Relocating Your Business? Consider These 3 Factors First.

Relocating Your Business? Consider These 3 Factors First.
Image credit: Floto + Warner
Magazine Contributor
3 min read

This story appears in the August 2016 issue of Entrepreneur. Subscribe »

Stop packing for a moment, and ask yourself: Do you really need to move your business? Relocations are expensive, disruptive and risky. If they’re done poorly, your business can fail -- and that new location may turn out to have just as many problems as your current one. 

But, OK; let’s say moving is the only option. Now start with a systematic look at where to move. Analyze regulatory differences, access to your market, workforce availability and cost, utility and transportation infrastructure and costs and, of course, real estate. A good commercial real estate broker can help gather most, if not all, of this information on your behalf, over and above just locating properties for you to consider. 

Once you zero in on a potential location, run a cost/benefit analysis with a budget for the actual move. The basics are easy: You know what it’ll take to pack, transport and unpack the business. But now come the Big Three:

1. Space costs

These will be significant, so think through everything. Get a good real estate lawyer to review your next lease -- and don’t scrimp on one, because a good lawyer can help negotiate the price and any unfavorable terms. Then consider all the related costs -- the lease deposits or down payment; the design and renovations; potential improvements to the space, including data wiring and connections; local permits and fees; and the initial costs of hooking up all utilities. All of this needs to be paid while you’re also paying overhead on your existing location.

2. Staff costs

Expect your employees to put in for -- and be paid! -- significant overtime to execute the move while doing their jobs at the same time. You’ll also lose some of those employees in the move. Recruiting, hiring and training their replacements will be time-consuming and costly, as will the lost productivity (and business) until the new hires get up to speed.

3. Business losses

These can be huge -- like bankrupt-the-company huge. Make a careful analysis of your customer base and sales, and the likely effect the move will have. Will your current customers stick with you? You may think so, but there’s nothing stopping a competitor from snapping up the experienced staff that doesn’t relocate, and taking those customers you left behind. 

Once you’ve collected all the figures, do the calculations with a goal of breaking even on the cost of relocation within two to three years. Be brutally honest with your numbers. Entrepreneurs may be all about high risk and high reward, but moves should involve as little risk as possible. If you’re going to go, go slow. 


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