Building a successful coworking brand is hard. It’s a business that has the physical limitations of real estate, the unpredictability of high-velocity business, and the complexity of a hospitality company.

It can serve a wide range of customers – from individual freelancers to the largest enterprises in the world. It’s also a complicated community-building exercise of creating an environment where all these different customers can work together.

On top of that complexity, 2024 is the 4th year since the perfect storm. Which unleashed unprecedented office utilization challenges, raging inflation, super-high interest rates, and a completely unpredictable business climate.

Yet, the best coworking brands are thriving! They have done a lot of things right. We studied hundreds of coworking and flex space businesses and we found the top 7 traits of the most successful brands. The ones with the highest occupancy rates, the best retention rates, growth, and profitability.

Let’s dive in.

#1 Define a Clear Ideal Customer Profile (ICP)

The best coworking brands have an extremely well-defined Ideal Customer Profile (ICP) down to the smallest detail. For example, some are going after VC-funded, seed-stage tech startups with 3-20 employees. Others are focusing on mid-age, successful solopreneurs working in the creative industries.

icp

The ideal customer profile defines the firmographic, environmental, and behavioral attributes of your most valuable potential customers. It is developed through both qualitative and quantitative analyses! You can read more about it and follow a well-established framework by Gartner here.

The ICP aligns marketing, sales, service, and executive teams to the highest-value customers. It also creates a focus on scalable and repeatable strategies and tactics to engage and convert top accounts. It drives target account list creation, segmentation, organizational structure, and other key activities!

It’s essential to have a very clear ICP in coworking because as mentioned above, potentially everyone can be your customer – from a freelancer to a multinational corporation.

switch to officernd flex

You don’t want to waste time on the wrong customers instead of chasing more of the right customers. Having more of your best customers (and less of your worst) will help with retention, occupancy rates, growth, profitability, product offering, and everything in between!

You can start building your ICP by:

  1. Creating a unified spreadsheet with all the data you can collect for your existing members.
  2. Talk to your customers and try to learn as much about them and their decision-making as possible.
  3. Analyze the results and build assumptions.
  4. Validate and iterate until you feel you nailed it by observing!

Pro tip: Try to estimate the size of your market based on the ICP. Are there enough of your perfect customers in the area?

Knowing your best customer (ICP) will allow you to further polish and perfect your best product. We discuss creating an ideal customer profile in our extensive guide on SEO for coworking spaces.

#2 Have a Hero Product

The best and most successful coworking space companies we have evaluated have a product that stands out. They are famous for that one specific product! Having that one great product helps them also sell a lot more of their other products.

For example, some spaces are offering the best event spaces in town. That helps them to sell a lot more desks and offices as a result of that. Others are offering the best day passes in the city.

As a result, they can sell easier their offices and meeting spaces. Or some have an outstanding design and character of their buildings. Others have an incredible community.

Of course, your killer product can also be offering all services at the best price.

Your Ideal customer profile (ICP) should be able to easily connect your brand to your hero product or feature of your space! Everything gets so much easier after that.

Interested in further learning what makes a coworking space business successful in 2024 and beyond? Don’t miss checking out the trend-setting webinar of the year!

#3 Win the Local Market

The most successful coworking spaces win their local markets, first! They usually saturate their small town or city well before expanding to other cities, states, or countries.

winning a deal

Almost all great brands started by winning their local markets – opening 3-5 or more locations in a city and completely dominating it before they move on.

The power law applies very well here – the dominating brands in a local market get the majority of the opportunities.

Researching our customer base clearly shows that having more locations in a city is increasing the lead flow exponentially.

In difficult times, like 2024, the best strategy is to focus! Focus on your core market and win it!

#4 Go Small-town or Suburban

It’s no secret that the Central Business District as well as the Financial Districts are struggling the most in the post-pandemic world. Also, it’s no secret that the Suburban spaces are doing very well lately!

These are both very good reasons to expand in small towns. However, the main reason is that you will inevitably have less competition in the early days but also, you will be closer to where people live.

All research out there is pointing out that the main reason for people to work from home is not that they don’t like the office in general. Or that they like working from home so much.

The problem is that people hate the commute. People hate spending hours in their cars.

So, if your coworking space is near your ideal customer profile’s home – you have a win and a much better chance to convert them to customers.

2024 will be the year of small-town and suburban locations.

#5 Just be Profitable

I know it sounds easier than it is. However, in 2024, you just have to be profitable. The best brands out there are profitable. Some of the best-performing coworking space operators are generating a 20% EBITDA margin on an individual location basis.

profitable business

This is a very healthy margin for a hospitality business. It’s hard. It’s very hard but it’s doable.

  • Increase your topline – nail down your ICP, polish your hero product, and go win your local market.
  • Improve the bottom line – renegotiate your base rent, find operating efficiencies, utilize AI in sales & marketing, invest in good tech, etc.

Coworking can be profitable!

#6 Sign Better Deals with Landlords

The biggest cost as well as the most important element of a coworking space remains the physical location. This will remain true in 2024.

There are many details to consider when signing a new contract with a landlord. Our research points out that the best brands are very good at negotiating great deals with their landlords. They usually align the incentives well and turn their landlord into a strong partner. Some of the important elements of the contract include:

  1. Type of contract – management agreement vs. lease agreement or some form of hybrid.
  2. Specific terms for getting out of the contract – this is also a very important term as some locations don’t work and in that case, you should be able to shut it down.
  3. Fit-out and renovation costs – in many cases, you should be able to negotiate how to share the costs of fit-out and renovation for the flex space with the landlord.

#7 Secure the Right Funding

2023 was the worst year for funding any type of business. Next year should be a little better. Hopefully, it will be.

There are different funding paths for coworking operating companies.

  • VC (Venture capital) – that’s arguably the worst funding for a coworking space. Almost all VC-backed coworking spaces failed with WeWork and Knotel being on top. The main reason is that VC money is tight to extremely high-growth, high-margin which are mostly tech businesses. This is very hard to happen in real estate or hospitality and that quickly creates a big misalignment between the business and the investor.
  • PE (Private Equity) – PEs can work better for coworking and flex spaces than VCs. There are many flavors of PEs and some can be more patient and provide great support for strong coworking operating companies.
  • Family Offices – in many cases, family offices can be a good investor in a coworking business. They can provide patient capital that’s suitable for hospitality and real estate brands, such as coworking.
  • Local Councils – oftentimes, local councils can provide additional funding to coworking spaces when they are opening locations in the local area. A lot of councils can recognize the massive splash effect that good coworking spaces have on an area. So they are more and more willing to help fund new openings!
  • Debt – debt is always a good option to finance a coworking operating business that’s profitable. 2023 was hard and likely 2024 will be almost as hard, however, if you have a good business, debt is always an option!

When securing funding, the most important element is always to have a very good alignment between your business and the investor!

In Conclusion

Building a thriving coworking business doesn’t have to be hard. You just need to be well-educated and plan for success.

The good news is that at OfficeRnD we have the right tools and resources to support you along the way:

  • Gain invaluable, practical insights about the coworking business with “Flex Academy: Coworking Bootcamp” video series that we created together with the experts from “Everything Coworking”. It’s free.
  • Check out OfficeRnD Flex – our coworking and flex space management software that connects members, operators, and owners in over 2,500 locations worldwide. We help flex operators scale revenue collection through native integrations, billing automation, and a modern member experience. We can help you too. Book a live demo here.

Wishing you a very successful, less stressful, and incredible new year!

Miro Miroslavov
CEO and Co-founder of OfficeRnD
Miro Miroslavov is a software engineer turned into a tech entrepreneur. In 2015 he co-founded OfficeRnD - a leading flex space and hybrid work management platform. As a CEO at OfficeRnD, he grew the company from inception to a leading software vendor that serves thousands of customers worldwide. He is a big fan of flexible working and is on a mission to "Making Flexible Working the Way of Working".