The very first and most important thing you must know about leasing or purchasing warehouse or other industrial space is whether or not you can avoid the process altogether! There are many avoidance strategies available, but you also shouldn’t delay just for the sake of delay since that isn’t always the correct strategy. There can be good reasons to wait, and good reasons to move forward. Let’s take a bit of time to cover some of those reasons in more detail.
- Why Change Your Situation?
- Why Maintain Your Situation?
- Why Change - Location
- Why Change - Capacity
- Why Change - Suitability
- Why Change - Costs
- Why Maintain - Cost to Move
- Why Maintain - Business Disruption
- Why Maintain - Workforce Impact
- Why Maintain - Customer Impact
- Avoid Moving - Property Improvements
- Avoid Moving - Productivity Improvements
Why Change Your Situation?
There are many reasons why a business might feel the need to make a change. Some reason categories here include:
I’ll use these broad categories later to cover in a bit more detail information supporting a move.
Why Maintain Your Situation?
Some factors argue against making a change. Some reason categories here include:
- Cost to Move
- Business Disruption
- Workforce Impact
- Customer Impact
I’ll use these broad categories later to cover in a bit more detail information supporting staying in your current location.
Why Change - Location
Location affects many factors of your business. You could be attempting to position your business to improve your proximity to your existing or potential:
- Supplier base
- Distribution channels
These are all specific to your company and are difficult to generalize, but can all be good reasons to make a change.
Why Change - Capacity
In this case, you have likely determined that your current space no longer matches your needs from a capacity perspective - either your business has grown beyond, or shrank below what your existing area will sustain. Either way, this can be a strong motivator to make a change.
Why Change - Suitability
Suitability can be the need for equipment that does not fit, is too heavy for, or required utilities not provided by your current building. You might need more loading docks, larger trucks, more maneuvering space, etc.
Why Change - Costs
A common reason here is that your landlord has made one-too-many lease rate or capital improvement expense increases, and you believe you can do significantly better elsewhere.
Why Maintain - Cost to Move
Moving an existing business from one location to another is a significant expense - over and above your regular cost of doing business. A move will result in lease expenses from two buildings for a finite period. You can likely assume that you do not have resources not being utilized, so you must hire or contract temporary support to help you move. You will also be likely to need to spend to avoid business disruption (see below).
Why Maintain - Business Disruption
If you manufacture products, you will likely want to build an inventory buffer of these products before you move to avoid disrupting your customers. This type of disruption “insurance” can be difficult to implement depending upon the state of your manufacturing capacity, relationships to your customer, and your reasons for moving. Similar reasoning can apply regardless of the activities performed in your building.
Why Maintain - Workforce Impact
As with any change, the relocation of your business will have an impact on your workforce. The implementation of disruption “insurance,” changes in their commute, or the requirement for employees to relocate are some examples.
Why Maintain - Customer Impact
Any change - e.g., moving from one building to another - creates risk for your customers. They have to be sure that the products you supply to them from location B are going to be equivalent to those you provided from location A. What if something goes wrong with your move and the disruption “insurance” you put in place is insufficient? What if your customer’s requirement for your product suddenly changes in the middle of your move, and you cannot meet that requirement?
Avoid Moving - Property Improvements
If you have transitioned in your business from needing all grade-level to some dock-level loading, but your building has only grade-level access, then you should consider working with your landlord to add a dock-well on the property. Assuming you both believe you are a good tenant, there is a chance they will work with you if the property is suited. Adding a dock-well is one example of a property addition that can be a win-win between landlord and tenant.
Avoid Moving - Productivity Improvements
One of the more common reasons for deciding to move involves some form of “output/square foot” calculation. This calculation probably indicates that you don’t have enough space to accommodate people, equipment, inventory, etc.. Hopefully, you made productivity and other assessments a large part of your decision process. There are many ways - apart from moving to a larger building - to address this issue. Some of these are:
- Using Lean Tools or other approaches to redesign your business processes for productivity improvement
- Product line strategy assessment to see if there are products you can/should cut back on. The evaluation could also show you that you need expansion more urgently
- Determine whether or not there are businesses that can help you offload one or more functions you perform in your current building to make space (outsource)
There are other approaches to create more (or less) space. There are probably 10’s or 100’s of ways to describe these things based upon the terminology of the day.
We hope this has helped you think through your potential move. We’re not trying to say moving is a bad thing, but it can be expensive and disruptive. If you have been inspired and wish to explore this further, feel free to drop us a line with questions. Some consultants specialize in productivity improvement activities. Contacting a local university business management or operations engineering program can also sometimes bear fruit if you are willing the work with them. In any case, we wish you all the best of luck in your move - or not.