If you don't own the building where you conduct your day-to-day business, you will inevitably be considering your lease when it's about to expire. Should you stay or should you go?
Business owners will face this question time and time again. This situation of considering to re-sign or relocate is often referred to as a stay or go analysis. It will involve a pros and cons list of staying in the current space vs finding a brand new location. Both have merit; both require your full consideration.
Here are 5 things to consider before you board the relocation train.
How much will it cost to move vs. the cost to stay?
First things first, cash flow. Is the building you have the right size for your current business, have you over capitalized on the space you have or is it just right? Can you afford to continue to pay the lease you have with the cash flow your business currently attracts? Compare this to whether you can afford the cost of relocating. This short-term expense may work out better in the long run, but you still need to consider whether it's something you can afford to take on.
What does the future have in store for your business?
Does the current space represent fully your brand, or could an office relocation elevate your business to a new level of success? Does the space you are in now allow for your business to change and grow? Do you need to consider a bigger or a smaller space for any changes in your business operations? Do you need your space to have additional functions? For example, warehousing, IT server room, a need for offsite parking, a reception space, private offices for staff etc. Does this mean you need to move to accommodate these required elements?
Lease duration and options?
When considering your current lease, what are the key timeframes you need to stick to? Do you even have options for lease renewal? For example, if you are starting out in business and don't have a proven track record of success, you may have initially negotiated a short term lease with short options to renew. Read the fine print about exercising your options and consider whether this timeframe works for your business as it currently stands. If you don't have the option to renew, you will need to renegotiate your lease, or find a new location.
Your employees are key to your business success, considering their requirement during this time is recommended. Are your staff settled into your current space? Do they have enough room or could you do with expanding the space to make staff more comfortable? What about staff growth? Can you accommodate any new staff members? If you were considering office relocation, would the conditions be an upgrade or much of the same? You would need to determine if your staff still have the same amount of available parking or access to public transport. Research says that the distance to work and time to commute play a key factor in talent attrition and staff attraction.
Call in the experts
If after asking all these questions and you are still no clearer about a decision to resign or relocate, speak to the experts. Work with your finance team or accountant to look at the real costs of your business. Spend some time researching available commercial property options on Commercial Property Guide and compare these to what you are currently leasing. Finally, spend some time working with a leasing agent or tenant advisor to work on your behalf identifying a favorable outcome for your lease negotiations minimizing risks and maximizing savings.