I have been writing for about three years now that co-working is not a “new” business; instead, it is “a new way” of doing business. So, what does this mean?
First, it means that many have rushed into the co-working “business” and there will only be a few survivors.
Second, it means that an enormous number of players in the real estate world – and by this I mean almost anyone who owns a building or portfolio of significant sizing – will eventually have a portion of the building or portfolio devoted to co-working. The space will be run by a third party co-working operator (not far from the concept of a property manager on some steroids) or by the property owner itself. Some will be leases to co-working operators and some will be essentially joint ventures between owners and operators and others will the so-called hotel model. It will become ubiquitous.
Third, profit margins will fall as it becomes clearer that to make money in co-working you have to do it the old-fashioned way; namely, by doing a great job, having a strong brand, etc.
All of this is part of what people are loosely calling the “hotelization” of real estate and it is happening all around us.
So what is someone in the co-working “business” to do? This is by no means a doom and gloom article. Instead, I have a suggestion for how co-working players can succeed and succeed dramatically.
And the answer is to combine operational skill and branding power with the Power Niche.
To refresh your recollection if you have not read my book If You Want to Get Rich, Build a Power Niche. The Power Niche concept is to determine a small-sized niche within a bigger industry that no one else yet dominates or has ownership of. The niche isn’t obvious – or it would already have been established — so you have to figure it out and “create” it, i.e. you don’t “pick” a niche; instead you “create” the niche. You then step in and learn everything about it and everyone in it until it starts to become “powerful”.
Applying the Power Niche to the co-working world is so easy. You just chop up the real estate world and, voila, you have a Co-Working Power Niche. Here are a bunch of quick examples, some of which are already happening:
- Co-working for artists
- Co-working for real estate players
- Co-working for women
- Co-working for specified minorities
- Co-working for cooking and kitchens and food
- Co-working for philosophers (not sure if I am kidding here or not)
- Co-working for the LGBTQIA community
- Co-working for lawyers, accountants, and similar professional service providers
- Co-working for [fill in just about any industry]
- Co-working for [fill in just about any charitable concept]
This doesn’t even scratch the surface but hopefully, you get the idea of how easy it is to create a Power Niche in Co-Working.
Now, to summarize, to succeed economically in the co-working business, I would propose that the operator do several things:
First – make sure your brand is primo;
Second – get control of your operating costs, either yourself or perhaps have a third party provide the logistics and backup. IWG’s franchise model comes to mind. Indeed, you might keep your costs low by arranging that you are solely the branding and marketing arm; and
Third – create a Co-Working Power Niche.
And then sit back and watch the money roll in. Okay, I am kidding here about that of course. This is a tricky and difficult business to pull off. I take my hat off to those who have done it so well so far and wish them the greatest success. And I hope this thinking is useful.