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Hidden Costs of Relocating Your Business
Don’t let unexpected expenses sink your big move.
Relocating your business can open up exciting new opportunities but it might be more expensive than you think. There are obvious costs such as paying a moving company and changing utilities, but there are also other expenses that you might not consider. Expenses such as lost business and productivity. With careful planning however, you can avoid a major blow to the bottom line.
“Business owners really should have a very detailed list to take them from A to Z to evaluate what they’re going to need to budget for before they move,” says Helen Dennis, president and co-founder of 300 Decisions, a business relocation company. Whenever possible, you should start planning a move 12 to 18 months in advance.
Before you commit to relocating your business, review this checklist of costs that can be easily overlooked.
Loss of productivity. Dennis says for a small to mid-size business, it usually takes between 800 to 1,000 hours of employee time to plan and carry out a move. That’s time not spent working on the company’s core business.
Loss of revenue. The worst-case scenario is letting your move interrupt core operations. “Loss of revenue can be a very dramatic hit in the whole relocation process,” Dennis says. In other words, don’t plan your move in the middle of a major project. Try to time it over a weekend or holiday. You might even need to keep your old site open until the new office is ready to go, creating redundancy costs. “You’ve got to build a good contingency plan,” Dennis says. “You don’t want to lose your customers over a move.”
Staffing costs. Every business needs to ask, “If I’m relocating, who will I be able to take with me and what will that cost be?” Dennis says. “If I’m not able to take people, what is the cost to recruit, train, and bring on new folks?” Don’t forget to account for lost institutional knowledge if you shed long-time employees.
Marketing expenses. With a new location, you may have additional expenses in printing new materials such as brochures and business cards with updated contact information. You may have to update your digital content as well.
Real estate fees. There can be fees for breaking a former lease, deposits, or costs associated with selling your former building such as cleaning, repair, realtor fees and space reconfiguration costs.
Information technology expenses. You may face charges to terminate services in your old location and get your new office connected. Engage your IT team early and work closely with them during the transition.
Insurance needs. Most moving companies have insurance, but you might consider a supplementary business plan to cover valuable items, in addition to insurance for business continuity. Depending on your new location, insurance costs may also be higher.
Equipment removal. If you have office equipment or supplies you aren’t taking with you, you may incur costs for their disposal.
Miscellaneous costs. Don’t forget to set aside money for security, cleaning, vending, financing and other incidental costs necessary to function in the new location.
Sometimes adding up all the hidden costs to relocating a business can outweigh the benefits, leading an entrepreneur to stay put after all. Whether you decide to stay or go forward with the move, plan early, develop checklists and try to calculate your relocation costs down to the last detail.
Want to learn more savvy business strategies? Take a look at our business resource center. And, one of the smartest business decisions you can make is being proactive about protection. Connect with an agent today to learn about customized coverage for your business.