Five Signs that Your Struggling Business Needs to Relocate

April 7, 2010
The right community can help a company reduce operating costs and better position itself for growth, site selection firm says.

If your company continues to feel the effects of the recession, relocation might be the key to turning things around, according to Ecodev LLC, a Bloomington, Minn.-based site selection analysis firm.

"In the past year, we've seen a vast uptick in companies looking to relocate part or all of their business in order to reduce costs and better position themselves for growth," says Dana Olson, president/CEO and founder of Ecodev. "Businesses that are facing employee layoffs or the closing of plants should consider relocation before taking more drastic measures."

Some areas of the country are known to be more pro-business, offering tax incentives and grants to growing companies. Other areas boast lower property costs or a more qualified or affordable labor pool, Olson points out.

To determine if relocation is the answer for your business, Olson advises taking a close look at your business needs and how those needs are -- or aren't -- being met by your current community.

The process starts with analyzing your business's operating model and comparing key costs with what these same costs would be in a different area of the United States, Olson explains.

"Most people start a business or buy a business in the town where they live for convenience, and they don't consider that it may be dramatically more successful in another part of the country," says Olson. "Relocating can typically save a company 20 to 30% in lower operating costs. In addition, job-creation grants can generate the operating cash needed to fund the move and/or growth."

Is Relocation the Answer?

Olson offers these five signs that could point to the need for your business to consider relocating:

  1. You need to upgrade your facility. If you are in the midst of expansion, look beyond your backyard to ensure that you are moving into a community that not only meets your property needs -- often at a lower rate -- but also provides a qualified labor pool and an attractive economic incentives package. Further, consolidating multiple sites into one location can save money and streamline operations.
  2. Hiring and retaining employees is an issue. Work force issues can be overcome by relocating to a community that better matches your company's specific labor needs. For instance, when a medical transcription company was having difficulty hiring and maintaining its employee base, the company located a training center near a community college and developed a partnership with the college to train and recruit transcriptionists. In another example, a manufacturing company that struggled to find adequate sheet metal operators relocated to a community with a ready-to-go work force.
  3. Your operating model is too expensive. Moving your company to the right community can help to create a more profitable operating model, including lower labor and infrastructure costs and the ability to secure cash incentives and grants.
  4. Your company is not in close proximity to your customers. If your business is serving a customer base located halfway across the country, it may make sense to move a portion of your operations in order to cut shipping and transportation costs.
  5. Taxes, taxes taxes. Unfortunately, the United States is the second-highest taxed country for business. However, tax structures vary dramatically from state to state. By moving a company or expanding in a new location, a business can save a substantial amount by considering an area that provides lower taxes, tax breaks and incentives to businesses.

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