Before moving from San Diego to New Mexico, company president researched locations by phone for 9 months.
Ten years ago Holly Hitzemann cofounded Great American Stock, a photo supplier to the food and restaurant industries. But by the time the company had grown to $1.4 million in sales and a staff of 13, it had outgrown its San Diego headquarters. "Based on a list of relocation priorities -- which included very inexpensive land, a low cost of living, proximity to a major city, lower insurance rates, and water availability -- we decided to move to Rio Rancho, New Mexico," Hitzemann says.
Since the cost of building a new 11,000-square-foot headquarters was already going to strap cash flow, Hitzemann, the company's president, knew she needed to keep the costs of the move to a minimum. Here are three ways she helped accomplish that goal:
1. Researched the move by phone. "We considered moving to a range of different locations, including Nevada, Texas, and Oregon, and we might have spent a fortune if we had visited all of them," she says. "Instead, over the course of nine months, we conducted most of our investigations by telephone and by reading all kinds of written material. We visited only a very short list of prospects." The total cost of her research: $5,000.
2. Budgeted for employee "checkout" trips: "I offered every employee the chance to relocate with us, and that meant they needed to be able to investigate the new location beforehand. But to keep costs under control, I gave every person a $400 budget -- which I figured would cover the cost of a special airline deal and allow $100 toward car rental and another $100 toward lodging. Anything more than that, employees paid for themselves." The cost of the trips: about $5,000. (Hitzemann and her partner had to make multiple trips to supervise office production and other matters, which pushed the total travel expenses up to about $16,000.)
3. Capped moving costs. "I was afraid of a situation in which the seven employees who decided to relocate would just tell their moving companies to send me the bill," she recalls. "Instead, I surveyed moving costs and concluded that $3,500 would be a fair subsidy per family." To push costs even lower, Hitzemann contracted with one mover to transport in two large trucks her own belongings, those of the staffers who had opted to move, and all of the company's equipment. The total cost: $39,500.
The overall cost of the move, including severance packages for the staffers who chose not to relocate, was $160,500, not including the down payment on the new building or $5,000 for setting up phones, turning on electricity, and so on. The only budget buster? "I had assumed we would be able to unload our prior lease in San Diego," explains Hitzemann, "but since we haven't been able to, we've been paying about $4,000 extra per month in office costs." Her advice: "If you can time your move to coincide with the expiration of your lease, you'll avoid a lot of unnecessary costs."