Slicker Cities

Measure the Greener Grass

Once you've finally put down on paper all those issues that have been nagging you about your current location, it's time for the second step: scouting the alternatives. Entrepreneurs recommend taking a look at several options. Thorne eyed Denver; Boulder, Colorado; and Portland, Oregon, in addition to Seattle. Genex scoped Boston, Chicago, Cincinnati, Miami, New York City, and Washington, DC, before settling on Atlanta.

In an expansion such as the one Genex undertook, the opportunity to grow the second office depends largely on the wealth of target clients and the competitive environment. New York City may have had more companies, but it also had more competition. "We really liked the competitive environment [in Atlanta]," says Genex managing director Seth Lynn. "We felt like we could elevate ourselves much more rapidly in Atlanta than the other cities."

Experts say that in researching your options, you should contact the local chamber of commerce--even while being wary of that source's bias for its town. Genex, for instance, got information and introductions to other entrepreneurs from the Atlanta Chamber of Commerce's economic development committee that helped with its decision. Such introductions can help you estimate costs for real estate, insurance and labor. You can also get information on local educational opportunities to find young talent and provide continuing education for prospective employees.

Costly Moves

As you eye a new location, remember that it won't necessarily pay for itself just in more employees, lower rent or better transportation. The savings need to be significant to recoup the substantial cost of moving your business.

Regardless of whether you move to a new city or across town, the biggest cost of a move is in lost employees. Typically, only 30 to 40 percent of the employees offered positions in a new city accept. (Even Boeing achieved those numbers despite its expectation that 70 to 80 percent of its executives would relocate to Chicago.)

The labor havoc is less when you only move across town, but it's still there. "If you're moving any substantive distance, it's the people who [live in] the other direction [from the move] that you've got to address, even if it's 30 miles," says Amdur.

And if you decide to move employees, keep in mind that the Employee Relocation Council estimates it costs an average of $51,353 to move a home-owning employee and $15,335 to move an employee who rents.

That doesn't even begin to take into account the lowered productivity as workers surf the Web for information on everything from homes to schools to churches in the new town. You'll also lose income from time lost during the move.

Where to Now?

In the end, you may decide that a change in location isn't worth the effort. Hess estimates that half the firms that investigate a move decide to stay put after looking at the costs.

If you decide a new location is the only solution to growing your business, then your work is only beginning. Mumma and other experts say that the moving process can take up to a year from start to finish.

And don't speak too soon, even in an effort to keep employees informed along the way. "The company must clearly define what's going to be offered to employees," says Diane McIntire of Cornerstone Relocation Group LLC, in Warren, New Jersey.

Make sure you've got plenty of information to sell employees on the move. "This may include tours of the area," says McIntire. Be able to answer or bring in an expert to field questions about the new location, including everything from the weather to cultural opportunities.

If all those details sound like a second full-time job, that's exactly what they are. But no one ever said the road to bigger growth was going to be an easy trip.

For a complete listing of the top cities and profiles of our number-one hot spots, click here.

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This article was originally published in the October 2001 print edition of Entrepreneur with the headline: Slicker Cities.

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