With Michigan’s second significant lockdown due to COVID, it’s very appealing to search out business in surrounding states. You may be wondering: Should you take your business elsewhere to survive? I have been faced with this very question, but it’s important to be mindful of the impact of this decision and weigh the costs associated with it.
This reminds me of a time back in 2001 — prior to 9/11 — when I was faced with a similar decision. Back then I was a part of a business where we were attempting to start our own type of Microsoft business. During this time, we were faced with the issue that the market had become saturated, and the gold rush that was expected just didn’t pan out.
It was bad enough that the tech bubble burst in 2001, but after 9/11, the recession deepened beyond what any of us could have anticipated. We had a decision to make, and we chose to take our business outside of Michigan. Within a five-hour drive of Grand Rapids, we could reach Detroit, Toledo, Cleveland, Columbus, Louisville, Indianapolis, and Chicago. Those are some of the biggest cities in America, and the clients paid better. We found out that we could charge more per hour, and the markup was higher. It felt like a win/win situation. But was it?
Did we make the right decision? When you look at the numbers, some would say, “Yes, we did.” According to Senate reports, Michigan lost over 800,000 jobs between 1999 to 2009. That’s almost one million jobs. If you compare that to the entire United States, Michigan lost more jobs than the nation as a whole during that decade. When it came to seeking business outside the state of Michigan, I think we made the right choice. I don’t regret our decision. To survive, we needed to pivot our business and we grew.
However, I wish we had considered the impact this would have on the business long-term. We didn’t take into account the consequences travel would have on our business, our employees, and our families. I would like for you to consider these three questions and carefully weigh the effect these stressors will have on your business.
First, what will working remotely do to your business? Think about the costs involved in traveling and supporting employees and clients remotely.
Second, what will it do to the people — the employees — in your business, and how will it impact your company’s culture? If your employees have to drive two hours one way, they probably won’t be going home at night. They will face additional costs related to travel. They’ll miss baseball games, parades, and special events. It impacted our employees, and we didn’t keep employees as long.
Third, how will it affect the family and friends outside the business? When employees aren’t able to be at home every night, it affects relationships with friends and family. I experienced this personally.
As we face this current lockdown in Michigan, and perhaps a future lockdown for our nation, make a plan before you decide to do business outside of your area. Can you survive without moving from your local area? What do your reserves look like? How long can you survive? Look carefully at the three stressors that I mentioned and make sure the benefits outweigh the costs.
You may be thinking. Yeah, yeah, I know these costs, but the costs won’t be as big for my business. I can sell and deliver my product remotely. You can explore this opportunity. People are more open to remote options, but when the lockdown ends, people will still prefer to do business in person. The value of a remote client is less than the value of an in-person client. Humans still build relationships in person better than any other way.
Although the profits that come with doing business elsewhere look tempting, consider this fact: Every dollar you can make locally is worth ten dollars remotely.
Before deciding to move your business outside its current location, ask yourself if the business can survive where it’s at. For instance, the Red Wagon team is remote, but we make it work. Right now, there is a significant opportunity for going out of state to do business during this lockdown, but you must weigh the risks along with the benefits.
Written by: Wade Wyant
Red Wagon Advisors, West Michigan Scaling Up Coach