Is it Time to Move into a Larger Office or Retail Space?
We get this question a lot from the American Express Business Blueprint™ community. It’s as risky and intimidating as the question of whether or not to open your business in the first place. Scale doesn’t matter: the risk and trepidation are equally real whether you’re moving out of your garage and into a storefront, or if you’re moving a 100-employee production shop from a small factory to a larger one. If your business is growing, there’s no question of whether or not you’ll eventually ask this question. It’s just a matter of when.
If you move too early, you wind up with more space than you need. That means more expenses than your income justifies, and lower profits for months, quarters or years to come. Moving too late means lost opportunities and a hit on your bottom line comparable to moving too early.
As with so many situations, the perfect timing will be different for every business. We can’t give you a magic 8-ball, fortune teller, one-size-fits-all answer. But our experts have identified the most valuable questions to ask:
Why should you move?
The correct starting answer to the question “Should I move into larger space?” is “No!” That’s because moving costs cash investment and lost productivity in the short term and extra monthly expenses in the long term. Before you even begin thinking about a timetable, logistics and potential spaces, write out a list of concrete reasons a move is a good idea. If the list isn’t long enough or strong enough, put the idea away for a quarter and think about it again at a later date.
How full are you?
Assess the concrete costs of remaining where you are. If your staff has grown so much you’re violating fire codes at all-hands meetings, it might be time to move. If your retail stock makes your showroom look like an episode of Hoarders, it might be time to move. Do crowded conditions in the office and warehouse ruin productivity? It might be time to move. As with item one, if this list is short or weak, table the question for a later date.
Did the opportunity come to you?
Ask yourself how the idea of moving was brought up in the first place. If you’re thinking of it because you saw the “perfect” space or your real estate broker pal gave you a call, be very careful about moving forward. Excellent opportunities are around all the time, but there’s only one perfect time to move. A great opening can get you so excited about the prospect of a move that you don’t see the looming disadvantages before it’s too late.
Can you reorganize?
Ever notice how much more you can fit in a suitcase if you unload it and repack? The same phenomenon works in your business. Fully explore how you can accomplish your goals without taking on the expense and complexity of a move. A crowded office could move to separate shifts or allow part of the team to work from home. A retail shop can expand by putting a line on the web instead of on the floor. If you have too much stock for your storage, reach out to family, neighboring businesses and even your staff about renting their unused space. All of these tactics cost less than taking on a larger space and its corresponding monthly cost.
Do you have enough money?
Moving into a new, larger space will cost more than your initial set-up between moving costs, deposits, cleaning fees and renewing your utilities and other services. If you don’t have enough money to pay those expenses, the question of whether or not it’s time to move becomes moot. If you must move, but lack the funds, small business loan providers like American Express® Business Line of Credit can provide you with the working capital you need to make it over the hump.
Can you double-dip?
Will the move give you a benefit above and beyond more space and less crowding? Does the new space have more street visibility? Is it in an area with better or cheaper internet? Does the lot have more parking? Is it next door to a synergistic location like a stadium for a sports bar or a courthouse for a documents shop? While answering this question, be on the lookout for its opposite. A bigger shop in a worse location can be the worst of both worlds.
Once you’ve put your answers in the appropriate pro and con columns, finish up the conversation with yourself by asking one Bonus Round Question: Is this decision emotional or mathematical? Your business is your baby, and it’s easy to become excited about expansion. New, bigger digs represent both opportunity and evidence that your company is doing well. Ask yourself, and one person you trust, if the move makes sense purely on paper before committing to your decision.
If you have experience or advice to add to this discussion, sound off in the comments below. Help your fellow community members find the answers they seek.