Your customer base is expanding. The array of products you carry are growing. The number of employees on your staff are increasing. Have you outgrown your current space and need to find a solution? There are a number of options you can use.
Before you move
There’s a lot of thinking that needs to be done before you decide what to do to gain more:
- Project your needs. Determine what your needs for space are now and what you project them to be in the next 3 to 5 years.
- Determine whether you can make your current location work. Perhaps you can reconfigure the space or move the storage of inventory and supplies near by (e.g., a basement).
Depending on your location and your needs, you may be able to expand into adjacent space if it’s available. Perhaps the office or storefront next to you is vacant. If so, and if you can negotiate well with the landlord, this horizontal expansion is the least disruptive thing you can do. Your customers know your location and you may not need to move too much around.
Relocate to a larger space
Moving into a larger space may better fit for your business to accommodate additional employers, more customers, more items to sell, etc. You can increase your revenue by scaling up in a larger location. What’s more, a larger space can not only meet your current needs but also enable future expansion potential.
There’s a lot to consider in moving to a new facility.
- Finding and finalizing a new location (e.g., buildout of the space)
- Cost of the move (moving furniture, equipment, inventory). The cost of a business move is fully deductible, but there’s going to be an after-tax cost.
- Permitting and setting up utilities
- Marketing to let customers, vendors, and others know about the new location
- Possible downtime (if the business can’t seamlessly operate between the old and new locations).
Also be sure to let the IRS know about your move. File Form 8822-B to provide a change of address.
Start a second location
If you need more space, a second location can meet your needs. Your current facility becomes your main location, but you have a second place. For example, you may take warehouse space for growing inventory without moving your main base of operation. Or you may set up a second, smaller, retail store.
Keep in mind that a second location entails not only the cost for rent, utilities, etc., but also additional management and staffing.
Other options
You don’t necessarily need to change physical locations; there are other options:
- Go online. Depending on the nature of your business, you can expand virtually rather than physically. You can move some activities online to deal with customers and clients.
- Use a fulfillment company. Consider outsourcing some aspects of the business to third parties. For example, instead housing your inventory and then packing and shipping to customers, you could use drop-shipping. This is a retail for fulfillment method in which you don’t have to maintain inventory. A third-party does this for you, along with packing and shipping orders to customers. Shopify has a guide on fulfillment for ecommerce businesses. While using a fulfillment company cuts into your profit margin, it eliminates the need for space and personnel to manage customer orders.
Final thought
“Change before you have to.” – Jack Welch, former CEO of General Electric
Decide now if it’s time to scale up. Yes, there’s risk involved in making a move; change is always hard. But think of the potential for your business growth…
Looking for more information about expanding your business? See this list of blogs.
