Why you should think about moving your business to a new city and how to do it
Wednesday, January 13, 2021
Last year was not easy on anyone, and businesses have been hit especially hard. The pandemic has forced many business owners to look at ways to adapt, both in the short-term and for years to come. One way that some businesses have adapted is by considering new locations for their businesses, whether it means a move across town, across the state, or even across the country.
There are many reasons businesses should consider moving their businesses, because location could be the difference between success and failure. Taking a look at your financial situation, employees, customers and potential customers, and quality of life in your current location (and any location you are considering) will help you decide on whether you should move your business.
Moving a business's location can affect finances in several ways, including cost of living and average wages. According to the Bureau of Labor Statistics, the average hourly wage in the United States (as of 2019) is $19.14. There are many states, especially those with large cities, that have a higher median hourly wage than the national average, like New York ($22.44), California ($21.24), and Washington ($23.15). In many states, the median is much lower, like in Idaho ($17), Alabama ($16.73), Mississippi ($15), Arkansas ($15.84), and South Dakota ($16.71).
Being close to a larger metropolitan area can mean an increase in expenses and wage costs for many businesses. But it can also bring in an increase in your business rates (what you can charge your clients and customers). It is worth noting that expensive cities like New York and San Francisco are seeing people leave — between January and June 2020, 80% more people moved out than moved into those cities.
Also consider whether you are looking to apply for a loan when you arrive, because different states may have different rules on when and how to apply. Because the costs of moving a business can be extensive, applying for a loan may be an important consideration for the move. If you cannot get approved for a loan, there are many things you can do, but it should always be a consideration before moving.
According to Fiscal Tiger, you should first determine why you were declined and then take the actions to fix those issues, including taking some time and actions to help repair your credit, increasing your income, getting a second opinion (from another lender), asking for a lower amount, or putting up property or assets as collateral. Another thing to consider is your current real estate — if you have a current lease, make sure the lease is up or you will be able to get out of it.
Other ways finances may affect your decision to move include business tax credits, where you may be eligible to receive credits for real estate owned, number of employees, and many others. Different states have different rules for business tax credits, and many companies will choose a state based purely on their rates.
And don’t forget the cost of the move itself — which includes moving yourself and your family, any employees you are bringing with you, your equipment and office supplies, and expenses associated with opening a brand-new location in a brand-new city. Hiring movers, hiring employees, finding real estate to lease or buy, and doing initial marketing will cost you, but are necessary to set up correctly in a new location.
Before you decide on a move, research your full financial picture to see if it makes sense. Your accountant or financial advisor may also be able to help you decide the pros and cons of a move, so reaching out to them can help you decide a black-and-white way.
Although finances may be the first concern when considering moving your business, hiring will also be important. The benefits of moving a business to a large metropolitan area include having access to a larger pool of potential employees. Some companies may have a harder time finding employees in specific professions the further away they are from a large population center. The more specialized the skills needed, the greater pool of expertise that can come with a larger community may be essential for your business.
However, if the company is not near a population center but in an area with a high quality of life, drawing quality employees to that area could be a consideration.
If you are happy with your employees, you can always ask them to move with you. Some will find it an exciting new opportunity and 15% of the population relocates each year. For employees moving with the business, be cognizant of adjustment periods, especially if you’re moving to a larger community. Offer employees survival tips for moving to a bigger city, such as budgeting for the higher cost of living and making sure they get out and explore.
To hire employees in a new location, researching the local market will be an important consideration. The Small Business Administration (SBA) has tips on how to hire and manage employees and recommends looking at federal and state labor laws from the Department of Labor.
Before you move your business, you will also want to research potential customers in a new location. Customers may be one of the most important parts of reconsidering a business move. If your business has been in one location for a while and has loyal customers, it's important to think about what that loyalty is worth to you — and how long it would take to build it back up in a new location.
But if you move to an area that is more in tune with your business niche than where you are now, losing that loyalty for a short time may be worth the new customers you will be seeing.
Taking the time to research your potential city (which includes researching your competition) will help make sure you will have enough customers and how popular your industry is in the area. You will want to budget for the marketing you will need when you get there to find new customers, and then decide if you want to hire a marketing employee or employees, a marketing agency, or if you have the time and skills to do the marketing yourself.
Quality of Life
Finances, employees, and customers are all tied to a quality of life to consider for a business move. Quality of life is a more intangible aspect of a business' location but can include things like cost of living, housing opportunities, crime rates, health care, education, transportation, recreational opportunities, and climate and weather.
A strong business community is also an important part of quality of life for any business owner. Establishing your network as soon as (or before) you move will help you and your employees settle into your new location and will help you feel more at home. Research the new location through LinkedIn, the city’s Chamber of Commerce or Visitors’ Center, and any other networking groups you can find. Anything you can do to understand what the environment will be like in your new location — for you, your business, and your employees — will be important to your quality of life once you arrive.
Making a living is no longer the only consideration for an employee. Choosing a location for your company could make a difference in your employee pool, revenue and expenses, customers, and quality of life. Doing your research before a move to a new city will be important to understand how your business will fit in at the new location, and whether it will just survive or whether it will thrive.
- 8 exercises for strengthening your business writing
- How employers are helping employees reduce student loan debt
- Report: Only 6% of US companies offer comprehensive child care benefits
- 3 ways to make your supply chain more resilient
- Millions of high school students set for success: Celebrating Career and Technical Education Month
- Tips for interrupting unconscious bias
- 10 negative employee behaviors that undermine success
- Study: Researchers search for better ways to nix inventory errors
- A strategic quotient for the board
- CES 2021: The year of staying home with gadgets
- The top 10 biggest data breaches of 2020
- Types of disability insurance businesses need to know about
- Seattle, Salt Lake City, Boston top list of best cities for construction
See your work in future editions
Your content, Your Expertise,
Your Industry Needs YOUR Expert Voice & We've got the platform you needFind Out How