Startup series: How much money do you need and for what?

Want to start a coworking space? Then this series is dedicated to you. We recently published the most critical questions prospective founders should ask themselves. We want to get to the bottom of each aspect in more detail. Because your project will only be on a secure footing with a solid financial plan, today we ask: How much money do you need for what - and who can invest in your project?

Money matters

Finally, we considered the motivation behind your startup, when it's a good time to do it, and what business models are available to you for your coworking space. Of course, all of these are essential criteria - but you need to deal more with finances to avoid unpleasant surprises.

When it comes to money, there are important decisions to be made early on, such as what you want to spend it on in the first place. From this, you can finally deduce how much you need and where you can get it. Therefore, it is difficult to give a general sum that you will need to start your coworking business - your costs will depend on the location and the size of the room, furniture, and other equipment.

What are the cost points?

The lion's share of your costs is for the room's rent, calculated from a price per square meter of about 15 to 30 euros per year - the commercial real estate market varies extensively here, depending on location and condition. Therefore, the minimum or the maximum number of people you would like to accommodate links to the considerations around the room size. You can also save money on rent if you want to do renovation work yourself.

In addition to the rent, there are usually additional costs: Whether heating or electricity - these costs must be calculated conservatively, after all, the prices are currently quite sensitive. For your rough estimate, be sure to ask for available figures, such as the average expenses of the previous tenant. 

The next regular cost item is WiFi. Regarding the Internet costs, you can quietly ask various providers to present you with multiple packages. Some of them can cater to the needs of a coworking space with their portfolio. That's not so trivial - after all, as many members as possible should have a stable connection. 

In addition to the Internet, the rest of the equipment is also missing: furniture, electrical appliances, coffee machine. In addition to the recurring costs listed here, these are one-time expenses, but depending on the quality and brand, they can be hefty. Can some things be purchased second-hand? Sometimes you find well-preserved designer desks or ergonomic desk chairs from office liquidations on eBay. Or is a local furniture store interested in cooperation? Especially at the beginning, only some things have to be perfect - with creativity, you can save a lot here.

You should also include the salaries of the cleaning staff in your calculation. Again, it is better not to save on this item - because keeping your coworking space attractive and clean contributes directly to the well-being of all members. So treat these costs as essential.

Finally, solid insurances are a must. Inform yourself about your equipment: Most people know that liability insurance protects against property damage and personal injury. But does it also make sense to have electrical equipment insurance for your coworking space? Protect yourself against burglary, water damage, or vandalism, for example. Some additional insurances are also liable in the event of cybercrime and protect against data theft or IT damage - a recommendable add-on for a highly frequented location where most work is done digitally.

Possible sponsors or partners

You've now written a pretty long list and are probably about to start budgeting several thousand euros a month. Once the members pay via a subscription or flexible space booking, the cash flow is there, but how do you start before everyone moves in? Do you have financial backers or liquid partners who invest in your project and participate in the calculation? Or do you go directly to the bank to find out about a loan? It is better not to rush into this.

We mentioned the following tip in this series before: As many conversations as possible with operators of successful locations can be worth their weight in gold. Let them tell you about their fuck ups - you don't have to repeat mistakes that others have already made... There are also often tailored consulting services for founders, for example, from the local municipality or the chambers of industry and commerce.

The thing about making money

Suppose you surround yourself with young creatives, solo freelancers, or fresh-faced startups – the clientele you often encounter in coworking spaces – you may feel a nagging sense of having to justify yourself. Yes, you're making a living by offering these workspaces. 

In your calculations, remember that you had a fantastic business idea. As a founder, you are not a non-profit organization that lives exclusively on good feelings and has to give something to others. Instead, you are founding a business that offers a home to other companies, so you want it to exist for as long as possible. 

Sure, you surround yourself with people who will at least become friendly contacts, maybe even your friends. However, your primary focus is to keep the store running - also in their sense. So keep your needs in mind when calculating your expenses and future income. Only then will you enjoy your project in the long run, and, in terms of sustainability, it will make you more relaxed and focused.. 

When planning, start with the essentials, write down every cost item, and keep the needs of the coworking community in mind - but most importantly, remember yourself.

For all other questions, we will break down various vital topics in more detail in the coming weeks. Stay tuned!