Presentation to the Illinois Municipal League

Economic Development Consultant David Dorgan and I will be making a presentation to the Illinois Municipal League Conference in Chicago on Thursday at 1:00 pm on Business Attraction, Expansion and Retention. Dave is the Economic Development Director for Downtown Aurora.



KEEP Your Businesses And Jobs



Attraction, Expansion and Retention
Of Businesses in Your Community

Attraction, expansion and retention of businesses for your community is vital.It is also one of the most difficult things for a community to successfully accomplish. It takes hard work, planning, and follow-through.

We recommend that a community go through a formal development of their Economic Development  Strategy. This will give you the plan you need to target your actions.   

However, most communities want to get started RIGHT NOW! So in the interim you can use the following as your strategy.

KEEP

Keep the businesses and jobs that you have
Expand the businesses you have
Enhance your community to attract new businesses
Protect and continuously improve your business environment


Keep the businesses and jobs that you have - Retention is actually the first and most important function. “Keep What You Have” is the cardinal rule of any good economic development program.  Barring a major disaster, loss of business has the most devastating impact on your community. If it is a large business or industry, you are unlikely to replace jobs for years or replace that service. Just how do you “keep the business”?  Here are some simple to remember rules.

1. Run an efficient, honest, and friendly local government.

2. Know your business community.

3. Let your business leaders know that they are appreciated.

4. Keep your businesses informed.

5. Help your business community when you can.


Who Does Your Business Retention?

It works best if you can make business retention a focus of your entire organization. Make your employees and citizens aware of how important it is to retain the businesses you have. Your employees are especially important. Part of their function is regulatory - the police, fire and inspection departments. You need to make sure that they try to do their regulatory jobs with as little negativity as possible. Make sure that they understand that the fiscal health of the community is tied to successful businesses in the community.  Employees are not asked to ignore infractions, but rather to approach them from a “let’s solve the problem” frame of reference rather than “this guy is the bad guy.”

Remember Boeing moved their corporate headquarters out of Seattle, partially based on their treatment there.  The big guy in town should be approached as a partner of the community not the “big bad guy.”

If the community has a full time Economic Development professional then retention and attraction are a principle part of his or her duties. Part of the decision of who does these functions is an assessment of the individual personality and character of the person the community chooses to lead their retention program. Some employees are born salesmen with a positive mental attitude.  Choosing an upbeat “can do” kind of employee to meet with and answer questions from your business community can work wonders. Some one who naturally networks with people and can cut through red tape to resolve problems can be key to retaining businesses.  Just remember, the employee must have the authority to commit the municipality to basic actions and they must follow through. These same principals apply when a community uses a part time employee.

Unfortunately, most smaller communities cannot afford a full time professional or all employees are maxed out with their regular duties.  These duties then fall to a citizen(s) or a commission who performs these functions as volunteers. Having local businessmen who can relate to and translate business problems on to the commission is a plus.

In this way a small community may task the municipal economic development commission with the responsibility to retain businesses. Many of the commission members will be local business men or women with a good knowledge of the other businesses in the community. They can network with these businesses and make sure that the business community knows they are appreciated by the municipality. And they can provide a good interface among the Village or City Council, the administration, and the Chamber of Commerce.

One simple way of showing businesses you care about them has been successfully developed by the Village of Tinley Park, Illinois. Each year the Village hosts a business breakfast where all business owners are invited. The Mayor and lead economic development Board Member give a “State of the Village” address where they let the business leaders in the community know what has been accomplished over the past year and what is planned for the future. They usually have a speaker to address the overall economy.This simple meeting helps the business community learn about the city and get to know their civic leaders. It goes a long way towards keeping the business owners positive about the Village.  It also provides business owners with an update on the economy and what the may expect in the future.  Service provides like the community college may be asked to attend.  Rather than speaking they might be allowed to set up a booth to describe their services to interested businesses at the informal coffee prior to the breakfast.

The City of Peoria developed a formal program entitled the Peoria Business Initiative (PBI) with the assistance of Executive Pulse. The PBI Program helps foster a business climate that encourages the retention and expansion of existing businesses in Peoria to provide quality jobs, a diverse workforce and an expanded tax base. The Department of Economic Development with other supportive agencies target existing companies and conduct on-site business visits.

Each PBI visit is an opportunity to:

Express appreciation for the company’s contribution to the local economy.

Learn more about the company’s strengths, successes, challenges and opportunities.

Gauge the company’s opinion about the local economy and recommendations for improvement.

Respond to and address any business concerns.



Expansion

Expand the businesses you have - Expand what you have is the second cardinal rule of a good economic development program. Your existing businesses that are successful will expand. You want them to expand in your community, increasing your tax base and providing jobs.

Your successful retention program will have helped keep your businesses in town. Helping them expand in your community is the next logical step.

So how do you do that?  The things that make your community successful will encourage your existing businesses to expand in your community. You can encourage this reinvestment in a number of ways.

You can work with your Chamber of Commerce, your regional economic development agency, consultants, and university/college supported organizations to conduct seminars on business expansion. And you can help businesses learn about and apply for State and regional programs that will help finance business expansion.

A municipal supported low interest loan program can be effective. Peoria County and the City of Peoria each set up low interest loan programs initially funded with a Federal grant.  Money is lent for business expansions at a low interest rate. The business must first obtain private financing for a major part of the expansion proving that the bank views the expansion as credit worthy. The government program is a percentage of the total expansion and is at risk first in the event of a default.  

Incentives play a very important part in both business expansion and attraction. Some of the most important programs include Tax Increment Financing Districts, Business Development Districts, Sales Tax Abatement, and Industrial Tax Abatement.  Theses are local municipal programs. Enterprise Zone and Edge Tax are two of several State programs; some are locally run and controlled .  These programs vary substantially among different governments, but generally rebate some or all of the new taxes generated by the new development for a set period of time. The Enterprise Zone can waive the sales tax on the material for the building expansion. The Business Development District can enact a new sales tax which can be rebated back to the business for specified improvements. TIF rebates property tax increases for specified improvements.

A description of State based programs, many with special requirements, is found below:

http://www.commerce.state.il.us/dceo/Bureaus/Business_Development/Tax+Assistance/

And keeping a positive mental attitude about your community is essential. There will always be naysayers about your community. You want to minimize the negativity and maximize the positive.

Click for the City of Peoria Programs

Attraction

Enhance your community to attract new businesses - Attracting new businesses to your community is actually what many people think is the principle part of the economic development function. As we have indicated, the first rules of economic development are to Keep What You Have and Grow What You Have. Attracting new businesses to your community is very difficult, especially if you are in a slow or no growth area of the State.

A major part of this effort is an ongoing effort to enhance your community. If your main entrance to town is an ugly strip, clean it up. Work to get dilapidated areas renewed. First impressions are vital.

The first thing you must decide is what types of businesses you should try to attract. You can go through a formal targeted industry program approach. Or you can try the more conventional approach, which we call:

SAATMACATF

Shoot At Anything That Moves And Claim Anything That Falls

This is actually what many programs do. Any time you hear of a possible interest in expansion in your region you contact the company and let them know that you are interested and invite them to visit. And ballyhoo any successes that you have.

A few years ago Mayor Jim Ardis of Peoria learned that the toy company LEGO was considering constructing a major theme park in the Midwest. Attracting this theme park would have been a major coup and we went full throttle trying to land them. We invited them to town and gave them the grand tour. We found one site they were interested in and gave them our best shot at incentives.  Ultimately they chose not to build in the Midwest, which unfortunately happens most of the time with attraction efforts. But it still important to try while recognizing that most of your wins will be much smaller deals.

Some years ago General Motors announced that they were looking for a location for the Saturn Factory.  Municipalities all over America went to great effort and expense to put forward proposals to GM.  Ultimately they chose one location and the efforts of all those governments did not succeed. That is the fate of most of these efforts.  

However, communities do succeed.  Some times you need to think of reaching first base instead of a home run. The Village of Saunemin, Illinois is a small community.  They had an eleven mile drive for gas or milk. They desired a gas station convenience store. They did a small study which documented the assets of their site and contacted developers with this analysis.  They, then, enacted a Tax Increment Financing District providing for Sales Tax Abatement and ultimately got a truck stop with a restaurant and convenience store.   Their first attempt  failed, but their subsequent step brought a needed business to town.  The small community gained sales tax, property tax, employment, and convenience for their residents.

If that other community near you made a  home run, use the successes in a neighboring community to leverage action of own.  Find out the industry’s suppliers and see if they are interested in your community for a new location.  You make your own first base or even home run. You have to try;  but you have to expect a great deal of rejection, especially if you are not in a high growth area.

So how do you approach your attraction program?  First designate who is running your program - is it a full time professional, or the part time effort of a staff member, or the part time effort of a Commission? Sometimes these efforts are contracted to regional, intergovernmental, or special purpose agencies.

Then you need to think through what types of businesses you will recruit.

You need a simple brochure. You can spend a lot of money on an expensive marketing piece. Or you can put together a simple one page flyer that says who you are, why you are a good location to locate a business, and a list of the types of incentives available.  We recommend that you do both.  Try to target your brochures to realistic possibilities and specify what makes you different.

You need a good web site that provides information in an attractive and easy to find way. And you want input from the State, your regional economic development agency, and the business community.  Use them even if you have an economic development program of your own.

Social Marketing has exploded the last few years and is a very low cost way of telling the world about the advantages of your community. There are many different ways to use the Internet and social marketing to promote your community, business and organization. The following is one way.

You try to make your web site or blog interesting to your intended reader. You can just have entries originated by you, but it will be more interesting if you add content from other similar web sites. It takes a little time to figure how to do it, but essentially you are linking other similar web sites, blogs, twitter, facebook, linkedin and other sites to your blog. As they write new content it appears on your site.

Complex Blogs:



First step for you? Create your Blog. For blogging I prefer http://blogger.com which is free and part of google, but there are numerous other free and low cost services. You can get up and blogging in a few minutes, although it will take some time to learn the tricks.

More on Social Marketing for Economic Development at:


Protect and continuously improve your environment - A major effort of any community must be to improve the local environment.  Businesses will choose to stay in your community or locate in your community based on their assessment of the community. And if your town looks bad with poor air and water quality and visual appearance then you will get nothing, or at best, poor types of industries. So keep at it. Make your community better and more attractive.

Following these simple rules can help you KEEP Business in your community. Good luck in your business retention, expansion, and attraction efforts.


Our Web Sites

http://craighullinger.com/

http://www.linkedin.com/in/chuckeckenstahler

http://bethruyle.com/  


Free on line book on Economic Development.

http://cityeconomicdevelopment.blogspot.com/


Other web sites of interest.

http://cityplanningnews.com/

http://economicdevelopmentnews.blogspot.com/

http://cityofpeoria.blogspot.com/




Dave Dorgan's Powerpoint Presentation

Craig Hullinger's Powerpoint Presentation