Relocating Headquarters Isn’t Just About Finding More Space

by Granville Triumph

Discussions about Amazon’s search for its second headquarters have reached a fever pitch. More than 200 cities have been clamoring for consideration with the expectation that Amazon would bring tens of thousands of jobs and millions in infrastructure investments and free publicity. In January, Amazon released a list of 20 finalist locations. The list was based in large part on proximity to a metropolitan area, talent recruitment and retention potential, and tax incentives.

Of course, Amazon hasn’t always been the behemoth it is today. It’s hard to believe that Amazon will only celebrate its 25th anniversary next year. Back in those early years, Amazon was a small, Internet-based company that sold books. A bell would ring in the office every time a sale was made.

There are thousands of companies that started small but have begun to outgrow their humble beginnings. Most don’t have visions of world domination like Amazon, but many are ready to move into a larger facility that helps them establish and elevate their brand. In many cases, relocating can change the perception of an organization from small startup to up-and-comer and serious player.

There are a number of strategic reasons for both small and large companies to relocate their headquarters. Moving to a new location may put an organization closer to both talent and customers. Relocation from a small town or suburb to an urban area is common for businesses that simply want access to larger pools of white-collar and blue-collar talent, as well as customers, prospects and strategic business partners.

Close proximity to large businesses and major universities can create a built-in competitive advantage and provide a more stable business environment. Candidates for employment might be more drawn to a location with walkable services and entertainment. Such a move would also give you access to a more robust public transportation infrastructure, including highways, buses, trains, one or more major airports, and possibly ports.

Of course, the decision to relocate headquarters is often driven in large part by economics. Can you take advantage of local and/or state tax incentives? Can you improve operational efficiency by consolidating functions and systems and bringing all departments under one roof? Can you create a revenue stream by leasing a portion of your new facility to a smaller company? Moving to a place with no state income tax can provide you with a powerful incentive when recruiting talent.

The key to a smart move is understanding exactly why you’re moving and what you hope to achieve. What are your current and future operating costs and space requirements? What can you afford? What will you gain in terms of tax savings, operational efficiency, and access to talent and customers? What risks are involved? How much will relocation disrupt business operations? How will you manage the move, who will be in charge of the move, and how long will it take? How will you ensure that your company will hit the ground running once the boxes are unpacked?

Big data analytics can answer these questions more accurately and precisely, illustrate the pros and cons of relocating to different areas, and help you choose a location and facility that meets your requirements. Do your homework and gather as much data as possible. Use technology to inform decision-making and planning and ensure your relocation is time and money well spent, with as little risk as possible.

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