Often called ‘millennial workspaces’, coworking spaces have become the lifeline of startups today — even in the light of the controversy surrounding coworking company WeWork. The mushrooming of these fancy workspaces is so rapid that even Brad Neuberg, the man who coined the term coworking in 2005, would surely be perplexed looking at its full-blown industry today.
Neuberg started the coworking movement in San Francisco in 2005 and today over 1.18 Mn people work in around 35,000 coworking spaces globally. A look at Indian statistics shows a similar scenario. According to The State of the Startup Ecosystem Report by Inc42, India has over 300 coworking spaces with over 720 centres and a total area of 15 Mn sq ft. After being adopted in Tier 1 cities, the trend is now spreading to Tier 2 and Tier 3 cities as well.
Coworking Startups And Spaces In India
As India’s startup ecosystem has flourished over the past five years, the number of coworking spaces has also mushroomed. Besides international coworking companies such as WeWork, there are a number of Indian startups in this sector, and their footprint is growing by the da. Here are but a few of the more prominent ones.
- BHIVE Workspace
- OYO Workspaces
- Base Station
- AltF CoWorking
With many more smaller players in the market, startups are trying to cash in on the demand for such coworking spaces from startups, and as a result, the coworking life is a norm these days for entrepreneurs and startups.
Why Startups Prefer To Work In Coworking Spaces
Here is a breakdown of startup growth into five stages and how coworking spaces help startups in every stage.
- Networking Opportunities For Early-Stage Startups
Ideally, the genesis of startups is from a garage or a basement. This stage involves firming up the idea, building a minimum viable product and testing. It involves finding a scalable product that would grab investment and lets them further move to other steps.
Instead of working from a basement, startups nowadays prefer shared working spaces at a very early stage. This helps them meet other entrepreneurs working in the same space, which leads to better networking with like-minded people. These entrepreneurs pitch in their ideas, advise them and also help them with changes if any.
Startup founders get to meet people working for other companies, who can help them further on a freelance basis till they reach the next stage. Many of these spaces also have managers who can direct them in the right path, help them with logistics and help identify a potential problem.
- Marketing And Talent Acquisition
As startups start to add more people and resources, their budgets are stretched. Once their business grows a little, word of mouth will help them grow further. However, till then startups need to work on basic marketing strategies for brand positioning. It could be as basic as a blog, or social media posts or paid search advertising, but this is an important stage for any startup. This is when talent acquisition could also be a challenging task.
Every company wants the right talent, but to hire people for a not-yet-known brand could be a challenging task. Startups need to save on investment costs. Low capital expenditure can only be ensured by cutting down on real estate and directing the budget towards hiring the right people.
- Lower Real Estate Costs
According to a report, Co-Working: The Office of the Future, by Knight Frank India, “Real estate expenses make up approximately 9-12% of overall operating costs for an established corporate and could account for more in a startup. There is a saving of 5-15% per seat in a co-working space compared to a standard lease.” By choosing coworking spaces over traditional rented places, startups will also be able to cut down on paperwork, usually needed to rent a place.
In every possibility, the startup’s most accessible client space could also be the shared working space they work in. Also, when a startup works on talent acquisition and marketing, working out of a coworking space than the basement of a house, or a garage would create a more professional image. The address they share initially matters a lot and a home address may not be seen positively by potential clients.
- Business Flexibility
When the startups are scaling up their business and hiring more employees to match the demand, it is very important to work on employee retention and avoid attrition. When a startup grows its business, coworking spaces offer the flexibility of scaling up as and when the need arises. When the startup needs more facilities and employees to match a peak in demand, a coworking space can be more flexible than a traditionally rented office. Location is also an important factor for growth. However, rent in prime locations in every city can be unaffordable and coworking spaces address this problem as well.
In the expansion stage, startups are unsure of the degree of expansion. They may cut down or increase the number of employees.
Coworking spaces offer flexibility to increase or cut down the team as and when needed. Companies can go in for different membership plans as they scale up over some time. They can also alter their lease on a monthly or annual basis. They can also change the location of the coworking space as per the needs of the employees and clients. Companies can also simply rent out more workstation when there is a need.
- Incentives And Motivation For Startup Employees
Coworking spaces also offer a feeling of motivation that employees do not get while working from home. Spending long hours alone can be depressing and in today’s work environment, ensuring the good mental health of employees can go a long way in the company’s growth. In addition to this, the perks offered by coworking spaces like community building exercises can be a motivating factor for employees. They also have access to the experiences of other companies.
Today, even larger enterprises prefer coworking spaces over their offices. They have recognised the advantage that coworking spaces offer. They believe in giving flexibility to employees for better productivity and giving opportunities and onboarding people from remote locations, unlike traditional 9-5 companies.
Given the traffic situation in India, the only way employees can enjoy a work-life balance is by giving them the flexibility of working remotely from coworking spaces. These spaces also have dedicated areas for video conferences as well, which could get a little tricky when someone works from home, with a lot of distractions around. Also, instead of isolating employees in their homes, they prefer taking care of their mental health by taking them out to coworking spaces.