FOLLOWING THE DECISION to investigate a change in office, the very first considerations tend to be around location, size and cost.
As far as location is concerned, there are a number of issues that business owners and managers will need to consider when choosing new office space with the intention to boost business performance.
In particular, they will need to answer the following question: Is there a particular reason that my business should be located where it is?
If the answer to the question is yes, then there is nothing further to explore regarding geographic location. If the answer is no, then that opens up a wide range of possibilities that might include the Central Business District (CBD) of a major capital city, a location in a nearby commercial centre, a main street precinct or office park, somewhere adjacent an industrial or educational node, or even a regional township. Generally speaking, the farther you are from the CBD, the cheaper the rent will be, but it might also mean you are farther away from your clients, customers, staff, supply chains and operational requirements from a logistics perspective. These geographic possibilities should, therefore, be explored through answering the next two questions:
-Can the location of my business affect turnover or sales?
-Can the location of my business affect my staffing and logistical needs?
When addressing each of these questions, a business owner must reflect upon the most critical needs of the business and the market that it services and consider:
-Where are my customers or clients best served in relation to my location?
-Where are my closest collaborators or partners located? This will be relevant to my location if it will make my business more efficient or productive when it comes to these relationships.
-Is it to my advantage to be located near my competitors or away from them?
-Are there any suitably trained staff near my proposed office for rent location? If not, will that be a significant impediment to my business?
-Are my operational needs compromised by my office for rent location?
Some of the above questions or issues may be resolved either by the way in which a particular business operates or by its reliance on certain types of infrastructure. For example, staffing needs may not be a problem if your office for rent location is well serviced by transportation infrastructure and other amenities that will likely attract staff. Likewise, most services-based businesses do not have particularly complicated supply chains or logistical needs. These are the businesses that make up the majority of our CBD.
Regardless, an investigation into the location of partners, collaborators and competitors is a valuable undertaking and raises the question of what opportunities might arise for a business through the economics of agglomeration.
The concept of clustering businesses together that share common goals or synergies has been shown to be beneficial to their performance . Economic agglomeration is the term used to describe the benefits which flow to firms from locating in areas which have a higher density of economic activity. Often measured by employment, this higher level of commerce allows firms to achieve economies of scale through a larger customer base, access to skilled staff, more efficient supply chain logistics and access to shared services. We often see this type of clustering in major capital cities where finance and insurance services or government services may be found a relatively short distance from one another.
In particular, this ‘co-location’ exploits the prospect for creativity and innovation by providing the opportunity to capture valuable knowledge sharing and interactions with like-minded individuals and corporations. This is particularly true of creative businesses, as exemplified by Hollywood, Silicon Valley and Digital Media City in Seoul, where the creative tension that exists between partners, collaborators and competitors works to produce innovative products or services and exploit the economies of scale mentioned above. I’d recommend that business managers and owners explore the relationships that exist for them within the markets they serve, to investigate whether there might be an opportunity to take advantage of the growth and profitability benefits that agglomeration may bring to their business.
