Sunday, February 6, 2011
The Fundamentals of a Business Expansion Program - DRAFT
First, allow me to begin by saying the word “retention” in the phrase Business Retention and Expansion (BR&E) program is a major thorn in my side. It is the overall context of “retention” within name of the program that gives me trouble. Retention implies old, tired businesses that we are trying to save. It implies that the community actually has programs and resources to “retain” jobs, to respond to companies with incentives when they threaten to relocate or shut down, and to repeatedly reward those companies that decide to stay for staying put. We all experienced situations when it is necessary to customize a solution to “retain” a company. In this case retention means the community’s economic survival hinges on keeping the company, but those events are rare. I think the types of economic development programs that serve local business and industry should be called Business Expansion Programs (BEP). The term “Business Expansion Program” communicates that the locality has a program for existing business and industry that their growth plans.
BEP programs remind me of car insurance. Everyone knows it is necessary, but it is not always appreciated until it is needed. This is unfortunate; it can translate into a minimum effort with meager results. Sometimes local industry executives are incorrectly perceived as complainers. So why makethe effort. In addition, I suspect it is because existing industry executives could give economic developers lessons on operating a business in the area. That may be information an economic development professional does not want to hear.
Most economic development board members do not know what to expect or why a vigorous BEP program is needed. The impression is that an industry call program is good because you visit existing customers, but board members cannot really tell you what they expect or the results they hope to achieve. The best case scenario is expansion announcement. It comes down to managing expectations.
The second component is that it takes more work than non ED professionals and ED board members realize. It takes far more time than simply meeting with an existing company. The follow-up and researching issues raised by local company executives can take 2 or 3 times longer than the actual meeting/interview.
On the other side, when you call on an existing industry, no matter how much prep work the ED professional does, the local industry executive is still wary for the reason of the call. It is understandable. It is not uncommon for existing industry executives to think the request for a meeting is a fundraising request or some other issue non-germane to the business operations.
A BEP good program requires the following:
· ED staff must have a general understanding about the basics of business.
· Calling on local executives at their facility is a fundamental requirement.
· An open ended questionnaire is preferred. The more the client talks, the more you learn.
· Follow-up is critical to the future relationship and the reputation of the program.
· It takes perseverance to address a client’s concerns and challenges.
· Patience is essential.
· ED staff should consider themselves an extension of the company’s staff.
· A confidentiality agreement may be requested by the company. Take it as a good sign.
· Contrary to popular belief, “I don’t know” is an acceptable answer, IF it is followed up by a timely response to the question or issue.
· No is an acceptable answer if you can tell the industry executive why. It helps if you can offer alternatives.
Economic development professionals walk a fine line when working with existing industry. A confidentiality request must be handled with the greatest respect. A break in confidence can result in rumors or worse, articles in the local newspaper or nightly news. The company executive team has an internal process to work through and it usually takes time.
The basic goal of a BEP is to begin building a relationship with existing industry executives. As the relationship grows you will be able to gain valuable economic trend data and primary intelligence. In addition, as you interact more with your local company executives you will be able to bring to their attention programs and resources they may not be aware of. Only through this type of effort can you build a successful program. With every communication to an existing industry executive ask yourself am I adding value to their operation?
An economic development professional has two main organizations and two service providers to help build a viable business expansion program. The list of associations is not by any means comprehensive, many state economic development organizations have active programs.
Business Retention & Expansion International (BREI)
P.O. Box 3212
Bismarck, ND 58502-1852
International Economic Development Council (IEDC)
734 15th Street NW, Suite 900
Washington, DC 20005
Blane, Canada Ltd.
1506 Cadet Ct., Suite 100
Wheaton, IL 60189-7380
11 East Fourth Street
Erie, PA 16507-1439
University of Minnesota Extension Service