The popular HGTV show “Love It or List It” presents a homeowner with a difficult decision every week. The show brings in a crew to remodel an old, cramped house, transforming the space into something far better. At the same time, a real estate agent scours the area to identify a newer, better house. At the end of the show, the homeowner must decide whether to stay in the renovated home or move to the new house.
The same basic principle applies to real estate issues for Middle Market manufacturing companies. If a company is growing (and many Middle Market businesses are), at some point, it will reach capacity in its current plant. Then, company leaders must make the difficult decision on whether to expand/renovate their current space, or move to roomier new accommodations.
Business author and journalist Erik Sherman examines this dilemma in a new article for the National Center for the Middle Market titled “Business Growth and Expansion: 12 Questions for the Manufacturing Industry.” Some of the questions Sherman says businesses need to ask before relocating or renovating are:
- Are there adequate prospects for local staffing?
- How close are important resources?
- Are you moving a single operation or multiple? And
- How does location fit into your overall strategy?
In a Forbes article, Jim Colson, CEO and President of Site Selection for AngelouEconomics outlines 13 factors that should be considered in site selection: labor, real estate, utilities, transportation access, vendor/supplier impacts, educational system, overall operating costs, governmental factors, environmental considerations, business interruption risk, political stability, quality of life and incentives. Companies weighing a relocation vs. expansion decision should conduct a side-by-side comparison for each of these 13 factors.
Middle market companies also need to consider the potential impact of relocating on employees. Will relocation result in significant employee turnover? If so, that could make company leaders more likely to make their existing site work. Location also can impact a company’s ability to attract workers moving forward. Many middle market businesses are privately owned businesses with long-lasting local ties. For these businesses, relocating outside of the company’s current community may not make sense.
Finally, businesses should explore what state and local economic development incentives may be available. While incentives for new business gets the lion’s share of attention, many state and local governments also offer incentive packages for existing business expansion.
Click here to view the video.