Before you pick up a map and select
potential new locations or expansion
opportunities for your business, you should review your business plan and compose a list of questions.
“The break-even point associated with a
move can get away from you if you don’t
ask the right questions before deciding on
a location,” says Marisela Cotilla, managing
director for the National Services Group at
Prudential CRES Commercial Real Estate
South Florida. “There are many things to
consider, and if you don’t have the information you need, you may end up making
a costly decision that could have many negative ramifications regarding your business
needs and your financial expectations.”
Smart Business spoke with Cotilla about
what executives should know before making a relocation decision.
What’s the first thing CEOs should consider?
You need to look at your current customer concentration and decide how your
relocation decision will affect them. If
you’re looking to expand, will your relocation choice help you capture additional
market share? In some cases, location
doesn’t affect a business’s ability to garner
and nurture clients, but in some industries,
it’s critical. If you need close proximity to
clients to deliver services or if they need to
come to your office to conduct business,
that’s another consideration, especially if
image and profile are important. A review
of your target market and client acquisition
plan will help you formulate critical questions to ask prior to making a decision.
What work force data should CEOs review?
Contrary to popular belief, I don’t think
that real estate is all about location, location, location. I think it’s all about timing. If
you are in the wrong location at the wrong
time, you will be unable to attract a quality
work force or customer base, so you’ll
have execution problems. Demographics
aren’t stagnant in any area, so it’s critical to
review the current population, density,
household income and daytime employment of each location under consideration
and ask the following questions:
- How will this move affect my existing
work force? Is it too far; will they leave?
Will I need to offer relocation stipends?
- Will I be able to attract the workers I
need in the proposed location? Do the
workers with the required skills live in
proximity to the new office? Is there available affordable housing? Expensive housing and long commutes might necessitate
- What’s the competition like for workers, and how does my current compensation plan measure up?
- How will these human capital decisions affect my cost of doing business?
Businesses can’t operate without people,
so knowing how your new location will
impact your work force is vital before making a selection.
How will relocation affect my vendors?
Think about your supply chain and what
goods and services you need to receive and
deliver to conduct business successfully. If
you receive goods via large trucks, you’ll
need a loading dock that can accommodate those vehicles and the timing of your deliveries may be impacted, which could
adjust your entire manufacturing process.
Also, your new location may impact your
vendors’ costs and they’ll pass that on to
you, so it’s best to confer with them before
signing on the dotted line.
What should I know about the property?
You really want to know if the property
you’re considering is conducive to your
business needs. For example, if you have a
large call center, a downtown location that
necessitates huge monthly parking costs
for employees doesn’t make sense.
Additionally, you need to investigate how
the phone service in the area may impact
your call center’s costs and efficiencies. If
you operate a manufacturing concern, can
the new building accommodate your
equipment? Does it meet your load capacity requirements, and can you move your
equipment into the building through the
existing doors and elevators?
If you deliver your goods to customers on
trucks, traveling just a few more miles each
day might have a huge impact in your costs
and create excess wear and tear on your
vehicles. You’ll want to consider toll roads,
proximity to rail lines and highways as part
of your decision because fuel and transportation costs are major factors.
Insurance is another consideration
because risks and rates vary by location.
Review the long-term plan for the areas
under consideration and any regulations
that might impact your business. A trip to
city hall with a list of questions might be
wise because zoning and future development plans for the area are important considerations.
Lastly, be sure to consult with real estate
professionals who know the area. They
can help you formulate questions and they
may already have the answers and the necessary data to help you make a financially
MARISELA COTILLA is managing director for the National Services Group at Prudential CRES Commercial Real Estate South Florida.
Reach her at (954) 829-1677 or [email protected].