10 Questions to Answer Before You Choose a New Site

Considering a new site presents an explosive bag of opportunities and risks. You can take advantage of the former and reduce the latter by answering 10 important questions before you make a final decision.

1. Will a new location achieve our intended goals?

Company A cited the need for a better labor pool as a reason to move. In fact, there were more than enough qualified people right in its neighborhood. The problem was a low wage scale. Raising wages by 10% made more sense than moving.

At company B, a new location would have reduced operating costs by 20% and paid for the move in three years. A good deal for many, but not for company B whose finances required an 18-month payback.

2. Will the potential financial rewards be great enough to offset startup and moving costs?

Today, few locations can offer enough savings in labor, utility, transportation or tax costs to justify the upfront outlay. There must also be realistic expectations to increase business, improve productivity, add new markets or otherwise enhance the bottom line long term.

3. Have we defined the key project drivers?

The first step in a cost-effective site search is to know exactly what you're looking for. So before you contact local governments, economic development councils or the like, be sure you have a firm handle on such items as distance to raw materials and customers; access to road, water and air transportation; necessary skilled labor; and utility capacity. Limit in-person visits to the final short list.

4. Where do incentives fit into the picture?

The average 100-employee firm will add about $50 million annually to a community. It’s not surprising, then, that all kinds of public and private groups will often provide direct investments, low-cost financing, infrastructure improvements, tax relief and other inducements to attract or retain a business. These can be hard to resist, but smart companies will proceed with caution. The intelligent route is to avoid both heavy-handed negotiations, which can set the wrong tone with the community, and unrealistic performance commitments, which can limit future management decisions regarding investment or employment.

5. How do we deal with unsolicited advice from high places?

If you're in charge of finding new space for your organization, your career could depend on how well you handle the principal players. Major shareholders and top managers often express divergent opinions on the best locations — opinions more likely based on where they would like to live or vacation than on sound business strategy. It's up to you to address suggestions appropriately in your report and support your own recommendations with irrefutable facts and figures.

6. Does the timetabIe fit the project?

Before reengineering became a household word, there were typically enough middle managers and assistants to staff a relocation comfortably. No longer. Today, such special projects become an added responsibility of senior management, who need sufficient time to make informed decisions. The schedule must accommodate not only the actual relocation but also startup time when both old and new locations may be operating simultaneously to minimize business disruption. A full-time transition manager and a detailed plan outlining required resources, milestone activities and assigned responsibilities are the foundation of a successful move. So are experienced consultants, who can expedite the process and prevent a drain on internal resources.

7. Which vendors should we use?

Firms with multiple locations may find it convenient to use the same architects, engineers, designers and contractors for all. But experience in a particular geographical area can sometimes be as important as familiarity with the company. The challenge is to determine where the organization can get the most value and insure a successful and timely startup.

8. Should we buy or lease?

Some companies insist on owning every property. Others will only lease. Neither is correct. A decision should be made only after weighing the risks and opportunities in each individual deal.

9. How will the move affect employees?

Employees are a company's most valuable — and most volatile — asset. Most will not welcome a move, even when their jobs aren’t in jeopardy. Reduced productivity and some degree of attrition are virtually inevitable, but also manageable. The key is to develop accurate estimates, factor them into the overall moving scenario and plan appropriate actions.

10. Have we addressed employee training?

New facilities demand at least a minimum of training. Enlightened managers will provide much more. They are aware that training is often the difference between an adequate workforce and an outstanding one. In the context of a relocation, teaching new skills improves morale, generates enthusiasm and, in the long run, increases the company's profitability.


Need Commercial Space?
Zeve Associates will help you secure the best commercial space for the best terms.
Newsletter Sign up

Representation Saves Time and Money in Renewals
Although you might think that negotiating a renewal without a tenant representative will reduce your costs, in fact, the opposite is true. At Zeve Associates, our experience and knowledge of the marketplace can reduce your occupancy costs — including all fees for our services — below what you can achieve on your own. We have one goal: to save your time and money. With all the opportunities available in today’s market, the best terms made yesterday are higher than what they will be tomorrow! For a no-obligation evaluation of your current occupancy portfolio, please call us at 949-759-6661.