Expanding to a second location can have major advantages for your business—from untapped markets and fresh talent pools to a more vibrant company culture. If you’re thinking about opening a satellite location or even a major headquarters, doing careful research into cost and location will lay the foundation for a successful move. Here’s what to consider when starting out:
Benefits of Expanstion
A second location can offer a financial boost to your business, increasing your production capacity and allowing you to reach new customers. By seeking locations with a strong consumer base and existing services for your product, you can also cut down on shipping expenses and production costs. You’ll also enjoy advertising advantages—Google automatically figures location into search results, for example, which can bump your company’s name up in when you move to a new region.
The benefits of expansion go beyond the numbers, too. When you embed an office in a new area, you’ll create strong, organic connections to a local base—through business partnerships as well as real-time connections with customers. Your business will grow with the community, creating a new nerve center of professional relationships and local trust. This trust, in turn, helps business: studies have shown that customers are willing to spend more locally rather than travel farther for a reduced rate.
A different location can fold new demographics into your company’s existing customer base. By working closely with local partners and communicating with new customers, you’ll learn how to adapt your product or services to fit local needs, sparking innovation along the way. As you hire new talent, you’ll diversify your company’s thinking, generating fresh ideas—and potentially new services and products
A careful cost analysis is essential before making the move to a second location. Make sure to consider logistical factors—the rent, utilities, and IT reassessment that will allow your new business to succeed. Think about the incidental costs: parking, public transportation, and neighborhood safety can all affect employee satisfaction and customer flow. You’ll need to budget for more “hidden,” regulatory costs, as well. Getting new tax identification information and other legal processes may generate fees, and there will be different local ordinances for each location you’re considering.
Local incentives, on the other hand, can minimize costs: different regions offer varying tax breaks, rebate incentives, and business loan programs. Cities trying to grow their economics may even offer employee recruitment assistance, shared resources, and rebates on utilities, so digging into local benefits can help alleviate cost in the long run.
To fully evaluate cost, think strategically about which of your business systems are exportable. For example, you could offer a standard, digitized employee training, helping to build a coherent business culture while cutting down on added cost. Before moving, it’s important to fully organize your cost evaluation through a business plan, determining whether you will pay for expansion or secure investments, and how you’ll balance the costs of the new office at your existing location.
Searching beyond the country’s major tech hubs can help you balance these costs and benefits. In the Midwest, for example, real estate is less expensive to secure. Many states and cities also offer pro-investor tax credits or business incentives. Start-up CEOs like Michael Seaman, the head of software company SwipeSum, have taken advantage of Midwestern programs as the Arch Grant, which offers $50,000 in capital and support services to business locating themselves in St. Louis.
New Market & New Talent
The availability of new markets can make or break a new business location. Conducting market analysis is crucial; realistically assessing market demographics, as well as potential competition, will help you make the best decision when narrowing down a new location.
Before expanding, consider which cities and neighborhoods will mesh with your business model, or take advantage of your products and services. It’s worth searching for a location with a business gap that your company can fill. Specific, local partnerships and clients can also ease the transition to a new location, by opening the gate to new connections and customer bases. Expanding might also enhance your company’s image: adding a second location to your website and ads will help bolster a reputation of up-and-coming growth.
In addition to new market access, it’s critical to think about the available talent in your second location. “Pockets” of talent—like universities or existing tech sectors—can provide a strong pool to recruit from in the future. Consider the broader trajectory of a new city, as well; if a mayor is leading revitalization efforts, your business can ride the wave of new talent coming in. Also, there is benefit to regional diversity in your talent pool when it comes to innovation. Your second location is an opportunity to recruit people with a different background and bring new, fresh perspective to your company.
Location is Key
Location makes all the difference—and searching for a future-focused city will help. Growth companies will benefit from cities with a skilled and available workforce, high connectivity—whether through broadband or physical transportation—and specific industrial expertise. (Think AI in Pittsburgh or geospatial tech in St. Louis). Seeking a location outside of strained “hot spots” can tap your business to communities with excellent business potential and economic growth.
When researching your move, think about the impact of location on both small and large scales. The size of your office and its street address are important—the facilities need to be suited to your company culture, from the layout of the meeting rooms to the availability of parking. Will your employees enjoy living near the near location? Think about the cost of living, the social culture, even the weather—the granular details that will affect your business’s day-to-day.
On a broader scale, consider the neighborhood, the city, and the region that your business will become a part of. Is your business sector thriving in this location, or will it be more difficult to break in? Read up on industry trends to get an idea about how your business will continue to succeed in a new location one, five, and ten years into the future.
Is it the Right Move?
Preparation is key to determining whether a move is right for you. Before moving, consider the full range of benefits as well as costs—for your employees, your potential new customer bases and talent pools, as well as the business and social community you’ll find yourself in.
Resources like One America Works will streamline the process. In addition to offering information on specific cities (you can find a list here), OAW will work closely with your specific business needs to create tailored suggestions for a second location. Visit the homepage or reach out to firstname.lastname@example.org to get connected to new talent and growth.