5 Reasons to Think Twice Before Moving Your Company
I still remember the first time we thought about relocating our company to Miami.
At the time we were based in the Washington DC area, where my husband and I had founded our company, The Orchid Boutique. We thought it would be nice to live by the ocean, enjoy year-round warm weather, and be surrounded by palm trees. Since our swimwear retail business was entirely online, we thought we could operate from anywhere in the US. Most important, we believed our business could benefit from proximity to the bulk of our niche clientele.
We ended making the move in 2010, but we seriously underestimated the consequences of relocating, even for a startup as small as we were. Here are the hard truths you should consider before moving your company:
1. You will probably need to replace some of your best employees
When we moved, we had to part ways with some of our most valued team members. At the time, we were in no position to offer massive relocation bonuses, and for employees like Stephanie, our beloved operations manager, setting up camp in Miami would make her regular visits to her native Rochester undoable. We had no idea what it would take to find and train a group of qualified and skillful employees from scratch, all at the same time. And boy, were we in for a ride.
2. You will need to keep both locations running while you transition
Plan to keep both locations open simultaneously for at least 30 days. It sounds like common sense in hindsight, but we had no idea of the logistical nightmare that relocating a growing business would become. One small example: Fedex does not have a forwarding address service. As a result, customers requesting expedited exchange orders, manufacturers that did not update our corporate address promptly, and even Fedex supplies deliveries got routed to our old location, causing a lot of headaches for our new and existing staff.
3. The price tag will almost certainly be higher than you think
The costs of moving both home and office (complete with merchandise, equipment, and furnishings) can skyrocket in the blink of an eye. No moving company would commit to delivering our stuff 1,000 miles away in a brief period of time.The only way to guarantee delivery in two business days was for us to drive the 24-foot truck ourselves.
You also need to let your clients know that your business might be down for a few days, and that they might call and get your company’s voicemail. We decided we would send an email to our mailing list, publish it on our blog, and also note it on our Facebook page. Some clients were still irritated.
4. Operating costs in your new state will surprise you
Find out what tax advantages or disadvantages you will have in your desired location. Unlike Virgina (where our business was technically founded), Florida has no state income tax. However, you do have to pay state taxes of 7% on commercial leases, which increases your monthly rent costs considerably. Sales taxes for consumers are also a bit higher in Florida than in Virginia. Worse, since our offices were now based in the same state as most of our customers, those customers--previously exempt from taxes on out-of-state online purchases--now had to add that cost to their Orchid Boutique bill.
5. Your workplace culture will change in ways you never expected
We knew we'd miss the intellectual stimulation we were exposed to in the DC area, but we thought the other advantages of South Florida would make up for that loss. However, we didn’t factor in what else we'd face, like the shock of adjusting to a more laissez faire business environment, and the adjustments we'd have to make in our office culture to work with people who talk different, act different and have different motivations from what we were used to.
Overall, moving to Miami allowed us a better quality of life, a more successful ecommerce portal, and an opportunity to open a brick-and-mortar location in South Beach. However, it came with its share of challenges, and it took us nearly two years to bounce back from the move. The problem is, when your company is growing at an accelerated pace, making any drastic change can really affect culture, work hours, and quality control. Make sure you plan ahead --way ahead--before you make your move.