By Bill R. Shelton, CEcD
Today most communities are stepping up their efforts to retain and expand businesses in their local economy. Business retention and expansion has become key to economic development strategies with the goal of building and keeping successful businesses that will have a sustainable economic impact on the community. There are many variables on why businesses close or relocate. But there are two major reasons:
- External conditions outside of the business such as economic downturn
- Internal circumstances such as management ability, workforce complications, etc.
The first is one that the community cannot control locally, and the second is one where the community can develop well-targeted policies and programs. Whether the reasons are external or internal the community should be informed and strategic in their response.
Here are four conditions where the actions or inactions of the city can contribute to the closing or relocation of businesses.
#1 There is not a shared vision for the community.
Businesses stay and succeed in communities where there is visionary thinking about improvements to the city for citizens to live, work and prosper. A shared vision allows the community to set its own values and a course for the future that gives local businesses the confidence and predictability to invest both capital and human resources in the community. Without a shared vision, businesses may be reluctant to take the risks associated with continued investment.
#2 A viable business retention and expansion program does not exist.
In the past, most community economic development programs were based on attracting businesses which garnered more publicity and public relations than retaining existing businesses. The commitment to support a viable business retention and expansion program is needed to focus the community’s attention on the needs and values of local businesses.
#3 Lack of a workforce development program.
Gaps in the local workforce are challenges for communities of all sizes and major problems for small and rural communities. The gaps can be skills or training gaps, or a shortage of workers to fill local businesses’ operational needs. Going unresolved the gaps will often lead to the business relocating.
The workforce development approach in many communities is an economic development strategy to enhance the community’s economic goals. Local business involvement is key to long-term reform of the workforce system.
#4 The city doesn’t contact businesses prior to lease expiration.
Analysis shows that businesses, particularly in the retail and service sectors, close or relocate when their lease expires. Proactive communities keep a list of businesses with their lease expiration date, and prior to that date visit with the business owner to offer assistance in keeping the operation in the community.
Keeping businesses in a community today is more than just addressing their individual operational issues, but it takes a more holistic approach of sustained and incremental improvements of the total community.
