Hot Cities

When you move or expand to a new location, the odds are stacked in your favor, according to Salvaneschi, who has overseen the selection of new sites for thousands of retail establishments. "Because you've been in business for some time," he says, "you are fully aware of all the problems your current location has. If you have poor traffic and know that's the problem, you look for a new location that has good traffic."

But there are no guarantees in relocation, and as many things can go wrong with a move as can go right. Ward cites a recent study of readers of Area Development magazine that identified a number of common mistakes. They included rushing the decision, focusing too narrowly on a few costs, failing to use available economic development services, ignoring quality-of-life factors, missing important environmental or regulatory concerns, and, believe it or not, failing to plan for future expansion. And those can be boiled down to hurrying too much and trying to do a move too cheaply.

Part of the problem is the complexity of these two issues. There's no set time for how long it should take to move, Ward says, and sometimes you don't have a choice. "I've worked with companies that made a decision in three or four months because they didn't have a choice," she says. Others might expend two or three years in the process, with no better results.

Unfamiliar factors complicate cost calculations, adds Salvaneschi. A mover must figure in the cost of business interruption, for instance. Almost inevitably, a business's productivity will be reduced for a period of days or even weeks after a move. And that's not all. "You may also have some loss of goodwill," Salvaneschi says. "Especially if you've been in that location for many years, you're going to lose some loyal customers."

Finally, there are the usual miscalculations, accidents and unforeseeable circumstances that require some sort of contingency fund in the budget for the move, generally 10 to 30 percent of the moving costs. It may be difficult for cash-strapped entrepreneurs to commit this amount, but considering the number of things that have to go smoothly for a move to happen within budget, it's a requirement.

This article was originally published in the October 1999 print edition of Entrepreneur with the headline: Hot Cities.