If your plans for the New Year include possibly moving your business to a different city or state, you’re probably already aware that the cost to physically pack up and move your equipment and employees will be considerable. There are other factors besides moving expenses that you should consider carefully before committing to relocate to a new area, here are five.
1. Cost of Living Comparisons
One of the most important things to consider before relocating to a new area is how the cost of living compares to your existing location. Obviously, a lower cost of living will probably translate to a lower office lease or purchase price for your office space, lower utility bills, etc. Relocating to an area with a significantly lower cost of living also may significantly increase the likelihood that more of your existing employees will agree to relocate. On the other hand, if you’re considering moving to a more expensive area of the country, you’ll probably pay more for business operating expenses and you may have to offer significantly higher relocation and compensation packages to convince your valued employees to relocate.
2. Quality of Life and Amenities
Besides considering the cost of living, expect your existing employees to weigh quality-of-life pros and cons when considering whether to relocate with you. If you are relocating from an expensive city to a less-expensive city, that’s great. However, if you are relocating from an expensive city with a vibrant cultural arts scene, outstanding restaurants, public transportation, pro sports teams, etc. to a less expensive city that lacks those amenities, convincing employees to relocate with you may be a tougher sell. On the other hand, if the potential new location has more amenities or similar amenities and perks like significantly less traffic, etc. employees may be more inclined to move with you.
3. Availability and Cost of Qualified Labor
Even if most of your employees decide to relocate with you, you’ll still experience turnover and, hopefully, expansion that requires you to recruit new employees. Make sure to research the talent pool in your potential new location. What are the demographics of the existing population? Does a large percentage of the population have the educational background you desire of your employees? If not, how do you plan to attract new talent? If so, what are the median salary ranges for the types of positions you’ll eventually need to fill? Are those salary ranges in line with what you’re willing and able to pay?
4. State and Local Business Tax Rates
If you’re considering a move out of state, keep in mind that state tax rates vary significantly. According to Tax Foundation, an independent tax policy research organization, 44 states charge corporate income taxes. State corporate tax rates range from a low of 3% percent in North Carolina to a high of 12% in Iowa, and average 6% across all states. Keep in mind that because state and local income taxes are fully deductible for corporations, the effective statutory tax rate for each state is lower than its “headline” tax rate. Alabama, Iowa, Louisiana, and Missouri also allow corporations to deduct part of their federal tax liability against their state liability, which further reduces the effective statutory rate.
5. Mother Nature’s Influence
Mother Nature throws unique curveballs to different regions of the country. Western states are prone to fire, monsoons, mudslides, and earthquakes. The Midwest sees heavy tornado activity. Coastal regions are susceptible to tropical storms, hurricanes, and flooding. The north and the east deal with heavy snow and blizzards. If your business relies heavily on shipping and receiving goods or owns fleets of vehicles or expensive equipment that is located outside, you’ll need to consider the possible impact of inclement weather on your operations and equipment.
Deciding to relocate your business is a big decision that requires research and insight from your employees and customers. When you do find the ideal relocation spot for your company and you’re ready to move on to phase 2 (logistics), contact us at Houston Installation Services!