When planning a coworking space, it's crucial to have a detailed financial forecast. This is where a coworking pro forma comes into play. It's a dynamic financial document that provides projections over a five-year period, detailing how your coworking space is expected to perform financially.
Space Allocation #
The initial step in creating your pro forma involves understanding how your coworking space will be allocated. The total floor plate size available will determine the space's layout and the number of units each space type can accommodate. Here are some examples of unit allocations:
- Private Offices: 50 SF for a 1-person office, up to 800 SF for a 20-person office
- Meeting Rooms: 100 SF for small, 150 SF for medium, and 350 SF for large
- Dedicated Desk Membership: 55 SF per member
- Coworking Membership: 45 SF per member
- Support Spaces: Spaces such as the manager's office, printer/copier room, server room, kitchen, and lounge areas
Remember, these standards can be adjusted based on factors like the specific layout of your space, furniture choices, and member needs.
Membership Plans and Add-Ons #
After defining your space, outline the various membership plans and add-ons you'll offer. A diversity of options not only caters to different customer needs but also creates multiple revenue streams. These might include:
- Private Office Memberships
- Coworking Memberships
- Dedicated Desk Memberships
- Social/Community Memberships
- Virtual Startup Office (including Mail)
- Locker and Storage Solutions
- Day Passes
- Private Corporate Team Suite Rentals
Revenue Lines #
Next, project the potential revenue lines. Consider all possible sources of income:
- Membership fees from various plans
- Meeting Room Rentals
- Event Rentals
- Virtual Startup Office fees
- Locker and Storage fees
- Day Pass sales
- Private Corporate Team Suite Rentals
- Sponsorships
Expenses #
Balancing the revenue lines, you'll need an accurate estimation of expenses:
- Rent
- Staffing
- Utilities
- Insurance
- Technology (hardware & software)
- Maintenance/Custodial
- General & Administrative (G&A)
- Property Taxes
- Marketing, Advertising, PR, Business Development
- Office Supplies
- Coffee, Tea, Snacks
Financial Modeling and Key KPIs #
The pro forma should be modeled over 60 months, taking into account an occupancy ramp-up to 85%. It should also factor in increases in expenses over time. This model will help you determine critical KPIs such as Net Operating Income (NOI), breakeven point, and revenue growth.
The NOI is crucial as it measures the profitability of your operations by subtracting operating expenses from revenue. The breakeven point, on the other hand, is the point at which total revenue equals total costs, indicating no profit or loss.
Remember, it's important to be conservative in your projections, especially in your first few years. Having a detailed, well-thought-out pro forma will not only help you understand the financial health and viability of your coworking space but also prove valuable in discussions with potential investors, lenders, and partners.
