Moving is one way to obtain room to expand, but it's not the only one. You may be able to expand by taking in adjoining space, increasing productivity of existing employees and facilities, or by splitting up your facilities in separate locations.
Absorbing adjoining space is probably the most convenient and inexpensive way to add room for more employees and equipment. You save on moving costs, interruption is minimal, and your old customers won't have trouble finding you because you will be in the same place. When you're picking your original location, in fact, it's not a bad idea to consider the availability of adjacent expansion room as one of your criteria. If space next to your current operation becomes vacant at a time when you are considering expanding, you may want to let the owner of the property know you may require more room soon. You may be able to take out an option on the space that will preserve your flexibility.
You may be able to grow your business without moving if you can increase the productivity of your current operation. You can generate more production without adding staff by training your employees to work more efficiently. You can also replace slower machines with faster models, or make alterations to existing equipment to increase output.
Another way to grow without moving your whole company is to split your operation into more than one location. A company that manufactures and sells from a single location can move its warehousing and manufacturing to another facility while leaving its sales outlet in the same place so customers won't have to find it in a new spot. Although the logistics of working from more than one location can be tricky, it's one way to have some of the benefits of moving without all the drawbacks.
One of the classic business decisions involves balancing the tradeoffs between buying real estate to quarter your business and renting or leasing the space. While each situation offers nuances to consider, the basic difference is that buying requires more upfront capital investment but provides security and the opportunity for capital appreciation. It costs less to get into leased space--and it's easier to get out, too--but monthly payments may be higher, and you may have to find a new place to do business when your lease is up.
One option open is to make a personal purchase of property and then lease it to your business. The business gets to deduct the lease payment, while you receive added income.
If you don't want to take on a long-term mortgage to buy office space, consider a lease with an option to own. Terms of this arrangement will allow you to buy the property for a preset sum at the end of the lease. You will be able to lock in a price now and save the expenses of having to move someplace new when you're ready to buy.
Making the Move
Although deciding to move is tough, it's nothing compared to actually making the move. That starts with writing detailed specifications about what your new location must offer. If your main reason for moving is to tap a better labor market, don't get distracted by a favorable lease offered by a prospective landlord or incentives dangled before you by an economic development agency. "You would not want to move to find a well-qualified work force only to find that it's worse in your new location," says Ward.
You'll also need accurate and complete information about the new location before you can commit to moving there. Reference publications such as The Statistical Abstract of the United States and magazines such as American Demographics are good places to start. You can also subscribe for a month or two to newspapers in the cities you're considering (or read them online) to get a general feel for local circumstances.
Be specific when gathering information from Chambers of Commerce, utility companies, economic development agencies, real estate brokers, employment agencies, other small-business owners, and so on. Don't ask general questions like "Is there a good supply of affordable office buildings?" Instead, ask "How many 10,000-square-foot blocks of vacant Class-A downtown office space exist, and what are the going terms and prices?"
You should also visit all sites on the short list of your targets. "I have a saying: You walk it; you drive it; you fly it," says relocation expert Salvaneschi. Only by walking and driving around a location from various angles can you get a feel for traffic patterns. Aerial views from small planes or helicopters can help you grasp the dynamics of a particular retail zone, he adds.
Making the move itself is another challenge in making the relocation work. It's important to decide what equipment, fixtures, records and other items to actually move. It might be better to dispose of inventory at fire-sale prices rather than pay to haul it across the country.
Once you have decided where, when, what and who you'll move, assign someone to be in charge of the relocation. He or she will be very busy with tasks from soliciting bids from movers to keeping employees informed about the plans.
In business, as in your personal life, not every move works out. But by looking closely at their reasons for moving and making sure the chosen spot addresses their needs, entrepreneurs increase the odds that the grass really will be greener and that what appears to be a better city for their business will turn out to be the best.