Business owners have plenty of good reasons to make a move. In many cases, it’s necessary to keep up with rapid expansion. Or, it allows a business to improve cash flow and cut expenses by lowering operating costs.
However, before deciding if you should move your business, you must also weigh the risks involved. In some cases, the advantages of making a move may not outweigh what you might lose by changing locations.
Here’s a look at some of the most common reasons for making a move, as well as the risks that should be considered.
Reasons To Move Your Business
No situation works out the same way every time. But some factors for moving a business are more common than others. They include the following.
You’ve Outgrown Your Current Space
This is a good “problem” to have. If you’ve needed to expand your staff because your business keeps growing, then you may need more space. Most businesses start in a small location – even the garage or house of the founder – before moving to an actual office in the same city. Eventually, they will move to an even bigger office for better services, utilities, infrastructure and other features.
Lower Rental Costs
Sometimes, a move is wise if you find space to rent for an office that has a better cost. Business owners sometimes find a lower-cost building in a different area, but must balance cost savings with staying near the target audience. The suburbs or satellite towns often have better prices than those in the heart of a city.
You Can Sell Your Current Space
In some cases, an entrepreneur may have purchased a space to start a business years ago. If that building has increased in value, it may make sense to sell the building for a profit and then rent out another space at a lower cost. This allows a business to tap into a cash windfall while also lowering expenses. That’s a hard combination to pass up.
You Want To Reach A New Market
This is especially true in retail and restaurants. A new location is needed to reach new customers. The same is true of any business where the owner thinks a new location can help him or her tap into a new market. This can include moves across the city or to another state.
Some areas offer a larger, more skilled workforce than others. Businesses may want to move to tap into that workforce and increase the skills and knowledge level among employees. This is especially true for businesses that need a certain type of skill set in their workers.
Risk Factors In Moving Your Business
Sometimes, an owner wants to move, but the risks might seem too high. In that case, not moving is the right choice. Some of the risks to consider include the following.
- Losing customers/suppliers. Are the customers you hope to gain from a move worth losing the ones you already have? Also, will moving to a new location make it harder to keep favorable contracts with current suppliers?
- Tax incentives. Sometimes, getting a tax incentive for moving to a certain area may seem worthwhile. However, it’s important to calculate how much benefit it offers in the long run.
- Startup and operating costs. A move might seem reasonable at first, but it’s important to take a deep look at the numbers and determine all the costs associated with the move.
- Work availability. As noted above, some moves are made to find better workers. Make sure that a move made for other reasons (expansion, lowering operating costs) doesn’t make it harder to recruit good workers.