funds that you can use to keep cash flow consistent. But again, things don’t always align the way you’d like. You should also be prepared for a time when your reserves run low and can’t fully cover your operations.
Look into business loans you can afford and put together a payment plan you can follow. Jeffrey Zhou, CEO and Founder of Fig Loans, shares:
“The smartest entrepreneurs know how to turn borrowed capital into momentum. When your reserves are running low, a well-structured business loan can be the bridge between surviving a rough quarter and scaling to your next milestone.”
For example, debt relief solutions show how businesses can manage financial obligations strategically and recover more quickly from cash flow strain. These programs consolidate multiple high-interest payments into one manageable plan, often with lower rates or extended terms. They help stabilize cash flow, protect credit standing, and give business owners room to refocus on growth instead of juggling overdue bills.
Plan for the future with forecasting
“Too many businesses operate on instinct until the numbers catch up with them. A clear forecast helps you see whether your growth goals are realistic, your spending aligns with revenue cycles, and your risks are under control. You can’t market your way out of poor financial visibility,” — Anna Zhang, Head of Marketing at U7BUY.
Coworking spaces live in a world of fluctuating occupancy, flexible memberships, and unpredictable demand. While you’ll never know for sure when one or more of these variables change, forecasting scenarios helps you prepare for both opportunities and storms.
Here are the most valuable ones to model:
1. Best-case, worst-case, and most-likely scenarios
The goal of this exercise is to compare these three scenarios side-by-side and determine how much financial cushion you need, as well as where to cut or invest with confidence.
Here’s how to build each scenario:
- Best-case: High occupancy, steady renewals, minimal churn, and strong event or rental income.
- Worst-case: Membership dips, payments come in late, and you experience a few months of vacancy.
- Most likely case: Somewhere in between, using your average occupancy rate and monthly churn.
For example, you can accurately project how costs will change if occupancy drops by 10% (only variable costs will decrease significantly) versus a stable period.
2. Occupancy-based forecasting
See how your revenue dips or grows based on the degree of occupancy. By running different scenarios, you’ll find the rate of occupancy you need for the business to stay afloat and the rate when it becomes profitable.
This helps you price memberships realistically and set smarter sales targets.
3. Membership mix and pricing scenarios
Use this to test the success rate of different membership plans. Model what happens if you shift your balance between flexible hot-desk users, dedicated desk members, and private office tenants.
A higher share of long-term members can stabilize cash flow, while short-term passes boost quick revenue. Experimenting with price elasticity (how changes in pricing affect demand) can reveal sweet spots that increase revenue without scaring off customers.
4. Expansion or downsizing forecasts
Run “what if” models around opening a new location or subleasing unused space. Include new overhead, marketing, and staffing costs, as well as projected membership ramp-up times. These scenarios show whether expansion will truly grow profits or just stretch resources thin.
Maximize profitability
The profitability of your coworking space is highly dependent on a series of factors, such as location, visibility, flexibility, market demand, and operational automation. In short, profitability hinges on how well you fill your space, price it strategically, and control recurring costs without compromising member experience.
So, let’s see a few methods that can help put more butts in seats, shall we?
Maximize visibility and build a sense of community
Simply hanging a banner that says “Hey u! Did you know we’re a fun coworking space?” isn’t enough anymore. Visibility nowadays requires more effort, both offline and online. But it’s worth it.
Offline, look into local partnerships with cafés, gyms, or startups for cross-promotions and pop-up events. This expands your reach and gains you a few local allies, which is nice to have.
Online, work on growing your brand image via social media and other platforms. Also, user-generated content, such as testimonials or short videos showcasing different members’ experiences in your coworking space, is quite useful. Peer advocacy builds authenticity faster than paid ads ever could.
Additionally, to attract remote workers and digital nomads, consider promoting your coworking space in remote work-ready cities that offer affordable short-term rentals and vibrant communities.
To encourage a sense of community, which many people in your target audience lack, host events, encourage collaboration, and create an environment where partnerships form naturally. Use open layouts, shared lounges, and intentional sightlines that invite conversation.
Extra tip: If you’re ready to take things one step further, try merchandise (t-shirts, mugs, caps, notebooks, etc.). It helps with both visibility and building a strong community as it allows members to show their pride in belonging to your space.
Merchandise sparks conversations and builds social proof in a way paid marketing can't touch. Just make sure to find a supplier that provides high-quality custom apparel that members are actually proud to wear or use.
2. A different kind of offer
The best way to stand out in a saturated market is to offer something no one else is. In the coworking space, where almost everyone has events and special perks, you can flip the script and offer a premium membership that includes access to local healthcare professionals via an online platform.
For instance, a coworking space in Ottawa offering a premium membership that includes access to online healthcare providers in Ontario would definitely get everyone’s attention. It shows you care about the well-being of your members and you’re willing to do something about it.
This is a sore spot for many coworking space users, especially freelancers and small startups, since they don't often have the same access to traditional health benefits as a large corporation.
3. Improve cost efficiency
The quickest way to boost profitability is to cut costs. The trick is doing it strategically, without chipping away at the experience that keeps members coming back.
First, try negotiating better lease terms or energy contracts. Some providers are open to offering better prices to avoid losing a long-term customer. Tech subscriptions (booking software, door access) should also be re-evaluated for efficiency and potential cost savings or bulk discounts.
Then, take a look at your internal processes. Are you still billing members manually? Is your management software a spreadsheet next to a Notes page? If this is the case, then you must try Spacebring!
Our software automates booking, invoicing, and admin tasks for coworking spaces so you can focus on building a better marketing strategy or improving member experience. It’s also a great way to have all the data in one place, which is useful for accurate forecasting and budgeting.
Lastly, another way to reduce costs and boost visibility is going green. You don’t even have to make any major changes. Small things like switching to LED lights, installing motion sensors, going paperless, or using eco-friendly materials in furniture and decor have a pretty strong impact.
For a boost of visibility, partner with local vendors and host community initiatives like bike-to-work days or environmental workshops. Going green attracts eco-conscious professionals who value responsible workspaces, so it’s a double win for your brand.
In conclusion
By mastering budgeting, forecasting, and taking actions that maximize profitability, you can considerably increase your chances of succeeding in the coworking industry. With the help of reliable providers, local partners, and smart tech tools like Spacebring, anything is possible!
