When you plan for your Middle Market firm’s growth, you likely think of physically expanding. You could add other production facilities or add additional offices. At some point, you’ve probably considered expanding out of state. It can be a fantastic boost to your organization, but it comes with challenges and state-to-state differences you must consider.
Despite the work involved, choosing to open a site in another state could lead to many great things.
When Out Of State Growth Makes Sense
Opening a new location in a different state can be beneficial for several reasons. Here are a few to consider.
Redundant infrastructure – Multiple sites on completely separate power and connectivity grids creates fantastic redundency. It could keep you running if something catastrophic happens in one location.
Unsaturated markets – A new facility may open you up to new customers and potentially less competition.
Beneficial local and state taxes, programs and regulations – Many states and municipalities offer incentives to attract business. The savings could reduce your operating costs or offer other useful benefits.
More access to talent – Having a hard time finding abundant, qualified candidates for your key roles? Opening another site may provide you with a new pool of potential employees.
Easier shipping or transportation – Depending on where you plan to expand, you may gain access to easier shipping and transportation routes or services.
Reduced costs – Sometimes expansion into another state gives you access to more cost-effective resources or real estate.
Options for corporate structure – If you are looking to bring on different products or desire a separation in your structure, expansion in another state could be the time to create a separate LLC or corporation.
What Else To Consider
The benefits of an out of state expansion might have you adding up all the plusses and it certainly could be the right decision for your Middle Market company. However, there are things you need to consider that might be a hindrance.
How To Make The Ultimate Decision
When you have evaluated all of the pros and cons for an out of state expansion, you may find you still don’t have a clear idea of if you should take the gamble. There are several resources you could look at for assistance in making your decision.
This might be the time to bring on a board of advisors and allow them to focus on doing further research and evaluation. You could consider an independent consulting firm to focus on the costs and do market research to make sure potential sales growth is feasible. Certainly, you should check out all state laws, regulations and licensing rules – legal resources in the new state should be contacted.
Expanding to a new state could be a fantastic step for your Middle Market organization if you look at all the positives and potential pitfalls with a discerning eye.
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