There comes a time for all SMEs when the decision on whether to relocate becomes a serious consideration – but choosing the right location and getting the timing right is crucial if the move is to have a positive impact on your business.
Perhaps your small business has grown so much that it needs a bigger space to spread its wings and continue to thrive. Maybe you have realised that your business would be best suited elsewhere and have decided to take the plunge by looking for new premises.
You surely already know that location is one of the most important aspects of running a successful business and it becomes an even bigger consideration if your business relies heavily on high levels of footfall, such as retail stores and restaurants.
In our, we discussed exactly how important securing the right location is for any business and how getting it wrong could spell disaster for the future of your company.
There are various key considerations you will have to make when choosing where to relocate and those will likely change based on what products or services your business offers. If you own a hospitality business, location really will make or break your business - a prime example being restaurants and bars... they are always best placed in either busy food and drinks hubs that are already well established or as standalone local establishments where the competition is limited.
Equally, hotels and B&Bs located near airports and train stations tend to thrive when compared to those that are located rurally - that is, unless you have a spa within your hotel, in which case quiet and out the way are exactly what you're looking for if you plan to
As you have probably already realised, there is an endless number of routes to consider and to identify which is best for your SME, you will first need to establish what key elements a new location will need to bring to your individual business.
Once you have worked out which core elements you wish to improve by relocating, you can then begin to look for premises that enable you to tick those all-important boxes. If you are unsure which direction to move in, refer to your business plan and familiarise yourself with the vision of your SME. Sometimes we lose sight of the bigger picture, so it is good to remind yourself about the ultimate goal of your business so that you can ensure each individual step along the way contributes to getting closer to that.
Don't have a business plan? Not to worry - read our blog post onand once you've written yours, you will then have a fully-fledged blueprint on what you need to run a successful small business.
So, you know the vision, you know where you want to be in the next year or two and now you just need to work out how relocating can help with all the above...
1. Are You Thinking Big or Small?
Relocation can mean anything from moving to a bigger space on the next street, to moving to an entirely new city altogether. If you plan to move to a new location, there is a lot to think about.
- Is there a demand for your products or services in the new location you have in mind?
- Will your employees consider moving too or will you need to employ a brand-new workforce?
- Will your suppliers still be able to continue their operations, or will you need to find a replacement?
Before you make the decision to relocate, you will need to make sure that you can replace anything lost with a relocation, whether that is employees, suppliers or anything else you currently rely on to run your day to day business operations.
2. Is There No Alternative?
There are several reasons why many entrepreneurs choose to relocate, but the common ones are business growth, a change in personal circumstances, a lack of demand and limited availability of materials. Relocating is a big step for any business and it needs to be the only option if you decide to go ahead. If you can achieve the same result without needing to relocate, then it is worth exploring other solutions first.
If your business is failing because it is in the wrong location, then you'd be right in thinking that you have no other choice than to relocate. Most business owners do their fair share of due diligence before deciding on an exact location, but sometimes things get in the way that can't be predicted or avoided.
Recognising the need for change before it is too late is vital if your business is to survive, so if relocation is an absolute necessity, stand by your decision and get the ball rolling immediately. If relocating is what your SME needs to succeed, yet a lack of working capital is what’s holding you back, exploring what external funding sources are available to you is the first place to start.
Our Cash Flow Finance product is perfect for businesses that need cash to move into new premises. We have worked with various SMEs that have used Cash Flow finance to hire new staff, buy additional stock and afford relocation costs to fulfil their expansion plans.
3. What’s Your Current Market Position?
Before taking a leap of faith and relocating your business, you should assess your current market standing and how a move would impact it. If you are struggling to thrive due to your location then you know that a move is essential for your business to continue operations.
However, if you already have a formidable position in the market and are dominating the area in which you’re based, that could be a sign that you should stay put and continue to retain your number one spot. It might be that you are so far ahead from your competition that you are ready to expand into another market - but first and foremost, you must be confident with your market standing before venturing into another.
4. Do Your Research on Cost Beforehand
Whilst moving to a nicer area might be fantastic for you and your customers or clients, especially if you relocate to a bigger, suitably more impressive office, it might not be best for the business as a whole. With a better location comes higher rental costs, increasing train fares and with that comes the expectation of bigger salaries.
The cost of living can vary hugely depending on location and a quick search of London salaries perfectly demonstrates this. If you decide to move your SME to a busier region so that you’re operating in the UK’s biggest cities, you will need to be prepared to pay your employees a considerable amount more.
Of course, the idea is that even with the additional costs, your business should be attracting a lot more custom and getting itself on the map, so choose wisely and the risk should pay off.
If you are struggling to raise the capital required to relocate to an area that is more beneficial for your business, a secured business loan is a fantastic solution. You can use your property or assets as collateral to borrow larger amounts at more competitive rates and use the funding to pay for relocation costs.
5. Proximity to Both Potential Customers and Competitors
If your SME is based in an area where your customers simply aren’t, then relocating is a necessity and it is better to do the legwork now before you become even more established. But if your target demographic tends to frequent the area your business is based in, relocating could have a negative impact.
It takes time and a lot of hard work to build a good reputation amongst your customer base, so be certain that you have no other choice before starting from scratch elsewhere.
Equally, it is not just your customers that you need to worry about. Whilst you can expect to be faced with some competition, too much could hamper your efforts and ultimately your business may suffer. For example, you might run a popular Italian restaurant that is brimming with guests most nights as it is the only local Italian cuisine available. Moving to a busier food hub that is already well established could be a disastrous faux pas for your business if the competition is fierce.
When choosing the perfect location, do plenty of research and visit the area on numerous occasions, at different intervals throughout the day. Ensure that your business is located near frequently visited places, such as commuter hubs, built-up commercial areas, shopping centres or residential areas if you are in the hospitality industry.
6. Be Prepared to Lose Some of Your Best People
Relocating might be the best thing for you and your business, but that will not necessarily be the case for most of your employees if you plan to relocate somewhere further afield. You will need to account for the loss of business during the transition and setting aside a budget for recruitment is also an important factor to include in your relocation plan.
Replacing talent is a task no manager looks forward to, but this is even worse for companies that rely on employees for business and access to the right contacts. Some of your clients may choose to take their services elsewhere if some of your best employees leave – and they will likely be headed straight to your main competitors.
Relocating a business comes with its challenges and it is a decision that should never be taken lightly. That said, for many struggling SMEs, a move to a more suitable area can be the breath of fresh air that rejuvenates an otherwise dying business.
If you are experiencing cash flow challenges or want to realise your business growth plans, get in touch with our team of Funding Specialists today on 020 7839 9451 or email firstname.lastname@example.org.
3 July, 2019