Term Paper: Relocating and Existing Business Relocation

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[. . .] (Everly, 1998, p.OKRB983560D4) The Environmental Protection Agency established a set of guidelines for the reduction or elimination of fuel leakage in underground fuel storage facilities. The requirements included a testing requirement which was followed by replacement of any existing leaking tanks and an EPA approved ground treatment to contain any fuel that had already saturated the earth surrounding underground tanks.

Financially, spillage of fuel from one underground tank could cost $250,000 or more in the product and cleanup costs if leakage was restricted to the tank owner's property. What is feared most are liability costs that could skyrocket into the millions of dollars if there was contamination of ground water and surrounding soil." (Transportation & Distribution, 1988, p.45)

Many smaller retailers, without the capital to upgrade to newer more costly tanks and perform the required clean up simply lost their ability to retail fuel, after 1998 fuel providers were no longer permitted to refill underground tanks that had not met the new requirements. (Wilhelm, 1998, pp.3)

Many of the remaining tanks are owned by companies that don't have the money to replace them. "A lot of the independents and small mom and pops, " said Gibson of the Independent Oil Marketers Association. And it's not going to get any cheaper for them. As the deadline approaches and environmental engineers get booked for tank replacement jobs, their prices will increase. (Graebner, 1998, p.1)

For many retailers the fuel portion of their sales was the main profit-making portion of their business and also the major commercial draw for customers. Businesses were left with few choices, either diversify or close. (Graebner, 1998, pp.1-2) Ronnie's Place has addressed these issues and as many other of the more successful fuel retailers took advantage of the opportunity to obtain capital to make more broad upgrades. In the case of Ronnie's a new building was constructed, hardware retail was expanded and a tire service truck was added to the repair fleet. Ronnie's Place may benefit from the recent improvements not only in the increased fair market value but also in the possibility that some portions of the existing new equipment may be reused in the new location.

The owner will need to cost benefit the possibilities of moving presumably new underground fuel storage tanks from their existing location to the new location. This cost cutting move could produce a substantial savings and may have less of an impact on the total transition difficulty. The existing tanks will likely have to be removed from the ground in any case as simply draining and filling them is often not enough to meet either EPA or local regional requirements.

The future operating costs must be considered carefully during any plan for future transitions. A logical starting point for any relocation plan would be the procurement of real estate appropriate for the demands of the business, including the present structural needs and room for possible future improvements. (Miller, 2001, p. 13) The location must serve the purpose of the organization as a retail entity and must also address environmental impact issues that pertain specifically to the type and size of the business it will house.

It is assumed that such a location would require the construction of an entirely new physical facility. The present owner of Ronnie's Place may have a distinct advantage in that he/she has so recently undergone the preparation for and construction of the present facility and may have integral knowledge of the successes and/or mistakes of this very recent endeavor.

Though the land location did not change in this recent transition the impact and cost of construction is fresh in his/her mind. In addition to an understanding of construction issues the most important factor is probably the location choice.

Relocation provides the opportunity to reassess a myriad of options from the cost of doing business to the ability to retain employees. In the end, however, relocation is largely about real estate...How will the particular location affect cost of operations? Are the local, regional, or community incentives for relocation?...Does it make sense to "build to suit?"...With a more efficient floor plan you may learn that you actually need less space than you originally thought. (Miller, 2001, p.13)

The owner of Ronnie's Place should review as many available regional locations that would benefit a high traffic drive in retail service as can be found. Issues like proximity to the new on-ramp and off-ramp, convenience and ease of entry by the customer vehicles, room for potential growth and of coarse the visibility of building, advertisements and signage. The owner should find a location that takes full advantage of the increased traffic associated with the freeway alteration.

Taking into consideration all the factors affecting the needs of his business as well as the line of sight to the freeway and any other access roads regionally important.

DO A FEASIBILITY STUDY. Once you've fixed on some potential locations, carry out a feasibility study. According to Stuart Mitchell, senior partner in Business Moves Advisory Centre, such a study will invariably include an appraisal of likely fallout among employees, as well as a cost-benefit analysis. It will also look at the resources needed to make the move. Ideally, have this work completed at least six months before your planned moving date. (Garret, 2001, p. 92)

Architecturally speaking it is important to understand the newer concepts of handicap accessibility as it applies to new construction. In an existing building the owner may be exempt from making costly changes as long as more mild reasonable attempts have been made to accommodate the handicapped. Yet, when new construction is undertaken it is often undertaken with the intent to meet all possible requirements for accommodation without regard to cost.

It is sometimes necessary in public spaces to contact a building inspector, either private certified or employed by the local regional government and review the most recent rulings in the local codes, both accessibility and construction. Most regional architects and/or contractors will have at least the basic understanding of the issues and if nothing else will know who to contact to gain a more complete list of requirements. In the case of Ronnie's Place it may be assumed that recent construction of a new building would have taken these issues into consideration, but it is always good to make sure that new regulations have not been instituted in the interim.

Don't settle for verbal assurances that the architect or someone with the firm "went to a workshop." Check the blueprints and shop drawings carefully yourself to catch any accessibility problems early, and inspect the site frequently during construction to guarantee that subcontractors do the job correctly. Also, remember that the ADA Accessibility Guidelines for Buildings and Facilities (ADAAG), which is Appendix B in the Americans with Disabilities Act Handbook (available from the U.S. Department of Justice at), only establishes minimum accessibility requirements. (Gunde, 1992)

Another possible expense that is often overlooked is the change in location increasing either overhead through necessary leasing rather than ownership of land, or in the case of ownership the cost of increased property taxes. Another consideration often overlooked is change in utilities that cause an increase in overhead. Some rural older sights are purveyors of well water rather than city water services which is often more expensive in the short run.

The owner must take into consideration those aspects of his business, which are more profitable, and those he/she conducts at a less desirable gain, formulating a plan to expand one and decrease or eliminate others. Additionally, on the issue of real estate and relocation the owner must take into consideration the impact the new location and/or transition would have on his existing and returning customers. (Miller, 2001, p.13) (Bertagnoli, 2003, p. SB4) (Estey, 1982, 15-18) This consideration is particularly important in the case of the repair and hardware retail aspects of his/her business as that service is likely to command return local customers in addition to the on demand service associated with freeway repairs.

Though the general trend of the defeat of so-called Ma and Pa stores has historically been strong, recently the upswing of a few of these smaller store industries has occurred. Ronnie's Place contains one of the few retail industries that has been holding its own and even growing under the pressures of large retailers and that is Hardware sales. It may also be argued that Ronnie's Place contains two of the types of retail businesses small businesses have been successful with, at least regionally as evidenced by the Swifty Serve closure.

Mom-and-pop retailers in several industries -- books, coffee and hardware -- are prospering, sometimes literally in the shadow of popular national chains like Barnes & Noble, Starbucks and Home Depot. This wasn't the case for much of the 1990s, when lower prices and broader selection enabled the giants to crush local shops. And to be sure, in the mass-merchandising field, Wal-Mart continues to stomp most… [END OF PREVIEW]

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