“Economic Development for the People” Business Retention: It’s a Partnership, Not an Event
Posted on by Dale Kroop
We never have enough time for it, everyone has a different opinion about what it is, but we all know it takes 70-80% of our time each week. It isn’t always splashy, but economic developers know it is the time best spent in our communities. I am talking about business retention.
First we need to define it. Like many things economic development (i.e., incentives), local elected officials and some of our EDCs generally look at business retention through the prism of an old paradigm.
We tend to see retention as an event based on research; we gather the forces in our community and make a visit to our local companies as part of a listening tour. Then we make promises and a plan to alleviate concerns that they may have. You can almost always predict what they are, taxes, workforce, transportation, taxes, the cost of doing business, utility costs, perhaps blight and the local building department. All of these are legitimate concerns of business large and small.
Business recruitment is different than business retention. With business recruitment you focus on more macro issues such as school systems, community branding and perceptions, housing prices, etc. The challenge is that most of us are part of a government system, whether it be in our community, our region and statewide. We operate in fiscal years and election cycles. We generally move too slow for business. Business runs in a more dynamic cycle, effected by fuel prices, real estate deadlines, state and federal policy. It is challenging to succeed in business retention when we are not on the same page or working at the same pace as the business community.
We do the visitation thing because that is how we believe it has to be done to get everyone involved. But many businesses have told me it is annoying to come in with a group, that you should know what they need, you should know their challenges. So how do you gain that knowledge in order to retain a business, especially since economic developers have limited staff and time?
First we need to identify business retention goals.
- Are we helping them expand in place or at a new location?
- Are we helping them survive the economy?
- Are we helping them anticipate their growth and opportunities?
Yes, yes, and of course yes!
So we really need to do business retention properly and effectively by developing partnerships with businesses. We need to do it in a transformational or sustainable way, not as just an event (a visit and press release) or a transaction (i.e. survey).We need to connect with local businesses by seeing them as a customer. So think of them first as businesses, not a company.
That change in lexicon is important as we must not forget that 80+% of businesses generally have less than 20 employees and over 70% have less than 10 employees. They all worry about making payroll, providing health insurance, hiring the right person. These are still the core issues. Small businesses are often part of the supply chain of larger businesses. They are all important. So remember that not every business is a “company”. This subtle change helps to make business retention a more personal commitment.
To engage you in the process of business retention (as well as other topics in economic development), each month we will share our experience as economic developers in different areas of business retention as well as other topics. We will discuss the ways that we develop a long term partnership with our business community, rather than rely solely on the research and visitation approach. We will begin the next edition of “Economic Development For the People” with Hamden’s successful program for business retention, the Hamden Business Cluster Program.