Co-working Business Model

This financial model provides an excel template for a multi-year financial plan, DCF valuation for a co-working business

by Jair Almeida
Business Controller and FreelancerFollow 43

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Description
When beginning a Co-working business, you should create a financial model before you open the space or even sign a rent contract. This financial model provides an excel template for a multi-year financial plan, DCF valuation and IRR analysis for a co-work space. This template allows you to gauge how much funds you need to open a co-working business and, by taking into account several assumptions, whether the operation itself is likely to bring in sufficient revenue.

The model starts by outlining the various costs that will make up your capital expenditure, such as:
• Security deposit or down payment needed for renting
• All legal fees (pertaining to the process of registering as a business)
• Furnishing expenses: construction, flooring, infrastructure installations, materials (e.g. paint), interior design, furniture and equipment.
• Marketing costs
• Legal fees
For the regular (recurring) costs associated with operating a Co-working hub, the model does factor in costs like:
• Monthly rent
• Staff salaries
• Utilities
• Marketing
• Internet
• General supplies
• Hospitality costs associated with the benefits your co-working space offers: coffee, tea, juice, food &snacks, etc.

Based on the overall size of the co-working facility, you can set up the size and % allocation of each individual space types, this will then feed the model with the quantity of available spaces to rent.

The Model assumes two revenue streams for co-working spaces: membership plans (dedicated desk, hot desk) and space leasing (offices), besides that the model considers services revenue such as conference room, printing, Food & Snacks etc.
The highlights of this financial model are:
• Monthly and yearly Forecast of Income Statement, Balance Sheet, Cash Flow Statement and Financial Ratios over the next 10 years
• Detailed breakdown of sources of revenues such as renting desks in open space, renting offices, services.
• Detailed breakdowns of operating costs, staff expenses, rent per sq ft and ramp-up schedule (for free rent at the beginning)
• Debt Schedule, with option such as refinance, interest only period
• Fixed Asset and Depreciation Schedule
• DCF Model
• Acquisition analysis with uses and sources of funds as well as investor IRR and quick Goodwill calculation
• Executive summary with a quick glance on the company’s key highlights

If you have any questions regarding this tool, don't hesitate to reach me out by starting a discussion below, or by private messaging via my Eloquens Author Channel.

This Best Practice includes
1 Excel Template