Key Factors to Consider in a Business Relocation

Relocating a business is something that should be done with careful consideration and analysis for every aspect that could be affected. As a leader of your organization, the last thing you want to do is make a decision that could severely impact a stakeholder, or cause the business to suffer financial loss.

That being said, the weight of this activity is what makes it such an important process for the people involved in making the decision. In this article, we will break down what a business relocation entails, why it might occur, and what key factors to consider when relocating a business.

Let’s start by exploring what relocating a business actually means. It essentially refers to the process of picking up one or more of your business’s current locations and moving it to a new spot. However, this could look quite different depending on the scenario.

It can be as simple as moving an entire office from downtown to the suburbs. Or it can mean moving an office from one city to another, or across the country, or even to another country entirely. Another example could be relocating a portion of an office to a new location, while maintaining the original location.

But no matter the situation, business relocation should never be taken lightly. Depending on how far you are moving, where you are moving, and why you are moving, there are several things to consider. Even the smallest move can have a significant impact on the larger organization, financially and otherwise, in both the short and long term. Not to mention that you might be stuck in the new location for a long time due to leasing contracts, tax incentives, or other agreements. So as a company, you want to make sure that you make the right decision when relocating your offices.

The reasons for relocating a business vary depending on the situation. It can occur because your business is doing well, or as the consequence of your business doing poorly. If you have experienced so much growth that your current facility cannot produce enough of your product to meet demands, this would be a positive reason for business relocation. However, other less ideal reasons could be due to lack of business funds, rent increases for your current facility, or otherwise not being able to generate enough profit in the geographic area where you are located.

So the decision to relocate the business comes down to the business objectives and the type of relocation in question. For example, a business that cares more about space and less about cost would see moving into a big, expensive new office as a pro, while a more fiscally conscious business looking to downsize would view that as a con. The key is to weigh the business relocation pros and cons of your specific situation to determine the right move for your organization.

It’s essential to carefully assess how all of the possible business relocation pros and cons might impact your specific business situation. To help you with this, let’s dive deeper into these to more thoroughly understand all of the factors to consider when relocating a business.

You can also click below to download our free Careerminds relocation checklist to ensure that you are fully prepared to navigate a smooth and successful business relocation through any ups and downs. 

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Here is a more thorough look at the key business relocation factors for you to consider:

The most obvious consideration when relocating a business is legal concerns. Depending on the type of business entity (e.g., corporation, LLC, sole proprietorship, etc), and your current local laws, there are a variety of issues to work through.

A sole proprietorship is the simplest business entity to relocate to another state. You simply need to register your business in the new state, just as you registered in the state of your original location.

The options for corporations moving their business to another state get more complicated:

1. Continue the original business while registering as a foreign corporation doing business in the new location.

2. Dissolve the original business location and open a new corporation in the new state.

3. Reorganize the company merging the old corporation into the new corporation in the new state location. 

Plenty of options, but all have their tradeoffs. Running a corporation in both locations could incur double the expenses. Dissolving the corporation in the original state also includes hefty fees and potential tax increases for shareholders.

Moving an LLC to another state is pretty similar to moving a corporation. You can either create a new LLC in the new location, liquidate the original LLC (which is different from dissolving, but similar), or merge the old LLC into the new one with a reorganization.

Whatever you decide to do, remember that we are not legal professionals and this in no way constitutes legal advice. We highly recommend that you work closely with an attorney to ensure that you have all the information you need to make the best choice and follow all applicable laws.

This is another obvious factor to consider, and yet one of the most complicated because of all the hidden or secondary costs involved with relocating a business. First, you must consider the cost of moving the office itself from one location to another. It is not a cheap endeavor to move the entirety—or even a large portion—of an office, and the price only increases the further that relocation distance gets from the original location. You will want to assess if the benefit outweighs the actual cost of making the move.

Next, you’ll want to consider how the overhead costs of your new location will impact your everyday operations. Your new location could increase or decrease your leasing payments, utilities, and taxes. It can also impact the wages you pay your employees, shipping costs, and other secondary impacts.

You’ll also want to watch out for more hidden relocation costs. These could be different for every situation, so it’s important to thoroughly assess any financial surprises that could result from your move. Paying for the costs of all of your employees to relocate could be too expensive. You might also need to increase their wages to meet the cost of living in the new location. It could also cause higher attrition if any employees cannot relocate or make the new commute, resulting in added costs for hiring and training new talent.

Taxes are a particularly important cost factor to consider. When relocating your business to another county, state, or even country, it is important to assess the tax situation of your new location. Depending on where you are moving to, and your original location, taxes could have a huge impact on the profitability of your organization.

Some businesses also receive tax credits for having an office in different locations, so make sure you are fully informed on those when thinking through the tax implications of your business relocation.

People want to work in places where getting to and from work is easy. This means ensuring that the commute times are decent, parking is available, the building is accessible for everyone, and employees feel safe going to and from the new location at all hours. This might require leasing a nearby parking lot or reimbursing employees for parking, increasing the costs of the move.

The other employee impact to consider is whether you will lose any of your current employees in the move, either due to layoffs or employees voluntarily leaving? If so, can you afford that? And is there a large enough pool of qualified workers in your new location to sustain your company’s growth over the next 5-10 years?

Your clients are the lifeline of your business’s financial health. So when relocating your business, you need to consider the impact it will have on your customers. This could mean increased operating costs due to greater overhead, or perhaps a decrease in costs if moving closer to one or more of your largest customers. If you have clients who frequently fly in to visit your organization, it could also be important for your new location to be within a decent distance of the airport.

Remember to make sure you consider the risks of moving closer to one particular client, especially if your business is overly reliant on that client. If you were to ever lose that relationship in the future, it could destroy your business, along with the positive benefits of moving closer.

The organizations that run a community are all interdependent. So when one business closes or relocates, it can impact the entire community. Because of this, some would argue that it is a business’s ethical responsibility to assess and minimize the community impact from a business relocation. 

For example, if your business is the biggest employer in a small town, then moving your business to a different city or state will substantially decrease the amount of jobs available in that community, resulting in greater unemployment and a likely decrease in the town’s population as people leave in search of employment. This will, in turn, impact other small businesses in the area given the decrease in patronage from people in the town.

It’s also important to think about how relocating your business will impact you over the long term. This means assessing whether your new location has the labor pool to support your long-term goals and growth. 

If your growth will mostly be focused around general business professionals like developers, accountants, lawyers, and marketers, it might not be as much of a concern. But if you need to hire a lot of people with extensive backgrounds in something more obscure, like Farm Science, you might want to first determine if the local labor pool actually has the talent for that.

Beyond human capital, this can also apply to the opportunities for growth of your facility space in the new location, or even the capacity of local shipping companies.

If you decide to move forward after you’ve weighed the business relocation pros and cons, evaluated your specific situation, and considered all of the key factors when relocating a business, there are a few essential steps to follow that will ensure a smooth and successful business relocation process.

The first step is to choose the best spot for your business relocation based on your business goals and reasons for the move. If the reason is to reduce costs, you’ll want to pick an area with lower overhead costs over the long term.

On the other hand, if you need to move to expand for growth, you’ll need to find a new location with a bigger facility to meet your increased production demand over the next several years. If that positive growth reason refers instead to a need for an expanded workforce, you’ll want to move to a new area where there is a greater pool of the specific talent you need.

Here are the key considerations when choosing your new location:

• How easy it will be for employees to commute or relocate to.
• The affordability of shipping and receiving materials there
• Its proximity to the nearest airport or other major transportation hub
• The available labor pool with the skills you need to support future endeavors.

When you decide to relocate your business, you will need to notify several different groups of people including employees, clients and customers, vendors, the press, and government authorities.

Each of these groups will need to be notified in different ways. An employee might have different concerns about your business relocation than your local government authority or your raw materials supplier. So here are the important things to keep in mind for this step:

• Make sure to notify your employees first—ideally in person as well as in writing—so they don’t hear the news from the press or external stakeholders instead, which can lead to disgruntlement and anxiety.
• Be honest and clear in your communication about how this will impact each group, For employees, this could be the logistics of the move, who will be expected to relocate and how, and details around any resulting layoffs. For customers and vendors, relay the new location information, any changes in logistics, and how it will impact the production and delivery of products/services. 
• Notifying the press is vital to manage how the news comes out to the public and control the narrative. So make sure that your press team has the correct details about your relocation, use publications that are reputable sources, and provide contact information for further questions.
• Government notifications will depend on the size and type of your relocation, and may be subject to the WARN Act if there are any resulting layoffs. Make sure to work with your legal team to review and abide by these WARN Act requirements if applicable, including giving the proper notice time to employees.

Depending on the size and nature of your relocation, it could involve a lot of time, effort, and complexity. That’s why it’s important to have a plan in place for the entire move. This means creating your own relocating a business checklist that lays out every step of the whole process. 

Some people find it useful to break down the checklist into different categories, so that they can be delegated to the respective areas within the organization. You can also organize the checklist into phases of what you’ll need to do immediately, within the first week, within one month, three months, and six months out to ensure a smooth and timely relocation.

It’s also helpful to consider these questions when making your business relocation checklist:

• What are your reasons and goals for business relocation?
• What is your budget for the relocation?
• When will you take ownership of the new location?
• When will you need to be out of the old location?
• When are your business downtimes? Is it possible to move during these periods?
• Who will be responsible for what portions of the relocation?
• Will you need to hire an outside service to assist with the move?
• What equipment, files, and services will you need to get rid of, move, and acquire?
• Will employees be relocated? If so, how many and on what timeframe?
• Will employees be laid off? If so, which employees will be let go, when will be their last day, and what communications will be required?

The decision to relocate can have a huge impact on many aspects of your business and should not be taken lightly. That’s why it’s so essential to understand your reasons for the relocation and consider all of the important factors to make the best decision, and then put together a comprehensive plan with the necessary announcements and a business relocation checklist to successfully guide you through the entire process from start to finish.

At Careerminds, we believe that you can never be too prepared for your next business relocation, especially one that might result in workforce reductions. Our arsenal of resources, templates, guides, and industry-leading outplacement services can help you navigate the delicate relocation process. Click below to speak with one of our experts and see if we are the right partner for your organization. 

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Rebecca Ahn

Rebecca is a writer, editor, and business consultant with over 10 years of experience launching, managing, and coaching small to midsize companies on their business, marketing, and HR operations. She is a passionate people advocate who believes in building strong people, teams, and companies with empowering culture, content, and communication that facilitates meaningful results at every level and touchpoint. In her spare time, Rebecca is an avid traveler and nomad who also enjoys writing about travel safety and savvy. Learn more on her LinkedIn page.