Last reviewed 7 December 2020
Moving to new premises or even a new town or region can be an excellent opportunity to make a business more profitable, sustainable and agile. Here we look at how best to manage moving business premises.
How important is the physical location of your business? Localised businesses, of course, cater to their local communities and customers, but what about enterprises that can effectively operate from any location? Does moving to a new city offer a 'new start' many businesses are looking for? Is choosing locations for your business expansion a critical decision to get right?
According to research from the ONS (Office of National Statistics), “Between 2018 and 2020, most regions showed an increase in the numbers of registered businesses. London had the largest share of the businesses in 2020 at 19.3% (an increase of 0.3 percentage points compared with 2019), followed by the South East at 15.2%. This is unsurprising, since these regions are also the largest in the UK according to regional gross domestic product (GDP) and regional employment estimates.”
The question many business owners are asking is whether they should relocate, with new business start-ups taking a more comprehensive view and asking which region and city would best support their new firm.
Says, James Pinchbeck, Partner, Streets Chartered Accountants: “Location is increasingly about connectivity and digital access, but also about businesses’ access to people. There is a growing trend of businesses operating without predetermined geographical boundaries in the wake of the Coronavirus restrictions. So, while the location is important from a positioning aspect, for example, here at Streets Chartered Accountants, we have recently opened a Northamptonshire office, yet a physical location is less of an issue for clients and staff alike right now.”
The current issues with physical working spaces thanks to Covid-19 are having a massive influence on how businesses are structured and, where they are operating from. Post-pandemic, it's likely that many firms will take a complete and detailed audit of their premises and their office locations. Moving within a city can often have a positive impact on an enterprise. Moving to another region, may seem a radical step to take, but with careful consideration, this could ensure your business thrives in a post-Covid-19 environment.
New location, new business
David Laws, head of the national business space team at Matthews & Goodman – a commercial property specialist, spoke with Croner-i: Business Essentials and began by explaining why he believes the location of a business is still vital to get right.
“Location is critical when setting up, or managing, growing or downsizing a business because there are a number of considerations to make. For example, financial, strategic, operational and even the ‘Chairman’s whim’. Despite the current situation, these factors are still an integral part of an organisation’s decision-making process. The balance of influence might have changed, but all four factors still comprise the key elements of every organisations’ integrated criteria.”
What are the most important factors to bear in mind when deciding on a location for your business’s premises?
“There are several different factors that influence a company's decision. These include:
Can you afford it? If you’re leasing, think about all the costs over the term of the lease (from fit-out to dilapidations).
Is the location convenient for your commuting colleagues, as well as clients and customers?
What does it say about your brand? Does the move help attract and retain talent?
Is it close to partners, peers, suppliers, clients and customers? Think collaboration?
Does the space afford you the flexibility you need in terms of working space, meeting areas, quiet boltholes for thinking and writing, etc?
Does it meet your corporate, business ambitions and plans? Whether the move is to upsize, downsize, or redefine how your business operates.”
Can relocating breathe new life into a business? Is a 'new start' in a new town or region have tangible value?
“If your business model is flawed, relocation will not make one iota of difference. However, if your business is in the wrong place (e.g. you are a professional services firm, servicing a market that is located hundreds of miles away), then relocation might improve your bottom line as your ability to meet and service your clients will be improved. You might find attracting high-value talent might be more accessible, and you might also benefit from being closer to partners, collaborators or suppliers. But you might also suffer a significant hike in operational costs such as rent, rates, salaries, etc.
“However, if you are a manufacturer who requires a good transport network to distribute your product, moving out of a busy urban area, with limited transportation options (be it small, busy, densely populated roads, minimum parking spaces, etc.) to an out-of-town location, which is well served by good transport links, lower facility costs and a workplace structure that will allow you to expand will breathe new life into your business.”
Will the pandemic mean more permanent remote working? If so, what does this mean for businesses that have premises? Should they move or downsize to accommodate more flexible working spaces?
“The pandemic will have a profound and lasting impact on our working practices. Suddenly, work is not a place you go to, but something you do - be that in an office, at home, on the move. Rather than working from home every day, ad infinitum, I believe we will adopt greater 'blended working practices' protocols. We will go to the office for meetings, collaboration, or simply to get away from your home office and enjoy the company of like-minded people.
“That means how we use the space will change - physical distancing will mean fewer people in the office, desks will be swapped out in favour of formal meeting rooms and more informal collative areas, corporate vanity initiatives (such as chocolate fountains in receptions and games rooms) will probably be replaced by quiet ‘library’ zones and so on.
“Perhaps the greatest change might be replacing large, multi-floored offices in a prestigious downtown location with a smaller head office in the same area complemented by smaller satellite hubs, closer to employees’ homes for meetings, training sessions, escaping the home-office, etc. The caveat here is that this will only be possible if the lease allows it (i.e. no prohibitive clauses to prevent it). The satellite workspaces could be leased offices, serviced offices, rooms hired by the hour in hotels, for example, or a combination of the three.”
Are local authorities doing enough to make their regions, towns and cities, attractive to new or established businesses?
“Inward investment is every local authorities' holy grail. They actively promote their 'turf' to attract and retain businesses, as the latter is good for the local economy, local employment rates, acting as a honeypot to attract like-minded organisations from outside the area and abroad.
“However, some do it better than others and sometimes complacency creeps in and a hungry rival slips a courtship offer under the door, whilst the big guns rest on their laurels - what else would explain why Channel 4 chose Leeds for its national HQ, when the smart money was on Manchester (think Media City) and Birmingham.”
Are the factors affecting location-dependent businesses such as restaurants and bars now very different than before the pandemic?
“The lockdown, WFH (Work From Home), physical distancing measures and growing unemployment rates are a potent and deadly combination that will have a profound impact on the health and fatality rates of this sector. Even the government's financial support will not be able to sweeten this fatal pill. On top of that, consumers' fear, risk aversion and changes in behavioural patterns will mean that the businesses that will survive this recession will change their operational and business model beyond all recognition - from simple things like contactless payments across the board to the introduction of more complex developments such as voice-activated automated ordering.
“I do not believe that this pandemic has changed the evolutionary roadmap that was unfolding; all it has done is act as a catalyst to accelerate the process. Contactless payments already existed - today, cash is as popular as a drunken guest at a party. Tomorrow, all lifts, workplace coffee machines, etc., will be contactless.
“People had already started to work from home (especially on a Friday), but now major corporates are developing their occupational strategies based on physical distancing protocols, employees WFH most of the time and reducing their geographic footprint in expensive city centre business districts.”
Change for good
Concluding, Streets Chartered Accountants’ James Pinchbeck said: “When it comes to breathing new life into a business, especially if the previous premises were perhaps dated, in a less desirable location or challenging to get to for employees and clients alike. Relocation can and does reinvigorate a business.
“Who doesn’t relish the idea of moving somewhere new and making a new start? It can provide the chance to unite people, change working culture and spark new working practices. A move also gives a business the opportunity to take another look at its strategic plans and intent, with the potential for a new focus and energy for the development of the business.”
The operational changes that have been forced onto businesses will have a long-lasting impact. Location and region could radically alter for many firms, no matter their industry or sector.
If you are thinking about a new start for your enterprise in a new location, there is plenty of help and support from regional development agencies and individual councils. Many have specific departments set-up to support businesses moving into their area or city. Think carefully, though, about your motivations for moving cities or regions. There must always be a sound strategic reason to make the move.