Real Estate Strategy Helps Growing Companies to Succeed

This article first appeared in the January 2013 edition of Torrance Magazine.

As business owners consider their 2013 goals, including commercial real estate planning in strategic discussions will lead to greater success.

Imagine a manufacturer whose mission statement includes a vision for “lean manufacturing,” yet over time, finds itself operating within a building and location with functional and economic obsolescence.

It would be difficult to achieve strategic competitive advantage because the real estate and business strategy are at odds.

Some cases are more are more subtle. A firm exercises an option to extend  their lease and fails to check the market conditions while all other departments are striving to cut costs. Real estate could have been a key driver but was overlooked.

Start-ups or early stage companies needing to find functional space need help identifying landlord “fit.”

This is to preserve their operating capital to fuel future growth and position the firm with maximum flexibility.

Mid-growth curve companies needing flexibility may choose to lease vs. own because return on capital is greater in the business vs. in property.

On the other hand, ownership of a property vs. continued leasing makes sense for owners who plan to sell their firm and desire an income stream for future retirement after company disposition.

The bottom line is companies at all stages will benefit by including their real estate decision earlier as a strategic contributing factor to their success in 2013.

Bonus: Learning from Hostess and Kodak

Small and mid-market companies can learn lessons from big firms. As times change, so must companies change with them.

Here are a few tips:

  1. Stay Current: Discuss industry changes with your team. If you were making Twinkies, you might want to know that currently, there is a move towards healthy snacks.
  2. Be Ready: A well-run business that successfully executes business basics (AR controls, HR policies, billing, and pricing) along with eliminating expenses will allow a firm to be nimble enough to take advantage of new opportunities.
  3. Remake Yourself: If Kodak had considered digital photography a bit earlier, their story might be different today.
  4. Take a Chance: Are you investing in change, do you have a social media/internet marketing focus? Your company/brand may live or die on the internet.

Learning lessons and adapting will lead to greater success in 2013.

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