The Home Field Advantage

Advantage

Here’s the Scenario for Economic Development Strategy

After a six-month national search, your firm has developed a short list of three highly competitive sites for your client’s new manufacturing facility. You’ve had helicopter tours of Greenfield sites and met with local government and economic development officials. You’ve gathered information on available workforce, historic weather patterns and school systems. You’ve been placed on the ‘rubber chicken’ circuit, treated to local cuisine as part of each community’s efforts to wine, dine and attract your client.

Each site meets the basic criteria for your client, a major multi-national food products company. While incentives for each vary, the differences are offset by the unique attributes that each community offers, making the situation basically a toss-up. So, which location do you recommend?

Before you answer, here’s one more question FutureOn.

Have you considered how the community works for its business retention?
If you’re wondering about the relevance of this question to an attraction project, here’s the same question expressed differently. Are you going to entrust your client to a community that places a long term value on its business base – or one that’s constantly looking for the next big win? After all, a site consultant’s reputation rests on how well the recommended community works for the client in the long run, not how good it looks on paper when the location is announced.

Business Development Strategy – Playing at Home

Sports teams know the importance of the home field advantage, especially at playoff times. Playing in familiar confines in front of a friendly, supportive crowd can be the difference between a win and a loss – and even a championship season.

The home field advantage is not limited to sports. It is relevant to the site selection process, especially in a competitive global economy where every advantage, large or small, is important. How a community treats the businesses already located there could be a harbinger of things to come for your client. When a location is finally selected and the decision announced local government and economic development leaders will be your client’s best friend during these exciting early days of the relationship. Their eager-to-please attitude reflects your client’s status as the new kid in town.

Now, let’s fast forward three years. What happens when the excitement dies down? When there’s a bigger, newer kid in town? Or when global conditions present unforeseen challenges for your client? Will local government and economic development leaders be as supportive as they once were? Or, have they focused their energies on attraction prospects, virtually ignoring the companies already in town?

These are questions relevant to the site selection process. These are questions that impact the long-term satisfaction of your client with the location that you ultimately recommend.

Rodney Dangerfield and Economic Development

If you, as a site selector or corporate real estate professional, haven’t considered the ‘retention factor,’ don’t be surprised. The quiet, behind-the-scenes work to retain and grow an existing company seldom generates the headlines or top story status that an attraction prospect does. It’s nitty-gritty, in-the-trenches economic development work, usually not very visible, appreciated or valued – but entirely necessary.

For just these reasons, Randy Welker, the business retention manager for the Greater Cincinnati Chamber of Commerce, characterizes business retention as the ‘Rodney Dangerfield’ of economic development when compared to other economic development activities.

While colorful, the description has more than the ring of truth to it. In fact, when compared to business attraction and incubation efforts, retention is often overlooked in many communities. According to research conducted by the International Economic Development Council (IEDC), economic development professionals claim to focus primarily on business retention in their daily activities. Yet, other studies of private sector firms reveal that local companies perceive recruitment – not retention – as the primary function of local economic development groups.

Business Retention and Business Development in the Eyes of Expert

As Phil Phillips, Manager of Business Retention and Expansion for the Greater Omaha Chamber of Commerce puts it “Retention is priority #1 in any economic development organization’s mission statement, but often slips to #2 in their work plan and virtually disappears in day to day agency activities. This is a classic case of the ‘urgent’ forcing out the ‘important’. We have all had site selectors demand reams of information from us on nearly impossible timetables. What economic developer has ever had an existing business call to demand the developer come out to do an existing business survey IMMEDIATELY?”

Given disconnect between local development groups and their customers, it’s not surprising that some site selectors may shortchange the retention factor. Like Dangerfield’s signature complaint, retention doesn’t get any respect – and it may be undervalued as a competitive factor in the site selection process.

The Signs of Business Retention Supportive Community

So, how can you determine if a community is serious about the business of business retention? One indicator is the status of the retention program. Retention should not be viewed as a short-term, one-time, feel-good blitz. It should be a formal, ongoing program that is an integral part of the overall economic development strategy. It should be aggressively marketed and have a recognizable brand name such as The Team Pennsylvania Business Calling Program in the Keystone State; DC Connects in Washington D.C. and Business First! in Dayton and Montgomery County OH.

Another indicator is the type of outreach with the customer – i.e., the CEO or business owner in the community’s key industry clusters. While outreach often takes the form of phone, mail or fax surveys, programs that emphasize face-to-face dialogue with business owners take retention to a higher level. These meetings provide an opportunity for relationship building that a phone, fax or mail survey cannot provide. It permits an in-depth discussion of the challenges and opportunities facing the firm, especially if the owner is interested in available programs and resources.

Causes of Failure of Business Retention Plan

Outreach is virtually meaningless unless the community has assembled a cohesive team of service providers who are ready to respond to requests for assistance. One of the biggest failures of existing retention programs is the inability of local economic development groups to work together on behalf of the customer – whether it’s retention or recruitment. One site selector notes that he can determine the level of cooperation among local government and economic development groups within 10 minutes of arriving in a community.

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