Tweet

Relocate for cost reasons or to access qualified employees or support

Guest post by: Jack Greene

Article Overview: It is certainly possible for a business to cost justify another facility, instead of or in addition to, in order to gain access to qualified employees, specialized vendors, or support; to optimize location-sensitive costs, community incentive / tax combination, and regulatory climate.

Relocate for cost reasons or to access qualified employees or support

Relocate for cost reasons, or to access qualified employees or support

It is certainly possible for a business to cost justify another facility, instead of or in addition to, because of location-sensitive operating costs, community incentives and tax combination, regulatory climate. Access to qualified employees or specialized vendors and support is another reason for a company to urgently seek another locale even in a poor economy, in order to maintain product volume or quality.

For cost justification, the characteristics of your company will determine what costs can be lower in another community, and if a payback is possible after relocation cost.
In a relocation or expansion, there WILL be short term costs. There MAY be long term benefits. A company will need to identify, quantify and compare one time and operating costs and benefits at the current and alternative new locations, then calculate the net financial payback of each alternative. Be sure to consider:

1. Direct and indirect headcount at all levels of the organization: cost of pay; cost to hire and train at the destination, cost of an attrition plan or termination at the source.

2. Buy or build or lease space in the facility for: Equipment, Inventory, Headcount related, Maintenance, Other support and administration.

3. Equipment added for operation, purchase and depreciation, tooling

4. Utilities and energy, including waste treatment, waste disposal and emissions

5. Transportation in and out; and this variable is increasingly important in the time of rising fuel costs.

6. Regulatory cost of being a resident of a particular state and community, and those costs vary dramatically.

7. Startup costs: to disconnect, move, reconnect, train, absorb learning curve losses; for travel, for process qualification and validation. Technology transfer costs usually increase as complexity of the operation increases. Cost of the move itself increase as machinery size, weight, plumbing and foundations increase.

8. Cost of closedown at the source, and any property actions.

9. Possible interruption to channels of supply

10. Costs of actions to avoid business interruption, such as inventory buildup, or parallel operation of facilities.

11. Taxes and the offset of relocation incentives which can possibly be negotiated.


For assess to people, vendors and support, the characteristics of your company will determine what communities could offer resources more attractively than at present.

People
One of the most significant considerations in facility location is the availability of qualified employees. The unemployment rate in a community is important and easily quantified. Whether or not there are potential employees suited for your business is another question, much more difficult to evaluate in advance.

First, what kind of requirements does your company have? And are you able to meet that requirement where you are?

Does the educational system provide people trained to the level you need, generally? In a community you consider? Will you pay to relocate skills from another location? Can you train employees in the skills? Is training one of the incentives that a community will provide? (Training subsidies are quite common.)


Support
Similar questions should be asked about the availability of specialized vendors and support that you will require in the community you choose. There are many technology centers in the US, areas such as Silicon Valley in California; a similar community near Boston; Research Triangle in North Carolina. Large cities sponsor attempts to create such centers, in one or another technology, in their vicinity. These centers can provide services just across the street that are vital to the success of a company, so be sure that you understand the importance of support that you depend on. In this day of overnight package service, perhaps local support is not as important as before but check it out.

Related Articles
  Email and Internet Usage at Work- A Right or a Privilege?
  Cost Control in this Economy
  Flexible relocation
  5 tips to successfully sell your business
  Do you feel empowered and satisfied at work?

Article Tags: acquisitions integration, business facility acquisition, business facility merge, business move planning, business moving, consolidate building, consolidate business, consolidate companies, consolidate company, consolidate facilities, consolidate facility, consolidate facility, corporate facility merge, corporate integration, corporate move, corporate moving, corporate office move, corporate relocation consultant, corporate relocation specialist, corporation move, corporation moving, corporation relocation, facility expansion, facility site search, facility space planning consultant, facility strategic planning, ma integration, merge buildings, merge companies, merge facilities, merge facilities, merge plants, merged facilities, merger and acquisition integration, merger operational checklist significance of consolidation versus merger, mergers integration, plant expansion, plant relocation, post ma, post ma integration, relocation services, site search, small business technology transfer, technology transfer



Related Forum Posts
laptop vs. Desktop - I'm not a heavy gamer or graphics person so a Laptop is ideal for me for all the obvious reasons (portability, wireless, work on the go, etc etc) Major downside is the battery power and the cost to replace it - half as much as the cost of the laptop on my current IBM.
Helping Businesses Grow - Over the years, I've been hired by a number of businesses for the purpose of fixing the existing problems, reorganizing the business and training existing or new employees to do a better job. The problem I faced with some of these people is that they want to experience and ability, but they want to pay for an entry level person. When you find someone who is qualified, pay them what that position and their assistance is worth. Something else that came to mind is that there are some positions that anyone thinks they can handle and bookkeeping is one of those jobs. Its not something that everyone can do, but a qualified bookkeeper can not only keep your accounts up to date, but they can also help you track business expenses and trends, help you spot negative trends in time to fix them and they can save you a lot of money in unnecessary tax payments. Shri
Re: DropBox.com - Hi Evan, Thanks for the post, I haven’t used this myself but can see the advantages of the file storage. Being able to access your file from any PC or mobile could be really useful for the individual as well as for employees needing to tap into files in a small business. regards, Mal.
Re: NEW VIDEO - How to Improve Your Employee Retention - Ask Eva - Hi Evan, Thanks for the video, you sure have a nice relaxed style of presentation whilst giving really solid professional advice as always. I am sure Shauna will appreciate your tips and whilst I am self employed without employees as such, your advice also applies to many of our online activities. I like your advice on recruitment, support and development which also sits well with affiliate team building and general downline support in many of the ventures that the members here are involved with, thanks again, great stuff, Mal.
Re: Recently quit my job, new business owner - Thanks for the support everyone! With my stable salary, I was actually looking to buy a house. I had already pre-qualified for a loan, and was about ready to start house hunting. Then I realized that getting into a mortgage would REALLY lock me into a job I hated. Good thing I didn't go through with it!!


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

When Living the Dream isn't enough!

What Is The Foundation for Your Vision?

Providing Feedback

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.