As space runs out, consider analyzing your workspace to see whether you can reorganize it to find efficiencies. An operational efficiency expert can help you figure out a better layout that saves you significant space—and money.
“Instead of spending $5 million on a new building, you may be able to spend $20,000 on an efficiency exercise to reorganize your space,” says Poynton.
3. Set your budget
Determine a budget for your real estate needs. The amount you can afford is probably the most important factor in narrowing down your options.
Regardless of whether you rent or buy a new space, reserve a significant part of your budget to cover extra costs beyond the base rent or building purchase price. Extras can include things such as lease incidentals (utilities, insurance and maintenance), renovations and moving costs. Learn more about how to create an effective commercial real estate budget that reflects all potential and hidden costs.
4. Decide whether buying or leasing is better for you
Decide whether leasing or buying works better for your business. This decision is an important one to make before you start searching for locations.
There are many factors to consider, but in general, if you run a young business with little extra working capital or one that is growing quickly with uncertain future space needs, leasing may be a better option for you.
Buying, on the other hand, can often be less costly than renting. It can be an especially good option for more established businesses with ample working capital and those with particular space needs that require extensive renovations.
5. Research locations
Your budget will help you define location options. When deciding on location, be sure to take into account accessibility for clients and suppliers, parking and public transit, convenience for shipping and receiving, nearby services, zoning issues, and room to grow.
Overlooking staff needs is a common mistake. Be sure to seek employees’ input on locations. Have them visit prospective sites and get their buy-in for the move.
6. Negotiate effectively
It’s important to negotiate effectively to get a favourable lease or purchase agreement for the space. Also, be sure to surround yourself with the right team of commercial real estate advisors. In particular, a good commercial real estate lawyer is indispensable.
For leases, you shouldn’t just sign whatever document the landlord gives you. Carefully review all incidental costs and responsibilities, such as utilities, property tax, insurance and maintenance.
For a purchase, do thorough due diligence. This could include getting environmental and building condition assessments, getting an appraisal, requesting a title search, and reviewing vendor documents, such as past utility and repair bills.
Also, leave enough time for the bank to review the transaction before it approves financing; that often takes six weeks or more.
7. Create a timeline
Work with employees to come up with a timeline for the transition. The timeline could include time for doing renovations, moving assets, setting up phones and Internet, buying new furniture or equipment, making signs, and marketing your new address. Also, decide who will be responsible for each task. It can help to put someone in charge of the overall transition.
8. Build up inventory
You may want to build up extra inventory before the move in order to have enough stock on hand to ensure an uninterrupted supply for production needs and clients.
9. Give yourself extra time
Transitions often take longer than expected. Businesses typically underestimate production downtime during the move, and renovations commonly cost more than budgeted.
“Businesses often don’t expect how disruptive the move will be,” says Poynton. “Some transitions can take weeks before everything is running smoothly. Others take months.”
10. Consider a staggered move
One tip that seems to have worked for many companies is to consider maintaining both spaces—the current and new one—for a short time, and moving machines and inventory on a staggered schedule to minimize impact on workflow.
Throughout the transition, good communication with employees, customers and suppliers is key. “Talk to them early about the move, so you can head off any issues before they disrupt your business,” says Poynton. Be sure to share plans often, and be as clear as possible about what they can expect along the way.