How to Know If It’s Time to Change Offices

If you’re the owner of a small but growing business, it’s likely you’ll have to eventually ask yourself the following question: Should I move offices?

It’s certainly a difficult question to answer. Small business owners usually search for budgetary savings anywhere they can, and a cheaper office space is certainly enticing. But at the same time employers need to consider how their staff, customers and suppliers will respond to the news of an impending office move and whether these responses will positively or negatively affect business in the long term.

If you’re still in the process of deciding whether you should move offices or not, try taking a deep dive into the thought process other businesses leaders used when making the same decision.

On the Move

Businesses across the country simply aren’t staying put.

According to a survey commissioned by Knotel, a company that helps businesses find, design and operate office spaces, 92.5 percent of companies have taken part in an office move over the last decade, with a wide majority citing company growth as the leading factor behind the office move.

What this should tell you is you’re not the only one considering whether you should move offices. That doesn’t, however, mean you should take the decision lightly. Knotel’s survey also revealed a number of unforeseen issues arising from the move, such as a loss of productivity and executive distraction.

With that in mind, ask yourself the following questions as you contemplate whether you should move offices or not.

1. Do we have enough space in our current office?

People hate feeling cramped—especially at work.

A growing staff often leads to a mismatch between a company and its office space. Each new staff member needs a new workspace, which inevitably leads to less and less available space for additional expansion.

When it becomes increasingly clear a business is outgrowing its facilities, managers often immediately react by questioning whether they should move offices. And in some cases that really is the only solution. Before making that type of weighty decision, however, managers should first explore whether it’s possible to utilize their current space more effectively.

There are a number of companies specializing in office space utilization with whom you can consult to determine whether you can optimize your current space and avoid moving costs.

If there’s no way to fit any more employees into your current space, it’s probably time to begin exploring other options.

2. Does our current location affect our recruiting and prospecting?

In the past, many companies opted to locate their headquarters in downtown areas for the sake of convenience and proximity to other businesses. Although many have since moved to the suburbs, location remains a top consideration for any business owner.

Current and future employees want easily accessible office facilities. In fact, long commute times are one of the primary drivers of employee turnover. So while locating an office in a downtown area of a city might not be a cost effective option, you should still consider whether your current office is accessible to both your employees and customers. Be sure to consider whether it’s accessible by public transit for employees who don’t own cars or prefer commuting via bus or train.

An office’s proximity to other attractions is also a primary source of competitive advantage in the recruiting process. Younger employees want easy access to restaurants, coffee shops and bars once the work day is over with. You should consider the message your office location sends to young prospective employees when determining whether you should move offices.

3. Our lease is expiring. Should we look into new options?

The impending expiration of a lease doesn’t necessarily mean you need to move out. But it does present an opportunity to consider whether there are better options out there.

Managers usually have a lot on their plate, and whether they should move offices isn’t typically one of the first questions that pops into their head in the mornings. The upcoming end to a lease, however, can prompt managers to consider questions such as whether the company is effectively using its space or if the current office space negatively impacts recruiting and customer retention.

4. Is our current lease breaking the budget?

Determining whether your business is paying too much in rent is an inexact science. We’ve already talked a lot about the intangible benefits certain office spaces offer, and it’s nearly impossible to factor that into any formula one would use to decide whether their business is paying too much in rent.

Generally speaking, though, experts advise using the percentage of rent paid to your business’ annual revenue when determining if your business is paying more than it should in rent. To calculate these figures, first determine your company’s annual revenue, or the total amount your company earned over the last year. Then, simply divide the amount your company paid in rent the previous year by the total revenue from the same year.

Ideal rent-to-revenue ratios vary based on industry, so you’ll need to research how much your competitors dedicate toward rent spending. It’s also worth considering how much your revenue fluctuates from year to year. If it’s fairly inconsistent, you might want to take a more cautious approach when deciding whether you should move offices.

Your office isn’t just the place where your team members perform their daily tasks. It’s a message to the business environment about what your company stands for. Keep that in mind if you find yourself deciding whether you should move offices in the near future.

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