It’s a challenge with which every operation struggles: when to expand facilities to accommodate your growing business, and how to accomplish that expansion in a way that satisfies your company’s unique needs, goals and issues. Businesses within and supporting our nation’s agricultural industry, regardless of their sectors, face unique expansion considerations, such as varying space requirements with the passing of seasons, the need for neighboring property and the goal of preventing competitors from gaining access into your market. Taking time to really consider why your company needs extra space, for what purpose it will be used, and when and how often it will be used — all before the need itself is at a critical level — can help a company avoid costly mistakes, more closely fit its expansion plans to its actual needs and be better able to recognize a good opportunity when it arises.
Sometimes strategy and opportunity combine to make expansion of your current facility or operations particularly attractive, even if expansion wasn’t already on your company’s agenda. A neighboring property coming up for sale or lease is an opportunity that should be carefully considered, even if the growth which would necessitate that extra space isn’t anticipated for a few years. Likewise, space being made available by an existing competitor exiting the area, or the availability of space that allows a new competitor easy entry into your market each require thoughtful consideration. If a company has taken the time before these opportunities present themselves to plan its expansion strategy, the question of whether these “out of the blue” opportunities really make sense is more easily answered.
The following topics explore considerations that should factor into any discussion regarding expansion and can help guide a company through the process of determining the right time and right way to expand.
What are your needs, opportunities?
Seasonal expansion can be an excellent solution for companies whose needs for extra space come and go, whether it be for storing extra vehicles or equipment used only during the busy season, staging areas for vehicles waiting to load or unload, or temporary or seasonal storage of excess goods or raw materials. In these cases, important consideration should be paid to whether there are issues that would justify controlling the area year-round, or if occupying — and paying for — the area only when needed is a viable solution. If your business’ strategic plan includes expansion in the coming years, then keeping an eye out for properties, either near your current facility or in a new location, is critical. However, it’s important to know what you need, how much you need, and why you need it, before an opportunity presents itself. Conversely, sometimes an opportunity to expand into a new market, to keep a potential competitor from making a move into your area, or to lease or acquire a neighboring property that could be useful in the future, are situations in which opportunities necessarily have to get ahead of strategy.
What will you use it for?
Are you looking to expand because you need larger indoor storage facilities? A staging area for vehicles? A larger office for administrative functions? Something else entirely? A company’s day-to-day use of space is typically the first topic that arises when considering expansion. Use this opportunity to critically examine how the company operates out of its current location, how it achieves its business goals, and ways that those activities can be optimized, improved and enhanced by having a larger or better physical space. In some cases, a company can satisfy its needs for more space by leasing nearby space on a temporary or recurring seasonal basis and only incurring rental costs during the months that they really need the extra room. If a company really only requires seasonal access to the added space, is there a strategic partnership that can be explored to co-locate operations with another company that needs it at different times of the year? Conversely, does it make sense to acquire a more remote and lower cost site, which the company can use seasonally but control year-round, to ensure regular access and avoid risks associated with third parties operating from the same location at other times? Sometimes, when a company’s operations include potentially hazardous activities or carry the risk of environmental contamination, the benefits of having sole control of the property far outweigh the savings achieved when that savings is accompanied by increased risk. Additionally, many companies find that they will use the new space much more than originally anticipated simply because it’s available.