Relocating Your Headquarters or Office: The Pros and Cons
January 24, 2019 by Aley Brown
Are you thinking about relocating your headquarters? Or one of your offices?
That decision can be stressful to say the least.
For those of you who have never gone through a relocation before, it refers to the process of picking up one of your business’s current locations and moving it to a new spot. This could be across town, across the state, the country, or even the world.
Depending on how far you are moving, where you are moving, and why you are moving, there are several things to consider.
And it is a necessity to pay attention to all of these considerations, because getting a move right is so important. The smallest type of move when relocating your headquarters or office (just across town) can still cost millions of dollars depending on your office size and capital assets.
Not to mention that you might be stuck in a new location for a long period of time due to leasing contracts, tax incentives, or other agreements. So as a company you will want to make sure that you make the right decision when relocating your headquarters.
Also, we know this blog is about the pros and cons of relocating your headquarters or relocating an office. But it is important to note that the pros and cons will vary by each situation, depending on what is important to your business objectives.
For example, if you care more about space and less about cost, moving into an expensive and big office might be a pro for you, while a con for a more fiscally conscious business.
Because of this, we will go over a few common situations that arise when companies are relocating their headquarters, and then go through the pros and cons of each specific situation.
Relocating Your Headquarters or Office: Aley Manufacturing
Our first example is based on a fictional company called Aley Manufacturing, located in Kansas City, Missouri.
Aley Manufacturing is experiencing an increase in demand and their current facilities aren’t big enough to keep up with production. Because of this, they are looking to move to a bigger facility.
We should also probably tell you that their biggest client is located in New Jersey, and makes up about 80% of their revenue.
It would make sense to go forward with relocating the headquarters to New Jersey, right?
Let’s break down the pros and cons.
- They will be closer to their biggest client, resulting in lower shipping costs, and a stronger relationship.
- There is a lot more office and manufacturing space located in this area of the country, when compared to Kansas City.
- There are also a lot more people, meaning that the area could better support the human capital needs of the company as it grows.
- It is risky to place so much weight on your company’s relationship with one specific client. What happens if you lose that contract in the future?
- While there is a lot more space in NJ, it is also substantially more expensive. It is important to make sure the benefits outweigh the increased overhead costs.
- Kansas City is pretty far from New Jersey, so it is likely that very few of your staff will actually be willing to relocate to the new location.
Not as easy as it sounds, right?
There are a bunch of things to consider. And tons of pros and cons as to why you should or shouldn’t work on relocating your headquarters or office.
When you get to this point in your planning process, I would recommend doing a cost benefit analysis to determine the added benefit or cost of relocating your headquarters.
If there is a substantial cost benefit, you should do it. If there is a big cost, then you shouldn’t do it!
In the situation above, the cost benefit analysis would be clear in my mind: stay in Kansas City.
Let’s go through another example.
Relocating Your Headquarters or Office: Josh Consulting
Josh Consulting is located in Pittsburgh, Pennsylvania. They have 30 employees, and do consulting work for startups about their content strategy. Their clients are spread out across the United States, and their employees are all located within the northern part of the Pittsburgh metro area.
Their current office is located within the northern part of the metro too, but the rent is fairly costly. The company is also looking to expand in the next two years, so it needs an even bigger office.
The CEO thinks that he has found a great new location in the city center, for a cheaper cost of rent, and with much more space.
Let’s go through the pros and cons of this situation.
- Cheaper rent then they currently have.
- More space to accommodate their growth.
- Location in the center of the city makes it ideal for employees to live anywhere across the metro area.
- Proximity to airport makes this location great for clients visiting the office.
- Their current employees who live close to the office location will now have to start commuting into the city everyday.
- Parking in the city is rough. Employees will be disgruntled about having to pay for parking on their own, so it will be an incurred cost to build a lot, lease a lot for them, or reimburse for parking.
- The weather can be very cold in the winter, which would make parking and walking several blocks to the office not as accessible to all employees.
Not the easiest decision, right?
At face value it seems like this move would be a no brainer. But it will greatly impact the lives of the employees who currently work at Josh Consulting.
In this situation, I would do internal company research to see what the estimated turnover would be if the company was to relocate. Then use that information to do a cost benefit analysis.
Without doing said internal research, I would probably recommend relocating given the facts listed above.
Relocating Your Headquarters or Office: Pros and Cons to Consider
While the pros and cons will be different for every situation, the things you should review in regards to relocating will always be the same.
Below is a list of things that you should always consider when making your pros and cons list for relocating your headquarters.
Overhead costs: Will the cost to run your facility be more expensive in one location over the other? Things like utilities, lease payments, and taxes should all be taken into consideration.
Talent costs: Will you lose any of your current employees in the move? If so, can you afford that? And is there a pool of qualified workers in your new location? If so, is there enough of these said workers to sustain your company’s growth over the next 5-10 years?
Location: Does it make sense to relocate to the new location based on the logistics of delivering products or services to your customers? If you provide mostly virtual services, this probably won’t matter as much. But if you provide in person support, where you locate could either cost or save your company money in future travel and shipping expenses.
Employee Feasibility: People want to work in places where getting to and from work is easy for them. This means that the commute times are decent, parking is available, the building is accessible for everyone, and employees feel safe going to and from the location at all hours.
Relocating Your Headquarters or Office: The Final Say
Relocating your headquarters can be a tough decision. It is important that you develop a thorough pros and cons list, and then use that to run a cost benefit analysis before making a final decision.
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