Upward vs. Sideways Coworking Expansion

This article is less of a how-to piece constructed to tell you how to do something and more of a thoughtful suggestion. I'm not going to get into the nuts and bolts of expansion strategy, but merely point out the benefits of a sideways expansion as opposed to upward expansion. But first, I think we should tackle some definitions.

Upwards and sideways expansion may sound synonymous with existing business terms, vertical and horizontal expansion. But I've purposely not used the latter. I've done so because the business world uses these words for describing the types of services you offer and to whom you provide them. What I'm talking about, specifically, is how you expand your physical footprint, which may or may not include additional services and audiences. So for this article here are the definitions:

Upwards Expansion

A process of expanding your coworking space by adding extra floor space within your existing building, or to buildings nearby that would render their physical proximity (as seen by your member commuter base) mostly irrelevant.

Sideways Expansion

An expansion strategy that revolves around adding additional buildings whose locations are distanced enough from one another to the extent that they attract new members who would otherwise not commute to another site.

Why We Build Up

Upwards expansion has many benefits, not the least of which are the ease of new member integration with the existing community and the relative simplicity with which one can maintain an effective operations team. Other benefits include:

• An easier time dealing with fit-outs and remodeling
• More effective tours because potential members see existing members and the vibe of the space
• Less staffing costs or need for member autonomy
• Less confusion from visitors (who may accidentally go to the wrong location)
  

In effect, we build up because it's easier and generally more useful for marketing and growing our brands. However, there are downsides. Notably:

• Limiting reach to existing commuter base (i.e., the people willing to walk, drive, or cycle to your only location)
• Narrowing services and amenities scope due to existing building infrastructure (e.g., lack of cafe space, additional meeting space, event space, etc.)
• Lack of experimentation with more efficient and autonomous management structures

I'm not saying that upwards expansion is terrible at all. I'm merely saying that it's the most common strategy and that it leaves opportunities unexplored. Expanding sideways allows us to take advantage of those opportunities.

The Benefits of Sideways

There are several benefits to expanding sideways, which are the inverse of the downsides from upwards expansion, which are listed above.

Primarily, doing so allows us to offer up our coworking community and experience to people who would otherwise not make the commute to our original location. That is most apt in the suburbs or outlying regions of our city.

Berlin comes to mind as an example. It's unlikely that a potential member would commute from Prenzlauer Berg to Neukölln for coworking, or vice versa. The 30-minute train ride isn't worth it to most coworkers. And depending on your potential member's address within those neighborhoods, the commute could be up to 45 minutes with transfers and walking time. Even if a potential member identifies with your brand, values, and likes your offering, in many cities, adding an hour or more to their daily commute is a non-starter.

That makes establishing small, satellite locations an incredibly attractive strategy for many urban spaces. Not only does it make the commute more convenient for existing members, but it also puts you in the position to gain many new members for whom the transit time was just too far for comfort.

Another reason for expanding sideways has to do with attracting new audiences. You may already have your bustling coworking space in or near the city center, or perhaps in an up and coming neighborhood. And a specific type of person will be attracted to that physical location. Typically younger, single, less-senior professionals who enjoy the buzz and energy of life in whichever metropolis you call home.

However, as many people age, have children, and advance their careers, their needs and desires change. No longer do they want or require the ever-vibrant city environment, with its endless menu of events and chance meetings. Instead, they need stability and perhaps desire a child-friendly workplace. Their want for connection and fun hasn't gone away, but the intensity and frequency have changed. These people move to the suburbs or to smaller towns which are not only outside the commuting distance to your space, but that have a significantly different vibe than city life. And they've chosen that vibe because it's more in line with their lifestyle and values.

The opportunity here is clear. Instead of trying to convince people from the ‘burbs to commute to where the action is, bring the action to them, albeit in a different way. Opening up a satellite location here will allow highly skilled and experienced professionals to connect to your brand and community. You will start to attract an audience that many coworking brands typically ignore.

In fact, we've seen a significant rise in rural and suburban coworking in the last year, as outlined in our State of Coworking 2018 article. That means there's a growing demand for flexible workspaces and connection in rural and suburban areas, a market that you can satisfy.

Lastly, expanding through smaller, additional locations forces your organization to be more efficient and effective with your operational structure. Because we typically expand upwards, our teams are always close to each other. That means that when a problem arises, we solve that problem by throwing a team member at it, as opposed to developing a process that prevents the problem in the first place.

But when we expand to other locations, we are faced with the choice to hire additional expensive team members to manage those locations or to come up with better processes. If the audience demographic I outlined above holds, your suburban locations may be filled with more mature and professional individuals who quite possibly require less babysitting. That is an excellent opportunity to experiment with more autonomous operational processes such as smart access control systems, fully independent member bookings and billing, and member-organized events or gatherings. If you go for the sideways strategy, you'll be required to adopt these strategies because your team will be spread too thinly to be effective. 

But upon solving these challenges you'll expose the cracks in your already existing operational structures, which means you may identify systems and processes which could you can implement in your main space. Once that's done, you'll realize you've freed up a lot more time to work on the things that matter, things like impact, business development, and further improving systems; things that can't be done by a system or computer.

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As I mentioned at the outset, this is merely a thoughtful suggestion. Your mileage may vary as it comes to expansion via this strategy depending on your location, the skills on your team, and your budget. Overall, however, I think that expanding sideways is a solid strategy for increasing your reach, attracting new audiences, and experimenting with better processes.