Top 5 Items to Consider When Moving Your Business
Fingers crossed for good luck, the economy keeps improving in California. Business relocation to the state is back on the drawing board for many companies. Additionally, California business expansion is making a comeback. The result is that many businesses now need bigger, better locations to accommodate their growth. For a number of those companies, this means making a move to a new location, and, for many, the place to be is California.
Corporate Relocation and Business Costs
KPMG, a leading audit, tax and advisory firm, recently issued a study on business location costs. Along with international figures, Competitive Alternatives 2014 Special Report: Focus on Taxlooked at several regions in the United States, including California. Business relocation requires consideration of many factors. A KPMG press release on the report distilled the essence of the site selection analysis:
"Clearly business costs are a major component of the site-selection process for any company, yet organizations should make sure that they also take into account non-cost factors such as labor availability and skills, economic conditions, infrastructure, innovation, regulatory environment, cost of living and quality of life."
Following the lead of KPMG, consider the following five items in contemplating business relocation:
- Business costs
- Labor availability and skills
- Regional economic conditions
- Quality of life in the region
- The region’s regulatory environment
These are major concerns for any business in many different endeavors, not just relocation.
Regulatory Issues and California Economic Development
When moving to California, business relocation entails more than hiring a moving company. Depending on the type of industry, regulatory and environmental regulations come into play. For businesses relocating to California, the state provides Business Relocation Checklist, including information on:
- Updating businesses addresses, employer identification, tax filings, and other business tax returns with the IRS
- Updating business mailing addresses with the USPS
- Updating business formation and entity documents with the California Secretary of State
- A list of industry specific licensing agencies
Although it sometimes seems so, regulations really are not intended solely hamper economic development. California is not the only state with environmental and regulatory requirements for businesses. Different states have stricter regulations for specific industries, and looser ones for others. Being prepared to deal with regulatory and environmental hurdles is but one aspect of any corporate relocation.
Quality of Life – It’s All Good, or At least It Should Be
It sounds simple enough, but the term “quality of life’ encompasses many things, from the people living the “quality life” to the qualities that make those lives good. Happy people make better employees. Better employees make happier managers, etc.
A huge factor in quality of life calculations is the cost of living. Housing affordability relative to wages is important. People looking for a good quality of life need jobs. In Ontario California, along with other California communities, the availability of affordable housing and the opportunity to live close to work not only enhance good jobs but also significantly contribute to increased quality of life.
The Importance of Continuing Economic Development
California saw its share of economic turmoil in the past several years. Now, throughout the state, including southern California, business expansion is regaining traction. Making the move to an area with dwindling economic prospects may seem appealing, especially when attractive tax incentives enter the picture. However, assessing the importance of the economic health of the region must go beyond just how things benefit the company itself. Consider the implications of settling many employees in an area where buying real estate is a gamble and economic prospects are scary.
Big gambles sometimes pay off in big ways, but carefully consider the costs of such a wager prior to placing your bets.
Labor and Workforce Resources
Successful businesses thrive because of good employees. The two things to look for in a relocation choice are:
- The availability of workers
- The skills available in the work pool
Research the history of the area in terms of employment. Look for areas with good prospects for economic development. California has many regions with labor forces possessing a wide variety of skills. The Bay area may have plenty of people with tech experience, whereas Ontario California businesses employ many individuals with experience in the warehousing and fulfillment realm.
Always save the best for last. Whatever the issue with business, in the end, it always comes down to money. As in most other places, in California, business expansion is a positive thing that entails constant attention to details. The KPMG study referred to previously included several significant factors in analyzing business operating costs:
- Real estate
While relocating businesses need a strong pool of dependable labor prospects, the other side of the story is that they need to able to afford the prevailing pay rates in the region. Add to that the fact that the best location, without a low tax rate or tax incentives to move there, may require too much money paid out in taxes to the government. The same logic applies to real estate costs and utility costs, which vary greatly within California.
Business Expansion and Relocation -- An Exquisite Balance
As with any household, for businesses, there are “must haves” and “nice to haves,” just as there are affordable things and extravagant expenditures. Living or doing business within the scope of a business’s economics is the only way to succeed. Achieving a successful business relocation requires an honest assessment of true needs and budgetary ability, things that cut across every aspect of running a company.