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The pros and cons of coworking for startups

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As a startup evolves, its office needs change—quickly. See the pros and cons of coworking at each growth stage. View more on JLL TechSpec: http://bit.ly/2cVbD6f

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The pros and cons of coworking for startups

  1. 1. Coworking’s Growth Stages THE FOUNDERS THE RAMP UPTHE STARTUP THE EXPANSION “Can I even afford this? “Looking for value anywhere we can find it! Companies in the Founders group are trying to turn an idea into a business. They need to establish a problem/solution fit, or else they won’t reach the next stage. Concerns include staying afloat, conserving funds and finding mentorship. Companies in the Startup stage are most concerned with getting their product or service to market. They’re trying to generate revenue, raise money, gain runway and prove the business concept so it can grow legs. Size: 1-5 employees Annual office spend: $5,000–$50,000 ($400–$800 per desk per month) Funding: Angel investors, founders, crowdfunding, seed fund Workplace options: Kitchen table, coffee shop, coworking Size: 5-20 employees Annual office spend: $20,000–$150,000 ($350–$650 per desk per month) Funding: Angel investors, VC-backed A + B rounds Workplace options: Camp out in another company’s office, work remotely, sublease, coworking “Hey, we’re really on to something here. Companies in the Ramp Up stage are trying to scale. Quickly. They’re hiring, improving quality and implementing new processes. Activity in this stage determines whether they have the money/people/time/ resources to turn this into a real live business. Size: 20-50 employees Annual office spend: $120,000–$300,000 ($500 per desk per month) Funding: VC-backed B-E rounds, corporations Workplace options: Private block of coworking space, sublease, short-term lease “Up, up and away! At 50+ employees, many startups have raised $15M-$20M or more. They’re focused on market expansion, company culture and recruiting, protecting IP, and generating a profit. At this point, many companies will take on their first lease. Size: 50+ employees Annual office spend: $300,000+ Funding: VCs, corporations, buyout firms, investment banks Workplace options: It’s time for a permanent home
  2. 2. • Productivity: A designated workplace reduces distractions and establishes routine—something that’s hard to do in a bustling coffee shop or at home where you hang out. • Gravitas: A downtown work address that isn’t your home (or a public place) can make you seem bigger than you are. • Community: Both within the local workspace and among fellow global coworkers. WeWork fills 55,000+ seats worldwide. • Amenities: Resources, classes, events, reception, mailroom, snacks. Not to mention the exposure to sales leads and talent. • Consistent spend: Most subscriptions are all-inclusive. Avoid cost variance on daily coffee runs, printing and more. THE FOUNDERS Congratulations! You’re ready for your own space. • Cost: Amenities aren’t free. Memberships vary by city and company, but they cost more than working from home. • Distraction: While some enjoy the interactivity of a coworking community, others don’t. Some may prefer the solitude of their own home. • Hiring: It can be difficult to hire while in a temporary office. Prospective employees know the commute/environment could change considerably in the future. • Flexibility: Most spaces charge month-to-month per office or per head. Some even offer desks by the hour. • Savings: Avoid office overhead like security deposits, furnishings, buildout, reception and connectivity. Added desks are usually offered at a discount. • Recruitment: Coworking spaces are designed with the startup audience (and their talent) in mind. Think modern furnishings, collaborative space and perks galore. • Amenities: Resources, classes, events, reception, mailroom, snacks and more. • Connections: Get exposure for your business and collaborate with people from other companies. Not to mention access to sales leads and talent. • Privacy: Working within the same walls as others, especially potential competitors, can be a risk. • Operations: As you begin to hire more people, it can be difficult to configure an optimal workplace to accommodate everyone. • Motivation: Be clear about your objectives and about what creates the most value for your organization. Too much distraction can negate other benefits that come with shared space. THE STARTUP THE RAMP UP THE EXPANSION • Security: Working within the same walls as others, especially potential competitors, can be a risk. • Operations: As you begin to hire more people, it can be difficult to configure an optimal workplace to accommodate everyone. • Culture: As a company grows and begins to create its own identity, it can be difficult to cultivate a distinct culture within a shared space. • Cost: When you’re ready to relocate, the cost of coworking can be a hindrance when you’re looking to invest somewhere else. • Uncertainty: Once your team is accustomed to a certain environment (and community and amenities), uprooting everyone can be difficult. • Flexibility: Most spaces charge month-to-month per office or per head. Some even offer by the hour. A great option for testing a new city without commitment. • Savings: Avoid office overhead like security deposits, furnishings, buildout, reception and connectivity. Plus at this stage, added desks are usually offered at a discount. • Collaboration: Find space to connect within your team and outside it. Private rooms, bench seating, couches and other spaces are all in close proximity. • Amenities: Resources, classes, events, reception, mailroom, snacks. Not to mention the exposure to sales leads and talent. • Cool factor: They’re notoriously well-designed and curated spaces. Pros and Cons of Coworking at each growth stage of a startup + – – + – +

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