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Should Your Business Relocate?

Should Your Business Relocate?

Should you relocate your business? Picking up and moving might sound expensive, but over the long term it may prove to be cheaper and may help your business grow and thrive. Aside from the cost of labor, the cost of owning/leasing and maintaining your facilities could be your largest expense. Plus, the wrong space could dramatically impact the productivity of your company, lowering profits and making it tougher to compete in the marketplace.

Deciding to relocate should be based on an objective analysis of your needs, the costs involved, and whether a new location will improve your chances for success. Don't decide to move simply because you "want" to; move because it makes great business sense. (Check out the article Determine Where to Locate Your Business for an overview of how to find the right location.)

Reasons to Improve Your Location

  • Add space. Most businesses decide to relocate because they run out of room; for displaying products, for inventory, and for employees. But before you move, make sure you're using your space as efficiently as possible.
  • Greater access to customers and clients. Convenience is critical for customers; moving closer to a major client or to a steady stream of potential customers could dramatically increase sales.
  • Cut costs. Cheaper locations whether because of lower rent, lower utility costs, or lower taxes – reduce costs and improve bottom line results. Make sure relocating to a cheaper location doesn't also reduce the number of customers you attract.
  • Add services. Manufacturing firms may need to increase capacity or install new equipment; technology firms may need to upgrade infrastructure.
  • Attract employees. When unemployment is relatively high, employees place less importance on where (in terms of physical location) they work. When unemployment is low, employees have choices and may find working for a business with a convenient, attractive location more appealing. Plus, you may need to move to get greater access to a pool of employees with the right skills and training for your type of business.
  • Enhance image. Law firms tend to have plush offices for a reason; they hope to impress their clients and project an image of success. Retail and service businesses can also benefit from better, more prestigious locations. On the other hand, a business targeting the youth market may benefit from an edgier location.

The above are all great reasons to improve your business location. Before you move, take a look at you existing location and see if you can make changes that allow you to stay. Moving can be expensive and create disruptions to operations, especially in the short term.

Reasons to Move

Relocating to leave a less desirable location can also be a smart move. Your business may suffer due to the location itself. For example:

  • The surrounding area has deteriorated or become depressed. You may have found the perfect location a few years ago, but if socioeconomic changes have impacted sales, moving might be your only option.
  • Lease/rent costs have increased. Possibly the opposite has occurred; you picked a great location and other businesses have moved in, creating heavy demand and limited supply. As a result, property owners may increase rent amounts. Evaluate the benefit of lower rent against the potential for decreased sales if you move to a less desirable location.
  • Your client base has shifted. This situation often happens to service businesses. You may have chosen your original location in order to be close to a stable customer base;. If those customers relocate en mass, your location may no longer make sense and may actually create a competitive disadvantage. You may be forced to relocate in order to stay close to major customers.
  • Suppliers and vendors are no longer available. The availability of your supply chain may have changed dramatically as companies go out of business, consolidate, or relocate. If you depend on just-in-time deliveries or services, your supply chain is critical.
  • The nature of your business has changed. Years ago you may have designed and manufactured a product. Today you might be out-sourcing the manufacturing function. Maintaining offices for administrative and design personnel in an industrial park may no longer make economic sense.
  • Everyone else is leaving. While that may sound odd, sometimes when one or two businesses relocate, others quickly follow and what seemed like a short-term trend becomes a mass exodus. If you operate a retail business and other shops are leaving the area it may be time for you to relocate, too.

Should You Get Help?

Many business owners feel engaging the service of a real estate agent or a leasing agent is unnecessary. In fact, the opposite is often true. Agents know the market, know the area, and can help you find the perfect location, sometimes even help with negotiating leases. And it won't cost you money. Typically, agents are paid by the property owner, even when they are leasing the property instead of offering it for sale. Just keep in mind the agent works for the property owner, not for you. Still, they can do a lot of legwork, pull information together, and greatly reduce the amount of time you spend looking for a new location.

What Kind of Help Can You Get?

  • Market and data analysis. Agents know what is available, what might be available in the future and have a solid sense of overall lease rates. An agent can also help you determine other costs like taxes, fees, utility costs, etc.
  • Space requirement and location analysis. Agents can serve as a sounding-board as you describe the type and amount of space you need, can recommend alternatives, and can help you determine the right areas for your type of business. A good agent also has a sense of where your competition is and where compatible businesses are located.
  • Help with negotiations. Keep in mind the agent works for the property owner, but they can still provide a buffer between you and the owner if negotiations heat up. A good agent can also help you and the owner develop win-win compromises on items like rates, improvement costs, rights of expansion, renewals, and lease cancellation terms.

Most small business owners can benefit from using an agent; it's not likely you have the expertise or the time to perform a thorough search for a new location. Let an agent do your legwork.

Before you relocate, take the time to weigh all your options and the possible outcomes. Relocating a business is complex and time-consuming. Always weigh the costs and the benefits before you decide to relocate.


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