HOW COWORKING SAVED MY STARTUP
This should come as no surprise – current figures estimate that somewhere between 50-75% of startups fail in their first 3 years.
We’ve all heard the horror stories, and there’s a number of reasons for this trend; lack of talent, poor planning, an incomplete product – the list goes on and on. However, unless your startup is one of the very select few, you share a problem common to every other startup – money.
One of the most difficult gaps to bridge is the period between development and your first point of sale. For many companies this can be anywhere from 6 months to 2 years. It’s not unheard of for founders to go completely bankrupt using their savings to push through – hoping that in the end it will all pay out. Understandably then, the ability to minimize costs, and maximize your financial pool (and how long it can keep you afloat) are two of the most important things for bridging the gap between failure and success. Often the issue startups face comes down to how long they can last without making money, the longer they can last, the better chance they have for their product to catch.
Right, this isn’t rocket science, but what does it have to do with coworking? We’re getting there, but first some more numbers.
Quick question - what would you expect the average price per square foot of commercial real-estate to be in say, San Francisco? 30, 35$ a square foot perhaps? You’d be correct, if this was 2010. Fast forward to the 4th quarter of 2014. Those rates have doubled. Yes, doubled. A 100% increase in 4 years. Average listings price office space at roughly $65 per square foot. That comes out to $650 for a 100 foot space before taxes…that doesn’t sound too bad, right?
If you think that San Francisco is some sort of enigma, you’d be mistaken. New York City is currently seeing average prices hovering around $75 a square foot, steadily rising at roughly 10% per year. Keep in mind this is an average, in some of the more upscale areas prices get as high as $300+ a square foot.
While we’re on the topic of price, I failed to mention that $700~ish doesn’t include: Taxes, cleaning, internet, and or any other fees you may get roped into. Ouch.
So, what does any of this have to do with coworking? Well, let’s say you’re a typical startup – a 3 man team. That 100SqFt office won’t cut it, you’re going to need at least 150-200. This will (probably) be enough to work and operate, but you won’t be able to meet with clientele. So you’re in NYC, that’s anywhere from $1200-2000+ a month (It won’t be glamorous). Now you can have that, or you can have this:
That’s Joynture located on Wall Street in New York City. It comes with highspeed internet, phone, mail services, food, drink, games (they’ve got some serious entertainment systems), private meeting room hours, and a collaborative atmosphere. The best part? $400 per month per person, for all of that. A huge space to roam and work, meet new people, and schedule meetings with clients – all of this style and comfort for the fraction of the price of a private office.
As a startup – especially when you’re small and growing, the benefits that can be taken from this are invaluable. It’s clear that this will save you money and greatly expand how long you can ride your finance pool – but it offers more than that. We recently spoke with the CEO of a startup who attributed a large portion of his success to the atmosphere of a coworking space. The ability to meet new people with similar ideas, and bounce your developmental process off of other individuals was invaluable in their growth and development.
So do yourself a favor, if you’re thinking about starting-up check out a coworking space. It could make the difference between becoming another statistic and striking it rich.