Considering a Business Relocation?

When the wind is at your back, you can afford to endure a relatively high cost structure and intangible negatives associated with where you operate your business. However, good times don't last forever and the idea of relocating your company to a more favorable environment shouldn't be dismissed out of hand. Plus, you might want to make a move for purely personal reasons, like being closer to family or enjoying a better climate.

True, a relocation can be very disruptive for you and your employees — particularly if you've never done it before. But it might mean a brighter future for all concerned. Or not. How can you make the best prediction?

The kind of business you operate, along with who and where your customers are, play critical roles in the decision of choosing a site. Here are 10 factors that, to varying degrees, should affect your choice.

10 Key Variable Factors

1. Customers. If you're a bricks-and-mortar retailer and depend on people traveling to your site to make purchases, location is critical. Is the universe of potential customers growing in your area? Shrinking? Staying the same? Where might you find a stronger customer base, potentially close enough that you wouldn't lose all your existing customers?

2. Competition. If most of your customers are local, what's your relative competitive position? Will your market share likely erode because of strong competition that's growing faster than the customer universe? If so, can you outpace that competitor? Or can you relocate to somewhere with less competition?

3. Labor pool. Is there anything about your location that makes it hard to attract the kind of employees you need to make your business successful? Factors can range from the availability of affordable housing to the adequacy of local cultural and recreational amenities to attract new workers from out of town.

4. Real estate and utility costs. Is your rent in the stratosphere? If so, do you really need to be physically located where you are? Many landlords insist on five-year lease terms: think long and hard about whether you want to commit to another half-decade. Also, keep in mind that electric and water utility costs can vary dramatically by jurisdiction and region.

5. Physical space constraints. Wherever your customers are, is your ability to expand your capacity constrained by your current location? For example, is extra physical space (including parking spots) simply not available? Would you encounter zoning issues if you wanted to undergo a major expansion?

6. Tax rates. Sometimes a low-tax jurisdiction isn't as economical as it might appear at first blush. For example, a location with low corporate tax rates might have over-the-top property taxes or substandard public services. Other times taxes are high all the way around and public services are still poor. Many jurisdictions trying to attract new businesses will offer financing deals and tax breaks if you commit to creating a particular number of new jobs. Other strings may be attached to those incentives, so go in with your eyes open.

7. Regulatory climate. Some states and localities truly roll out a red carpet for businesses and don't try to micromanage how you run yours. Others take the opposite approach. Move there and you'll likely die by a thousand regulatory cuts. Also, try to gauge the direction of business regulation. Sometimes a new regime will burst onto the scene and restore a more business-friendly environment. The opposite is also possible. Try to get a feel for which way things are headed.

8. Access to logistics resources. Being off the beaten track can be appealing in some ways, but if you're too far "off the grid" you might find it hard, for instance, to get fast and reliable shipping services locally. Or if it would take many hours to travel to a major metro area, consider the business implications.

9. Disruption and moving costs. It's impossible to move without disrupting your business to some degree. If you're moving far enough away that your employees will need to relocate, many may choose not to, and you'll have to replace them at your new site. Plus, the cost of physically moving your supplies and equipment will be considerable.

10. Quality of life. If you're in love with where you live now, you'll need a compelling business case to relocate — particularly if you'll be dragging other family members along with you. The opposite is also true, of course. That is, you might be ready for a big change. If there are key members of your team who you hope will make the move with you, find out how they view the opportunity.

If you're open to considering a move, chances are you're thinking about more than one possible destination. Some that might appear attractive on the surface may turn out to be less so when you do the analysis. Keep looking. And if you decide to stay put after concluding that the grass isn't greener on the other side of the fence, you'll have a new appreciation for where you are today.

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