It was a decision TJ Hale thought about for years: how to handle the business’s growing space needs. Should they expand their current Menomonee Falls facility, construct a new building or continue leasing space in Milwaukee?

The decision-making process was challenging at times as Rosean gathered information and considered the trade-offs involved with his options. Initially, Rosean leaned heavily toward building new – he even purchased land – but after careful consideration, he decided expanding his current building was the best move for his company.

Rosean’s situation is not unique. When business owners come to me to discuss expansion, we analyze the options, understanding every consideration to help them in the complex decision-making process. Rosean’s story is an excellent case study on exploring whether building an addition is the right choice for your business.

Assessing the options

When TJ Hale needed additional space for its growing business, they considered all the options available, including maintaining the status quo. They took the time to carefully look at building new, expanding, leasing space or doing nothing.

“Everyone has different levels of risk tolerance. “Business owners are often up half the night thinking about some part of the business, including how much space you have or need. The confidence to expand starts with how you view your business and the staff around you.”

TJ Hale carefully studied the trade-offs of each option. “We did the financial analysis and got in the mindset of the different decisions. For example, if we did nothing, how would we cope with growing business – do we lease more space? Outsource? We ran through all the scenarios.”

Don’t forget to consider how the company might cope if business conditions change. While talking with a builder about new construction, orders from a key customer slowed. The situation was a financial reality check, making them consider more fully the implications of building a new facility. (The customer’s orders have since picked back up and even increased.)

 

Key decision factors

Three key factors played an integral role in TJ Hale's decision to expand the current facility: understanding how a move would affect employees; how relationships with customers would be impacted; and the feedback of smart advisers.

TJ Hale facility

TJ Hale, a Menomonee Falls-based company which designs, manufactures and installs retail displays in North and South America for some of the world’s top brands.

TJ Hale discussed with employees the challenges and choices facing the business. When moving to a new location was raised, TJ Hale was surprised at the feedback: Many employees were worried about a longer commute time. While they didn’t say it, they worried some employees would eventually look for jobs closer to home. “Good employees are vital to business success.”

 

Moving to a new facility would also disrupt TJ Hale’s ability to meet customers’ demands, as equipment would need to be taken down, moved and reassembled. “Building an expansion in Menomonee Falls and migrating operations from our other space in Milwaukee would not be a major disruption."

TJ Hale also reached out to several advisers and consultants to get their input. An operations specialist, for example, completed a thorough analysis of the existing location and how employees worked. A plan was developed that showed how changing some work shifts and moving equipment – along with an addition – would help the company meet its space requirements. “When finished, we realized we could reconfigure and expand here.”

 

Lessons learned

TJ Hale acknowledges that business owners are not experts on expansions – they are experts on running their business – and it is vital to seek outside counsel. By going through the decision-making process, TJ Hale came away with a couple of lessons to pass on to others.

“Communication is so important, especially with your employees, but be careful not to announce anything too early. We told one client we were going to move to a new location and they were excited. Then we had to walk that back when we decided instead to expand our current facility.”

TJ Hale

TJ Hale also learned the value of the intangibles, including employees’ reaction and what the business might look like in 10 years. “Do not just weigh the financials.”

There’s a lot that goes into making the decision to expand your business. An ideal place to start is to research your possibilities and consult with trusted advisers. Take your time and consider all your options. 

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