Look before you leap Featured

8:00pm EDT May 26, 2007

Selecting a business location requires more than looking at the base lease rate. A plethora of elements must seamlessly dovetail to lessen the impact on the bottom line.

“Moving day is not the time to discover that crucial features of a new location are unsuitable for your operation,” says Barbara Cooper, an adviser for CRESA Partners Orange County. “Choosing the right location for your business is a major decision that requires time and expertise to achieve an optimal outcome. A company can waste time and money spinning its wheels in trying to make the right decision about relocation. Hiring a corporate real estate adviser helps a business incorporate the key business functions into its relocation equation; identify competition, existing, potential and future customers; and target the most optimal new location based on its criteria.”

Smart Business spoke with Cooper about how real estate decisions are made and how advisers can help companies complete successful relocations.

Why is it crucial to invest time and seek expertise when relocating your business?

Relocation for any business involves strategic planning. The first question a company should ask itself is: ‘What is involved when considering a relocation?’ Corporate real estate advisers have come up with many key questions that a company may or may not be asking itself at the time of a relocation evaluation.

Is the company downsizing, expanding, or needing to place itself in a more strategic environment for its customers?

Will the proposed relocation make sense on the balance sheet?

Will this relocation increase or lower production cost?

Is the relocation financially feasible for the company? (At the end of the day, it has to make financial sense.)

Which new location is best for the firm and why?

Should the firm purchase land and/or a building, or continue to lease?

What are the company’s existing real estate circumstances and what are its options?

Will this relocation enable growth in terms of space and work force requirements?

At what rate is the firm growing?

Is the firm/facility dependent on being located in a specific time zone?

Should the firm be located along the Eastern Seaboard or the Pacific Coast (if remaining in North America)?

Does climate affect the business? Would proximity to the Mexican or Canadian border be beneficial?

Does the firm/facility need to be within close proximity to primary customers, suppliers, or specific distribution channels?

What about key locations for transportation like airports, train/rail lines and sea ports?

What local legislation could affect the company’s operations?

The real question is, ‘How many firms are going to ask themselves these questions?’ The answer? ‘Not enough.’ That’s why real estate advisers do the asking for them.

What are the benefits of a well-executed relocation?

A well-executed relocation plan will yield positive results. Hopefully, the company will experience a seamless move and relatively few or no interruptions nor delays in business operations. As a result of the relocation, the business should experience benefits such as cost efficiency and closer proximity to core business requirements like key suppliers, distributors and customers. Thorough analysis of the pros and cons of a move before it takes place is essential. The time invested in this process will pay off in the end.

What are the consequences of an ill-planned move?

A poorly executed relocation plan can be devastating to a company. Time and money will be wasted. Also, the company could suffer in regard to its core business functions. Business could be delayed, which is extremely costly to any firm, and its reputation could suffer as well. The public assumes that a company has done its homework before it selects a new site.

How can experts help companies minimize the financial and operational impact of relocation?

Again, saving time and money is critical. The key reasons a firm elects to relocate must be addressed from the beginning. A real estate adviser will honor the firm’s objectives for relocating and make it a top priority to resolve those issues in the move. A relocation should facilitate core business operations and make a positive impact on operating expenses.

The relocation must present multiple solutions: employee retention, image, future growth potential, key/ideal proximity to customers, suppliers, distributors, and the total cost. Cutting costs is almost always at the top of the list, but it is one of many factors that lead to a successful relocation.

BARBARA COOPER is an adviser with CRESA Partners Orange County. Reach her at bcooper@cresapartners.com or (949) 706-6600.