Everyone has heard the old real estate mantra “location, location, location” a thousand times — and it is as true for business owners as property salesmen. Perhaps among the most important aspects of business management is deciding where to put down roots or realizing the inadequacy of your current situation. Reasons for industry growth or decay in any region can be either man-made or natural, and many industries are relocating to the Sun Belt due to a combination of these effects in their current cities. States south of the 36th parallel often have lower taxes and unionization rates while providing a more recently desirable environment for employees. However, workers in areas like New York City have a high density of high-skill, motivated workers. As you read, consider your company’s current needs to see if a relocation analysis is right for you.
The primary reason to relocate, as of now, is workforce. Companies with a need for workers, particularly those with technical or highly skilled fields, are moving to areas where these types of workers are readily available. An example of this would be a trading firm that moves from St. Louis to New York to gain access to the greater pool of financial employees in the area.
When relocating to access high quality workers, it’s important to contemplate many of the other factors of an area. For example, will there be a continuous and steady flow of new youthful workers in the area for the company’s future or is this simply a single generation of talent? College towns are perfect for their ability to produce a constant stream of workers. One of the main drawbacks here can be a large investment in employees that may eventually leave for different climes.
Quality of life is one of the most important aspects to employees, so it should be one of the most important aspects of a moving company as well. To many people, the benefits package and income level are irrelevant if they’re going to be working and living in the slums. However, few people are willing to live below the poverty line just to get to say their address is in San Francisco proper. Business moves toward better areas can be rejuvenating and beneficial for employees and customers alike.
Room to Grow
Another common reason for relocation is much less drastic. In the course of time, most companies hope to find that they’ve grown so vast as to be hindered by their current site, like a hermit crab that gets too big for its shell. To raise production and efficiency, and perhaps create room for new, updated equipment, companies must find a more appropriately sized shell. This can necessitate employee hires and other expenses, so should really only be undertaken by companies already assured of their need for space. However, be forewarned: Retail location movement can cause a disorienting change for customers and many will often not survive the transition.
Access to Business
Just as retail locations can lose business in a move, they can be significantly benefitted by a change of location that brings them closer to customers. Clustering together with other shops of a similar price point or target audience can increase traffic. However, this can be a gamble as the costs of moving are often high, due to physical goods transport and productivity loss. There will be a period for any business, particularly manufacturing businesses, of productivity loss that must be accounted for as equipment must be set up and routines re-established.
While routine interruption isn’t as prevalent with retail or food service, the costs of moving merchandise may still outweigh the benefits. A potential fire sale should be examined and weighed against outright moving costs. If the gamble pays off, this reason to move can be the best one on the list. A failing or struggling company can be revitalized and even begin to thrive based on this single maneuver alone.
Bottom Line Reduction
Opposite to increasing sales is the need to decrease costs. This can manifest through lower rent, utilities or even taxes if you’re crossing borders. As everyone knows, the next best thing to increasing revenue is decreasing cost as it will increase competitiveness and even open up the opportunity for price undercutting if you’re comfortable with keeping the per item revenue at comparable levels. If you can move to an area that lowers overhead costs, like rent and utilities, you might benefit your business significantly.
Technology is constantly moving and physically moving with it may be necessary to keep up, as is the case with many companies and the new Google Fiber. Industrial firms should look at a new space that would better suit newly acquired machinery. Whether they can slim down the space to save as new machinery grows increasingly efficient or they need to bulk up to account for increased output, moving is often a better idea than overpaying or risking the hazard of cramming it all together.
When moving shop, aside from looking at costs analytics, quantitative and qualitative judgments on regional happiness, CPI and revenue stream potential it’s easy to forget about the little details of legality and regulation. Always consult the experts, like those at your friendly PEO, when moving, both in the departure point and the destination.
Ideally, you won’t be moving your company for any single reason but rather a combination of those above. Try to get the most bang for your buck on moving costs and give the business a better environment, the right tools and employees and enough room to grow.