A Co-working Space vs. a Private Office: How Do You Choose? Keep in mind:The presence of Ping-Pong and foosball tables may be off-putting to a more traditional client base.

By Thomas Smale

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.


In just a little over a decade, the co-working phenomenon has revolutionized the way millions of people work. International co-working giant WeWork is now the largest corporate occupier of commercial real estate in London, second in size only to the British government. Founded in New York City in 2010, WeWork recently received a $20 billion valuation (according to Forbes' Steven Bertoni), a testament to how much the model has taken off. The only U.S. startups with higher valuations are Airbnb and Uber.

Related: What Will Coworking Spaces Look Like in 2020?

Co-working spaces aren't just for digital nomads and startup entrepreneurs anymore, either. Fortune 500 companies like GM, GE, IBM and Microsoft all rent office space from WeWork. In fact, big businesses now comprise 30 percent of WeWork's monthly sales, according to Bertoni.

Companies that size can undoubtedly find more economical office space, but they flock to WeWork for something more intangible than square footage. WeWork, in fact, sells a culture of work far removed from the staid office environment of past decades. The emphasis is on community and work as fun. The company's hybrid of hospitality and technology has made its co-working model by far the most successful in the world.

While WeWork is based primarily in the United States and Europe, the company is also expanding aggressively in Asia. And, there, WeWork is far from the only game in town. In Ho Chi Minh City, Vietnam, Circo recently more than doubled in size and has plans for further expansion. Indeed, different iterations of the coworking model exist in virtually every major city in the world.

If you're an entrepreneur who's just starting up or looking to expand into new markets, you may be trying to decide if joining the co-working revolution makes sense for you and your business. Certainly, advantages and disadvantages exist to choosing a co-working space over a traditional office. Here are several of them.

Cash flow and freedom from friction

If you're a solo entrepreneur or part of a very small team, co-working is likely the best choice for having a dedicated location for work. Yes, it's more expensive than working from home or a coffee shop, but co-working spaces offer an environment that's much more conducive to work.

Also, expenses like office furniture and renovations will be included in your rent, as will electricity, high speed internet and other utilities. Another aspect of the attraction of co-working spaces is that they allow you to work in a professional environment without high up-front costs or long-term commitments.

Related: Why Big Corporations Are Moving Into Coworking Spaces

When your team expands

But what happens when your team begins to grow? I spoke to Karl Kangur, founder of MRR Media, whose team grew fivefold in 2017. Kangur recently opted to lease a dedicated office in the co-working space where the company began, he told me: "Co-working spaces," he explained, "take all the hassle and admin out of setting up and running an office. It allows my team and me to focus on the work and growing our business."

Kangur said he sees enough value in co-working culture and flexibility that he's willing to pay a premium over what a private office of similar size might cost. "When you're growing rapidly, it's easier to upgrade and move to a new space. You're usually not locked into a long-term lease, and co-working-space owners are more flexible than traditional landlords," Kangur said.

Paying an additional expense for flexibility may be unnecessary or something your company can ill afford. When your team grows beyond a handful of people, it makes sense to evaluate whether moving to a private office makes better fiscal sense.

Facing your clients

One of the biggest potential disadvantages of establishing your team in a co-working space is the lack of control you have in presenting your business and brand to your clients. While spaces like WeWork and many others place a high premium on design and the creation of a trendy environment, their focus will be on their own brand, not yours.

That's why, even if you have a dedicated office within a co-working environment, there are likely to be restrictions on how much of a stamp you can put on your space. If you have a business that relies largely on face-to-face interaction with clients, consider the impression that your being in a non-dedicated office will leave on your clients.

From a practical perspective, meeting privately with clients is unlikely to be an issue. Most co-working spaces offer dedicated meeting and conference rooms to members. But it is difficult, in a co-working space, to create the level of gravitas that a private office does.This may be of particular concern for businesses that value confidentiality. The open-plan layout of co-working spaces is unlikely to inspire the sense of privacy and security that a private office can convey.

Related: Is a Coworking Space Worth the Cost if You're Already Working From Home?

When deciding between a co-working space and a private office, ask yourself how your current and target clientele will perceive your business. The perception of coworking spaces not being "serious" enough is changing, but the presence of Ping-Pong and foosball tables may still be off-putting to a more traditional client base.

Staying focused

One of the attractions of a co-working space for many businesses is that they foster an environment conducive to socializing. Typically, you'll find yourself surrounded by other entrepreneurs and their teams. This makes co-working spaces a hotbed for networking. For many people, these are positive attributes, but they can come at a cost.

A co-working space, for instance, affords you less control over whom you surround yourself with and your ability to minimize distractions. While most co-working spaces place a high value on maintaining a quiet, professional environment -- with dedicated phone booths for meetings and calls, etc. -- there is still a higher likelihood that you will be surrounded by distractions than in a private office.

If you have difficulty staying focused on your work, you may find it challenging to be as productive as you would in a private office. But consider that many co-working spaces offer free or reduced priced trials. So make sure to test-drive any prospective work location before you commit.

Final thoughts

Whether a co-working space or private office is best for you and your business depends on the intricacies of your operation. Evaluating your desire for ease of scalability, the impression you want to leave on clients and the kind of working environment you think would be best for your day-to-day tasks will be the key factors to decide on when choosing an office.

Perhaps there is no one universal answer -- indeed, we started out in a co-working space and found that as our business grew, it made more sense to scale up our headquarters in a private office. What you need from your environment will change as your business changes. Keeping an open mind and maintaining an attitude of self-evaluation are the best ways to ensure you're in the right space.

Thomas Smale

Entrepreneur Leadership Network® Contributor

Founder of FE International

Thomas Smale co-founded FE International in 2010. He has been interviewed on podcasts, blogs and also spoken at a number of industry events on online businesses, exit strategy and selling businesses.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

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