Perhaps your client base has shifted and you need to contract your premises, or you’re fed up with rent increases and the space just does not suit your company. Maybe you’ve decided to explore other markets or your business has simply outgrown its current premises. Whatever the reason, relocating can pose a number of challenges and concerns.
Will you be able to sustain the business’ feasibility in your new premises? Will old clients follow you to your new location? In many cases, relocation can help revive and rejuvenate a business and its staff morale and can improve a business’ visibility. But without foresight and consideration, businesses may also run the risk of undermining their profits and longevity. Without a doubt, the key to a lucrative relocation is planning.
In over 15 years of relocating single-man companies to large corporations, I’ve found following these 10 tips will ensure a smooth transition regardless of size of your business.
1. Analyse your lease at your current premises
It is essential that you know the details of your current lease. Have you considered the following:
- Are you paying market rents or has your rent crept above market with the annual increases?
- When does your lease expire?
- Would purchasing be more financially feasible?
Contact a financial advisor or accountant. Work out your rental repayments; if you purchase what would be your loan repayments? There are certainly some financial benefits to purchasing. For example, you can claim interest on the loan. Often people will own a property in their personal names or super fund and their company will lease it back. If you put money into your own fit-out, you reap the benefits directly; you are putting money into your own investment. As an owner, you will also not have the headache of dealing with unreliable landlords to fix broken amenities, or nightmare tenants as you have the option to act as your own tenant.
2. Work out your space requirement
Consider the function and space requirements of your business when choosing your new premises. It is important that you assess your needs. Factor in the requirement of amenities and your business’ growth potential. Before moving into a new space, make sure you do the following:
- Audit your current space. An architect or fit-out company may assist with this.
- Realistically estimate your future space requirement.
- Allow for expansion in your estimate and consider the lease term required to ensure you do not shrink or grow within the lease period.
3. Analyse the current market
Consider the costs to your business in relocating. Before moving out of your premises and into a new one, you should first compare the premises with what else is on the market. Consider how your prospective rental property compares with others. Rent is usually the largest area of expenditure for a business and paying too much rent can be a drain on a business’ liquidity, as can other ongoing costs. It is good to minimise such costs where possible. Prior to moving into your new premises, consider:
- Moving costs. Have you obtained as many free quotes as possible before settling with a moving company? Costs can vary between companies. Consider also their method of charging (e.g. do they charge by the kilogram?), whether packaging is included or comes at an extra cost, and whether you need to take out insurance in case of damage to your goods.
- Fit-out costs. Do you require new furniture?
- IT relocation/electrical/phone system. Can you relocate your existing systems or do you need new ones?
- Rent of the new premises compared with others?
Work out your budget and what properties work for you. Take a geographical map of your metropolitan area and ask employees to pinpoint where they live. You need to take this into consideration when deciding on your new location. It may be necessary for example, for you to stay within a 5km radius. Moving too far from your current location may result in high staff turnover.
Discuss with your staff their mode of transport to work and factor this into your decision. Do they drive to work? Is car parking essential or do you find most catch the train? If it’s the latter, is your new location near a train station? Do you receive fresh air and good natural light? Are there amenity shops nearby – a chemist, cafes, shops, gyms? All of these factors contribute to staff retention.
5. Design and planning
Find an architect or designer to design your new space. Consider whether you are going to take existing workstations? Alternatively, you may choose to use an office fit-out company to replace workstations. They generally offer a variety of other services as well, including: replacement and installation of desks and office equipment, provision and movement of electrical and data communication devices, interior building works, ceiling improvements, replacement of floor coverings, removal of existing office furniture, and relocation of office equipment.
By hiring a space planner, businesses can save a huge amount of money on rent as often you may not need as much space as you had originally expected.
6. Disposal plan for existing premises
Plan for make-good of your existing space. Check your existing lease to find out necessary requirement from landlord—do you need to repaint or re-carpet upon exiting premises? Allow sufficient time to make good the current premises.
7. Negotiate on the new premises
Consider the rent, lease commencement, rental commencement, rent-free incentives, and rent reviews/annual increase.
[Next: What to do before you sign the contract]
8. Appoint solicitors
Appoint a solicitor to assist in the lease or contract. A lease’s terms are negotiable, so appointing a solicitor will help to ensure you sign into fair terms and are not caught by any hidden liabilities. A solicitor’s function will also involve all local authority searches in relation to planning and use permissions and generally they will obtain all necessary consents.
Solicitors will usually provide a detailed report to you, the tenant, detailing the terms of your lease, your obligations to the local authority and to the landlord, and any other vital information you need to be aware of before signing in to the lease agreement. They can also formally reply to any enquiries raised by the landlord, and will calculate for you the duties and taxes payable on the lease. Most importantly, a solicitor will take care of post-completion steps, including registration of your lease. This is vital because failure to register will mean you do not have good legal title to your lease. By appointing a good solicitor, you will ensure that your interests are protected as well as the landlord’s.
9. Program for your relocation
First and foremost however, you will need to:
- Book a removalist
- Arrange a phone connection
- Redirect mail
- IT and computer transfer
- Notify clients and suppliers of your move
Make sure you factor in the cost of implementing IT infrastructure or additional costs of implementing any other infrastructure in your new location. Other costs you may need to consider are local council rates and the costs of maintenance of your new site.
10. Give summary of your new location and amenity to employees
Ensure your new employees feel comfortable with the new area. For example, let them know if there is a doctor within the vicinity, and indicate to them the various transport routes and local lunch areas.
–Kirsten Marsh is managing director of Billicorp (www.billicorp.com.au), commercial and Industrial specialists with over 15 years’ experience.