Business Relocation within the UK

 

Relocation, relocation, relocation – it could be the small business’ answer to the estate agents’ familiar cry. In fact, there may be a number of reasons why you may want to relocate your business and this article considers some of the benefits, some of the costs involved, some of the obligations that may fall to you as an employer and other considerations you may want to take into account.

Why relocate?

When you set up your business you are likely to have chosen the location that suited you best at that time, perhaps because it offered:

  • an area with which you were familiar;

  • a local source of the type of labour you needed at that time;

  • proximity to transport links;

  • availability of housing; and

  • proximity to other amenities attractive to your business or to your proposed workforce.

It is in the nature of practically any business activity, however, that the world in which it operates is subject to change. Over time, some or all of the factors which may have made your original location quite acceptable might change in such a way that relocation is either necessary or may offer the sort of opportunities which appear too good for you to allow to pass by.

The principal reasons for relocating, therefore, may be summarised as:

  • finding an alternative, new environment which better suits the changes needs of your business; or

  • taking advantage of opportunities which may benefit the operation of your business in a different location.

Benefits

If you are moving to a new area because it suits the changed needs of your business, the benefits may be explained by the particular requirements of your business – closer proximity to your markets or transport hubs, the availability of labour skills currently needed by your business, or the need to move to new premises, for example.

But relocation may also be driven by the opportunities and incentives provided by government and by local or regional authorities. Understandably, such incentives tend to be offered in order to encourage the relocation of business into areas of high unemployment or areas that are the subject of economic regeneration initiatives. However, the incentives might not always be offered in the most obviously deprived regions – East Kent, for example, currently offers economic incentives to encourage businesses to relocate to that part of the county. If you are eager – or willing – to relocate your business, therefore, it may prove more than worthwhile carefully to research the incentives currently on offer in many parts of the country.

The particular incentives offered by government or at regional and local level are many are varied, but typically include:

  • grants – which need not be repaid, to help with the cost of setting up a business in the new location;

  • loans – which may be repayable over many years at favourable rates of interest (to take the example of East Kent once again, interest free loans are available to businesses willing to relocate to Canterbury, Dover, Shepway or Thanet); and

  • tax breaks – relief from business rates or other tax reimbursements, tax credits, research and development tax credits, and payroll rebates, to name just a few.

In order to qualify for such assistance, you may need to show that your business is going to create a certain number of jobs in the area, at predetermined rates of pay, within a particular time schedule.

Training programmes are also the subject of government incentives to small businesses. Funding may be available for businesses which are creating long-term employment opportunities or shorter-term job experience opportunities, in particular to the unemployed in the area.

Costs

Clearly, any relocation of your business premises is likely to involve costs that may require additional forms of business finance over and above any of the economic incentives provided by the government or local authority.

Business loans

You may be able to persuade your bank manager of the compelling reasons for relocation to be financed through a long-term business loan. In the current economic climate, however, bank loans for small businesses, for any reason, may prove difficult to secure.

In that case you might want to consider a short-term business loan such as the kind we here at Merchant Money offer to established companies. Loans of up to £50,000 may be available on repayment terms of up to 2 years, to help finance the move you want to make. This type of loan has the further advantage of being quickly and easily obtained through a simple online application, with the requested advance being deposited directly into your bank account within hours of approval.

Employees’ relocation packages

Although your reason for relocating may be to take advantage of incentives that are linked to the creation of new local jobs, you may still want to transfer to your new location a number of your trained, skilled or expert employees.

According to recruitment specialists Jobsite, more highly skilled and higher paid workers are more likely to be willing to relocate. Indeed, the relocation of such staff may prove one of the most significant costs involved in your move.

Whether you are able to require them to move to the relocated premises depends entirely on the nature of their employment contract and whether or not it includes a “mobility clause”. If the contract includes such a clause, the relevant staff may be required to make any reasonable request to relocate.

Although there is no obligation for an employer to offer any form of financial compensation for making the move, many companies nevertheless provide relocation packages to help smooth the way. Typically, this kind of financial package is designed to cover the employee’s cost of moving home:

  • a travelling allowance or the cost of temporary accommodation;

  • estate agent’s fees;

  • solicitor’s fees;

  • removal costs;

  • reconnection of utilities at the new address; and

  • occasionally even help with such furnishings as curtains and carpets.

The more generous relocation packages may also include the provision of bridging loans or mortgage subsidies to help finance the cost of a new home.

Although you may qualify for tax relief on a number of these elements of employees’ relocation packages, it is clear that they may add a considerable cost of moving your business from one part of the country to another.

Additional costs may be incurred if you decide to issue redundancy notices to those employees who decide not to relocate. Such employees may have a right to redundancy pay if they have worked for you for more than a certain period of time, if you offer no other form of redundancy compensation, and provided they have not unreasonably refused an offer of alternative employment.

Relocating

There are probably few business decisions that may be made easily or without a good deal of research and level-headed consideration. The decision to relocate is likely to be one of those decisions.

Relocation may have its benefits, its opportunities and its costs, but it is also likely to be extremely disruptive to your normal business operations and to the lives and routines of any members of staff you wish to take with you.

You may find that a relocation service is able to manage your move not only in a way that keeps business disruption to a minimum but also helps to reduce the overall costs of relocation. If you think the services of a relocation agent may contribute to the overall success of moving your business, you may wish to consult the professionals in this area, the Association of Relocation Professionals, which has members throughout England, Wales and Scotland.