Overcoming The Four Fundamental Roadblocks to Relocating a Business
Moving consistently makes top-10 lists when it comes to the most stressful life events, and moving can be even more challenging for companies than it is for individuals and families.
Dana Olson, President and CEO, Ecodev (August 2012)
Whether undertaken for financial reasons, geographic preferences, labor demographics, or other deciding factors, relocation can be a daunting process. Whether it is the challenge of convincing key executives to make a move or the fear of disrupting production, a variety of factors may make leadership reluctant to make a move - even if that move is critical to turning around or even saving the company.
Before any ultimate decisions on relocation are made, it is important to examine the reasons for moving or staying, the biggest obstacles to relocation, and ways to navigate around these potential roadblocks.
Roadblocks to Relocation
Moving a company will create significant change for both business owners and their employees, which highlights the importance of well-organized business planning that examines the benefits and challenges associated with moving. Choosing to relocate a business is a major business decision that should not be taken lightly, and there are four key reasons that companies are hesitant to move:
- 1. Executives don't want to uproot their families. This is the number-one reason we encounter when working with clients who are considering a business relocation. Executives are rarely excited about disrupting their lives and their families with a major move.
- 2. There's a fear of disrupting production. Business owners and executives are also concerned about the potential disruptions in production and service that can take place when a business makes a major transition.
- 3. They are concerned about clients. As a corollary to fear of production disruption, business owners are also worried about upsetting or losing clients.
- 4. There's concern about incurring the costs of moving. Since the cost of doing business is more important than ever to U.S. companies, there is a natural concern about what it will cost to relocate and how long it will take to recover those costs.
Ecodev recently consulted with a company that eventually decided not to move, based on lack of buy-in from its management team. The owner weighed the pros and cons of relocating, but ultimately didn't want to upset his employees and decided the stress of a forced move was not worth it. With that in mind, however, all of these four obstacles can be overcome.
Overcoming the Challenges to Moving
Savvy business owners can coordinate resources, tools, planning, and communication to surmount each of the four chief roadblocks to relocation.
- 1. Local resources: Executives who are nervous about or reluctant to move have a tremendous resource in their city and state Chamber of Commerce groups. These organizations can work with families to help integrate them into the community, work force, schools, neighborhoods, and more; they offer extensive resources to make the transition to a new residence as smooth as possible.
- 2. Redundant production: Any business or production disruption can be overcome with redundant production. By running production lines in both facilities/locations for as long as needed and taking the move in stages, a company can avoid any disruptions or delays related to relocation.
- 3. Client communication/retention: Likewise, when production is redundant and disruptions are nonexistent, then businesses won't have to worry so much about client retention. Further, ongoing client communication will prevent surprises and keep clients informed throughout the relocation process.
- 4. Mitigating costs: Finally, the costs of relocation can be mitigated with grants that are available for job creation to fund the costs of moving. Companies that specialize in relocation services can help businesses identify appropriate grants and funding options for relocation.
Examining the Bottom Line
When Danfoss Turbocor relocated from Montreal to Florida a few years ago, the pioneer of the world's first totally oil-free compressor designed for the HVAC industry moved its entire operations from one country to another, inserting an additional layer of complication. Much of the company's smooth and seamless move can be attributed to redundant production; the company had new equipment installed in Florida and ran production in both locations for more than five months. The successful relocation involved well-informed clients and well-oiled production and customer service.
Simply put, if it does not make economic sense to stay, then a business would be advised to relocate, unless the vast portion of the company's business comes from one local customer. For instance, Ecodev is currently working with an 80-year-old manufacturing facility that is planning a move from Minnesota to Oklahoma in stages with redundant production. The company believes it will save about $75,000 per month by relocating to a lower-cost, lower-tax area, and that has been their chief impetus for the relocation. Cost is just about everything to U.S. companies today, and examining the bottom line can provide a major impetus to move.
Partial Relocation for Businesses
In contrast to a complete relocation, many companies today are considering a partial relocation - keeping their corporate headquarters in the current location and moving production to a lower-cost area, for example. Instead of outsourcing work overseas, companies are outsourcing within their own business and country.
This can make great business and economic sense for companies where management and production can work well in different locations and don't rely on day-to-day contact. Additionally, a partial relocation will cost less than a complete relocation, but it can still involve some of the other challenges - i.e., employees uncertain about moving, fear of disruption and client loss - so it is critical to incorporate redundant production for as long as it takes.
Should I Stay or Should I Go?
While relocation is a major event that entails a perfect symphony of planning and organization, if it makes financial sense to move rather than undergo layoffs, downsizing, or cutbacks, every hurdle and obstacle can be overcome, and it is absolutely the right thing to do for you and your employees. In some cases, a partial relocation might make more sense, reducing some of the costs and stresses associated with relocation. In addition, companies that specialize in relocation services for businesses can also provide advice on the feasibility and possibility of relocation for your business.