Navigating the Site Selection Process

Moving your business can be stressful. There are so many decisions to make. Should I buy more land than I need? Do I need utilities? Can I afford to move my business? How much money do I need? All these decisions can be made successfully with good planning.

The first decison you need to make is can your business afford to move, or better yet, can your business afford not to move? Going through your financials with your financial professional will give you comfort on the amount of money you can spend. If you are lucky, you can afford more than you need. Don't forget to include the money you need for additonal capital to grow your business. A major mistake companies make is to use their free cash flow but forget to remove the excess plow back needed to sustain growth. The consequences of this could be the loss of valuable opportunities during the business year.

After you determine what you can afford, your next call is to a commercial agent. Choosing a good commercial agent can be the difference between success and failure, so choose wisely. A good agent will be able to provide you the financial reasons, as well as the market reasons why you should buy a particular piece of land. Market reasons include a defined exit strategy for the future sale or lease of the property. You should never make a purchase without consideration of your exit strategy.

After you and your agent choose your site, the due diligence process begins. This process is also crucial to determine if your use is acceptable and feasibile. The use can be acceptable but not be feasible for many reasons such as grading, utility access, and stormwater requirements. All of these issues impact the total price of land you eventually end up at. A good piece of land can still have twice the cost as a piece of land in a different location. This decision needs to be weighed against the importance of your location. A new strategy used to calculate the potential cost is the use of design software. The software can help with cut and fill, import and export costs, as well as the cost of stormwater piping. Costs are different by site, so be aware of the potential costs before the expiration of your due diligence period.

Lastly, the consideration of cash or financing is important. Raw land purchases that use financing requires more upfront equity than purchases of land for future construction. Having an agent with connections to a commercial banker can also prove to be an unexpected benefit. Not all bankers are created equal.

There are many decisions to make. Do yourself a favor, hire an expert. The costs of making a mistake are usually ten fold versus hiring an expert.

As my father always told me, "prior planning prevents poor performance". See you in the trenches!

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