Are you evaluating your next business location? If so, you may consider a coworking space — a place for multiple companies and freelancers to pool resources together and lease desks, Internet, office equipment and a company address. These types of working environments can be a strong benefit for some companies, but a hassle for others, so it's important to evaluate the benefits and drawbacks carefully. Here's what you need to know about the advantages and disadvantages of coworking spaces for small businesses.


There are three main benefits for small businesses that use coworking spaces to house their companies and teams:

1. Coworking communities share resources. If you lease an office space directly, you'll be responsible for all utilities including lighting, cleaning, Internet connections and climate control. Most coworking spaces include these costs in the rental fees; some even provide office furniture. Members can also mingle, share challenges and brainstorm with complementary companies without leaving the office.

2. Shared work spaces offer flexible and negotiable month-to-month lease terms, especially for small businesses. While there is no direct way to compare the typical cost of a coworking versus a commercial office space, tenants are typically able to negotiate rates based on the number of employees, which may be more cost-effective in the short term.

3. Lease agreements often include other perks, such as gym memberships, on-site lunches and access to educational programs, which can be especially valuable for early stage companies that may be navigating periods of uncertainty and need to add or remove team members over short time periods.


Despite the benefits of coworking spaces for small businesses, there can also be some disadvantages.

1. You'll have to depend on the shared utilities and resources throughout your day, which means if and when the coworking space becomes crowded or conference rooms are unavailable, you'll need to carve out alternative meeting space options.

2. There may be privacy or security implications stemming from sharing a network with multiple companies. In addition, if the Internet is down or you're having trouble videoconferencing with clients, you'll have to figure out other options.

3. In the long term, coworking spaces may be inefficient from a cost perspective. Because lease terms are flexible, you will have to evaluate whether the cost of a coworking space will be less than a traditional office rental. Check with a small business financial advisor if you have questions.

Though 64 percent of employees in coworking spaces reported in a Huffington Post survey that they're better at completing tasks on time than in traditional office settings, this decision can have both strategic and practical implications on your business. Whether this would be a good fit for your company depends entirely on your unique evolution. Coworking spaces can be a great option for growing organizations that want to maximize their flexibility, however, some businesses may need more control in their operations.

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