So You Want A New Office? Some Things To Consider When Growing Your Firm.

So You Want A New Office?  Some Things To Consider When Growing Your Firm.

Picking a poor location can have a detrimental effect on growth and can be a disastrously expensive exercise.  This article dips its toes into an ocean of complex decisions.  By no means comprehensive, it points at a few concerns we would begin with when advising a firm seeking an additional site.

Being alone is surely a massive advantage?  One of the major obstacles to expansion is, of course, recruitment.  If you are going to be the only firm in a specific location this could be a major obstacle for growth.  You will never be able to source experienced candidates locally so will consistently have to recruit from outside the region.  This will invariably require higher salaries, relocation fees and other incentives to persuade candidates to move.  You would also need to be sure that career prospects remain consistently exemplary as candidates are less likely to make such a dramatic move if they can only be sure of a short term gain whilst the longer term benefits are uncertain.  In a city with numerous firms candidates are more likely to take a risk as there will be other choices if the position they find is not what was expected.

Saturation could also be an issue.  Despite the issues above and assuming that part of the reason to start a new office is to capture local business (if all you are interested in is international agency work, location is far less important, although other concerns might become important) then one should also be wary of locations where there are numerous firms serving a relatively finite market.  A number of firms in one location do demonstrate a market exists but it might prove extremely difficult to capture market share.  Firms could be in that particular area for historic reasons and the market could have evaporated.  We would certainly advise speaking to local Attorneys, off the record if possible, to find out how tough the local conditions are.  They may be very profitable but if this business is based on client relationships built over years then these clients might be difficult to tempt away from their supplier.

Ideal locations therefore exhibit an unsaturated market but with other firms locally to recruit from.  And this is far easier to find than one might expect, with a little bit of research and creative thinking it is certainly possible to find locations that fit this criteria. 

What else should be considered?  A few ideas are:

• Airport Access (and where the local airports serves), think laterally as well –  if a local airport serves the main international hubs in Amsterdam, Paris or Frankfurt then international travel is much more feasible
• Internal transport links (motorways, train links)
• Local house prices, if for example, house prices were considerably less expensive than London but you were able to offer a London level of remuneration then this would certainly be attractive to candidates.  If on the other hand the differential is small this could be a major obstacle to growth, particularly during a recession
• Local industry
• Small firm base (one of the best ways to found an office is surely to buy someone else’s and envelop them into your own structure)
• Local network effectiveness (such as inventor’s groups)
• Which firms are in the location at present and their demographic spread (in terms of sector expertise, size, etc.)

Of these further points the last is arguably the most crucial.  Where commercial opportunities exist is often where market conditions have remained static for decades – the same firms serving the same local clients the same way.  Whilst there will always be traditionalists which will be difficult to convert, market conditions such as these are usually primed for a new player.  Some of the IP firms that have grown quickly in the last few years have enjoyed this success by being a little different in markets where everyone else was the same.  If you are really lucky you will find a location where you can conduct business the way you always have but enjoy the benefits of novelty in a new area. 

Fellows and Associates.