Tim Hortons recently made headlines by moving its corporate headquarters from the Toronto suburb of Oakville, where it’s been for the past 50 years, to the city’s downtown core. Specifically, the popular Canadian coffee and doughnut chain is relocating to a 6,000-metre space in the Exchange Tower in Toronto’s Financial District.
Rent in the financial heart of Toronto is significantly higher than in the suburbs. Yet despite wanting to adjust prices to make up for the hike in minimum wage implemented earlier this year, Tim Hortons obviously calculated that the move would be profitable, or the company would not have gone through with it.
The reasons companies decide to move are varied, but they include enticing top talent, proximity to key clients and customers, improving their image and perception, and wanting better amenities for staff.
So, what about your own company? When is it the right time to relocate, and when should you stay in your current space? Here are some factors to consider before going ahead with what might turn out to be a huge undertaking filled with hidden costs… and opportunities.
Pros of Relocation
Moving closer to your customers, partners, and clients. This is one of the reasons Tim Hortons leadership gave for the company’s move to downtown Toronto. CEO Alex Macedo said the move would bring Tim Hortons closer to its partners, enabling it to better use technology to serve its customers and to stay abreast of industry trends. If your customers and partners are mostly located in a particular city or region, it makes sense for you to relocate there.
Improving your company’s image and/or brand. In business, fortunately or unfortunately, image matters. Your customers will form an opinion of your business early on and this opinion will be difficult to dislodge. Part of that opinion will be based on factors like the prestige of your office. If you can afford it, why not use this facet of human nature to your advantage? Superficial? Maybe. Effective? Definitely.
Rebooting your company culture. Has your office culture grown stale and mechanical? Perhaps innovation and creativity are being stifled by old habits that have become entrenched? Moving offices and relocating to a fresh, new environment will act as a reboot of sorts. Your business will be revitalized, and it will almost feel like a new beginning for your employees.
Lower rent. Is cheaper rent part of the reason you want to relocate? It can certainly be a major reason to relocate. Reducing rent and operating costs will boost your profit margins and allow your business to accelerate its growth.
Better employee morale and increased productivity. It is a fact that morale and productivity increase based on office layout. A spacious, well-appointed office with improved amenities will make your employees feel valued and will allow room for their creativity to flourish.
Cons of Relocation
Losing great employees. Depending on how far away you decide to move, and on what relocation bonuses you can afford to give your employees, some of your staff likely won’t make the move with you. You will therefore have to hire and train new employees from scratch. This could be an adventure in and of itself, as finding good and loyal employees is more difficult than it might seem.
Higher rent. Rent could well be more expensive in the area you decide to relocate to, depending on whether you’re expanding or downsizing. If your rent increases, this will have to factor into your overhead costs, which will affect your budget for marketing, operations, and other crucial areas of your business.
Relocation costs. Relocating can be expensive. You’ll have to move your furniture, technology, and other such items. Moving companies, or even hiring a truck and making the move yourself, can be expensive and tricky, and the process can be time-consuming. Also, readjusting to your new environment can potentially be lengthy and difficult. Be prepared.
Significant downtime. It will take time for your business to open its doors again, possibly as long as several weeks. You might have to pay to keep both your old and new offices open at for a time, so as not to disrupt business. Consider whether this a cost that you’re willing to incur.
Installing new equipment. If you don’t move your old furniture and technology, you’ll have to purchase and install new items. This will be a significant cost in both time and money. Think about whether the opportunities you stand to gain in moving will offset costs such as these.
Depending on various factors outlined above, relocating your business can be the move you need to reinvigorate your sales, your team, and your brand. But it also doesn’t come without cost, be that in money, staff, or time. Think hard before you decide to move your business to a new location and consider your needs and motivations. In some cases, relocation can be just the thing to help you take your business to the next level.
Nezha Boutamine | Staff Writer