Relocating a business to a new market: Key factors to consider
Here’s what small business consultants recommend for any business looking to jump to a new market.
Businesses looking for greener pastures stand to increase profitability and enjoy consistent growth—as long as they’re careful about the location they choose and the checklist they use to ensure the change is a success, according to Deborah Sweeney and David Nilssen, small business consultants.
Nilssen is CEO of Guidant Financial, a firm specializing in small business financing, which helps fledgling businesses find their initial footing in the market—or reposition themselves for enhanced growth.
Here’s what the two recommend for any business looking to jump to a new market:
- Be Sure Relocation Makes Sense
Moving a business is costly. So you’ll want to be sure that the new location will increase profitability, keep your current employees happy and offer the promise of substantial growth. “It’s essential to understand why you’re moving in the first place,” Sweeney says.
- Take a Hard Look at Relocation Costs
Besides physically moving your business, relocation also requires creating new marketing materials, registering your business with government agencies, hiring new employees and the like. Be sure the calculus works after you’ve factored in all these variables.
- Find the Best Location
Ideally, you’ll be able to find a new location that is extremely convenient to customers and employees, offers generous parking if needed, is close to an airport and/or mass transportation if needed, is close to a post office if needed and has built-in accommodations for the disabled.
“Your new physical office should be able to accommodate the needs of the business, its clientele, and its employees,” Nilssen says.
- Research Tax Break Opportunities
Many states, counties and cities offer special tax breaks for new businesses. Knowing what’s available can significantly reduce the cost of your move.
You’ll also want to be sure that your move does not subject you to significant new tax liabilities that could seriously degrade your chances of increased profitability.
“Tax rates can seriously influence the size of your profit margin,” Sweeney says.
- Be Clear on Licensing and Governmental Regulations
Uncle Sam et al will want to know all about your move. So be sure to file Form 8822 to notify the Feds about your change of address. And reach out to your local Secretary of State to determine the documents you need filed with that and related state offices.
You’ll also want to look at the city and county licenses and permits you already have for your business and then duplicate certification of those documents for your new location.
Also realize that certain offices, such as zoning offices, may need to officially approve your business’ change of address before you move.
- Meet Additional Requirements if You’re Moving Out-of-State
If you’re an incorporated business, going over the state border will require you to dissolve your existing LLC or corporation and then form a duplicate version for the new state.
Dissolving your existing LLC or corporation is critical. If you don’t, the state where you first incorporated “will consider the business to still be active, and you’ll still be required to pay state fees and taxes and file annual reports,” Sweeney says.
- Keep Current Employees Informed Throughout the Entire Process
The best way to hang onto as many employees as possible is to keep them informed about every stage of the move, the advantages they’ll enjoy if they stick with you and the key dates they’ll need to know about as the move looms closer.
You may even want to informally poll employees about the locations you’re considering and take that feedback into consideration as you make your decision.
- Verify You’ll Be Able to Hire Qualified New Employees
Relocating also offers you the opportunity to set up shop where you’ll find an extremely deep pool of prospective employees. Just be sure that deep pool actually exists before you greenlight your plans.
“Relocation offers the chance for businesses to tap into a qualified, educated and talented workforce—but the opposite can be true, too, especially if you are a niche business,” Nilssen says.
- Keep Customers in the Loop
It’s a good idea to ensure your customers are fully informed about your move – along with its advantages to them – during every step of your relocation. This is especially true if a significant share of your business hinges on everyday foot traffic.
You’ll also want to be sure that the changes in everyday modes of communication you use with your business—telephone, email and similar—are seamless. No customer wants to deal with a “this number has been disconnected” message or a bounced email when reaching out to your business as you move to a new location.
“If you need to close for a day or two to complete the move, notify your customer base about when you may be closed for moving purposes and how they’ll be able to contact you,” Sweeney says.
Join our LinkedIn group, ALM’s Small Business Adviser, a space where small business owners can gather to network, have discussions and keep up with the trends and issues affecting their industries.
Related:
How can businesses prepare for wildfires?