When Kreigh Knerr decided to relocate his then two-year-old SAT and ACT student tutoring service (which he'd later brand Knerr Learning Center) from Massachusetts’ North Shore area to Milwaukee, Wisconsin in 2009, he was motivated by one urgent factor—market competition.
"While I had many competitors in Massachusetts, because top test scorers flock to universities there, such as Harvard and Northeastern, I had very few in Wisconsin," says Knerr, a former teacher. And because expenses are comparatively lower in Wisconsin as opposed to Massachusetts, Knerr found it much easier to transition his business to a brick and mortar model.
Six years later, Knerr says his business is thriving. He operates two offices in southeastern Wisconsin and has the support of another regular staffer and five contractors. Also, without the constant worry about local rivals he has been able to concentrate on developing and launching SAT and ACT prep mobile apps.
Knerr's relocation of his small business was a strategic decision that ultimately improved his company's bottom line. But such a bold move might not be right for every small business owner. We spoke with some entrepreneurs who have relocated their businesses to see how they’ve fared. Read on for their advice if you're seriously contemplating making your own move.
Consider the market where you want to move
Just as Knerr carefully thought through the advantages of relocating to a different market, so too should you if you're mulling over the possibility of a move. Don't be impulsive and pick a destination without weighing the pros and cons. Not only will the change affect your business but also your personal lifestyle as well.
For David Landis, owner of RockerRags.com, an ecommerce site that sells rock and roll-inspired apparel and accessories, the decision to move from Los Angeles, where he had lived for 19 years, back to his hometown of Albuquerque earlier this year, was a simple decision.
With the standard of living being far less expensive in Albuquerque than in L.A. “it made sense to relocate,” explains Landis.
But there were other factors at play behind the move.
“I'm comfortable being in Albuquerque not just because I'm from here but because there's a good feel here for what I do,” he continues. “There is a clientele here for what I do based on the fact that I've gotten quite a few orders from this area.”
And, with Albuquerque being a far smaller market than L.A., there is less fierce competition and more opportunities to establish visibility in the local market.
“I am reaching out to work with some businesses locally, which is a lot easier to do in Albuquerque than it is in L.A. because there everything is corporate owned,” he says. “Albuquerque isn't like that. [For instance], I was able to approach a radio station that's fairly new to the market and it's just a really good fit. We're working on doing some co-branding stuff where RockerRags can co-brand [with the radio station] and they can promote RockerRags to their audience.”
Do your research
Just because the town or city you're eyeing for a possible move seems, on the surface, less expensive than your current location, doesn't automatically mean it will be a good fit. There are some questions to ask first: Is there a need for your product or line of business in the area? Also, is it receptive to small businesses? Does local press do an effective job covering small businesses? Does the town or city offer small business tax incentives?
Over 20 years ago, Dr. Vanessa Weaver, CEO of Alignment Strategies, a small management consulting firm with a then five-member staff (now it's 10), relocated from L.A. to Washington D.C.. Weaver was intent on growing her business, and identified the federal government as a new and viable market with significant revenue potential.
“Given the complexities of contracting with the federal government, it was determined that Alignment Strategies would need to relocate to the hub of Washington, D.C. so that we could invest in cultivating relationships within those federal agencies targeted for business,” she relates. “Also, our analysis indicated that most of our clients were either based on the East coast or in the Midwest. Thus, it made the logic for this decision even more compelling since it facilitated quicker and cheaper access to our clients.”
In hindsight, Weaver hails her decision to relocate as “one of the best business decisions I made.” Since the move, Weaver says she has even coached and consulted with clients, both small and large, when it comes to relocating their businesses.
Expect delays or initial setbacks
You may be confident that the new geographic location of your business is ideal based on careful scrutiny of the market's standard of living and culture, but don't presume the move will be seamless or come without hurdles. Just because you have acclimated to living and working in a new area, doesn't mean your vendors and customers will immediately adapt to the change. Be patient. Expect some glitches early on.
Even though his business is online, RockerRags' Landis still had to contend with a few snags after he moved from L.A. to Albuquerque.
“[During the transition], the biggest issue was getting the orders fulfilled quickly,” admits Landis. “I had to keep reminding myself and my vendors not to send them to the L.A. address, although a couple of them did go there. Inventory would sometime be delayed and have to be rerouted. But other than that, business just continued its natural ebb and flow because the website never came down.”
For Knerr, the immediate effect of his move from Massachusetts to Wisconsin was far more profound and unsettling. According to him, he experienced a significant (over 50 percent) drop in clientele during his first two years in Wisconsin. Knerr attributes the slump to his industry being based on word-of-mouth referrals. “I moved from a region where everyone knew about my company's value to one where I had no professional reputation,” he recalls.
However, business eventually rebounded to the point that Knerr now says his company has a waiting list for its services.
"I turn away as many as 200 clients a year," he says. "So, my business has more than doubled, and the mobile apps, which the move allowed me to develop, made up 25 percent of my fourth quarter income in 2013."
Whether it's getting an edge in market competition, taking advantage of lower costs and taxes, or opting for a more suitable lifestyle, relocating your small business could be the key to further growth. However, before you pack up your belongings, do your due diligence to determine how a move can benefit your business in the short- and long-term.