The growth of coworking spaces for SMEs has skyrocketed in recent years. This is driven by the growing trend of freelancing, people starting their own businesses and the flexibility it provides. So, it seems coworking spaces are certainly here to stay. And while the draw of Friday happy hour, unlimited coffee and table tennis is exciting, that’s not the best part. Its the cost savings that coworking spaces provide that’s the big win for SMEs. In this article, we’re taking a look at how coworking spaces for SMEs could reduce your balance sheet.
The growth of coworking spaces
According to a recent report by Hub Australia, the number of coworking spaces in Australia grew by 297% from 2013 to 2017. And with this growth has come huge cost savings for businesses. Hub Australia compared a lease in a Sydney CBD office to space at its Hyde Park location. This comparison found that Hub’s coworking space was 25% cheaper than a traditional office space. Not only have the number of coworking spaces grown because of these cost savings, but there are other benefits too.
Coworking spaces for SMEs provide businesses with a community of like-minded people. This community gives SMEs access to potential clients and an inspiring environment to get work done.
In Australia, coworking spaces generally have three types of memberships. There are hotdesking areas where people have access to space with shared tables or desks. Another option is dedicated desks. This option gives people their own desk within an office of people who have also opted for this option. Finally, there are dedicated offices within coworking spaces. These offices allow tenants to complete their own fitout and personalise the space.
Monthly pricing for coworking spaces depends on the provider. Hotdesking options typically cost $400 to $600 depending on the space, dedicated desk options are $500 to $800, and dedicated offices usually cost over $1,200. While it can seem like a big investment, it’s still cheaper and more flexible than a traditional commercial lease.
How coworking spaces for SMEs can save money
Not only are coworking spaces for SMEs cheaper than a traditional office lease, but some businesses may also be able to reduce their balance sheet. This can be done as a result of new standards for coworking space leases established by the Financial Accounting Standards Board in late-2018.
Under the new standards, office leases with a term shorter than 12 months are considered an expense. In contrast, office leases longer than 12 months are considered debt and must be reported as assets and liabilities on a business’s balance sheet. This means your borrowing capacity as a business could be affected if your office lease is considered a debt.
Opting for a short-term lease where you can record the monthly rent as an expense can help to free up cash flow for your business. This is because it reduces your taxable income. So, if you’ve been weighing up options for a new office or wondering where some of your employees could be based, coworking spaces represent an excellent option.
If you’re an SME looking for your next office space, a coworking space could provide the flexibility and cost savings you need. Plus, you never know who you’ll meet by basing your SME in a coworking space. You could meet a client who completely transforms your business as you grow to the next level; the possibilities are endless.
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