Business Retention & Expansion:

A number of studies have documented the net new job growth is attributable to existing business. Whether these studies looked at national or community data all concluded that job growth from existing businesses far exceeds job growth that was the result of industry attraction.

Existing businesses invest in the Community:

Aside from teh fact that existing businesses create new jobs, there are a number of other reasons that are often cited ti document the value of existing businesses.

• Existing businesses that make investments in facilities, create jobs, and pay taxes are at the heart of strong local economies.
• Existing businesses already have a stake in the community and are demonstrably contributing to the economic vitality and social fabric of the community.
• Business owners know that it is easier and less expensive to retain existing customers.
• The same thing is true for communities that focus on retaining existing businesses.
• Keeping a business in your community is less costly than attracting new industry.
• Industry attraction efforts often include significant tax incentives and substantial infrastructure development costs.
• Existing businesses may seek some of these incentives, but more often than not, the fiscal cost per job created is less for an existing business than for a new business.
• Keeping what you have is good for the development and growth of smaller firms.
• Businesses that export goods and services generate the revenue that funds smaller, local service businesses.
• Both types of firms are necessary and the service firms may not survive if the exporting firms close or move away.
• Every economy loses about 10% of its jobs annually due to retirements, business closing, product life cycles, etc.
• Existing businesses are best positioned locally to replace those jobs.

Existing businesses are ambassadors for industry recruitment:

Building on existing community business strengths has proven to be a successful industry recruitment strategy.

• Finding and fixing problems for existing businesses may identify businesses for targeted recruitment efforts.
• Satisfied existing businesses can be a community's best ambassadors when recruiting new firms to the area as well as serving as source of leads when seeking new firms to recruit.
• If an existing business is a thriving and growing concern, or is viewed as having growth potential, it may be the target of recruitment activities by another community. Thus, it is in the best interest of local communities to make every effort to retain them.

Conclusion:

There can be little doubt that existing businesses are important to the local community and its economy. The challenge for the economic development professionals is to effectively communicate to the local community the value of these businesses to the community and its economy.

Traditional Approach

The traditional approach is designed to bring structure to what is presently an informal and ustructured effort that focused on improving public relations between the community and its local firms. General characteristics of the traditional approach have been described as follows:

• The program is led by a coordinator who works with a leadership team of 10 to 25 businesses and government leaders as well as concerned citizens who meet over a period of a year and provdie guidance for all phases of the program.
• Between 50 and 100 local businesses are selected for visitation.
• Community volunteers conduct face-to-face interviews using a common survey instrument.
• A survey program is conducted every three to five years.
• A portion of the survey is desigend to identify the immediate, urgent concerns of the interviewed businesses. These issures are reviewed immediately by members of the program leadership team, action is taken to provide a rapid response to the issue.
• Typically, the program uses outside assistance to obtain a survey, train local volunteers to conduct business visits, tabulate and interpret survey results, and suggest long-term actions to strengthen the local economy. The leadership team chooses whihc projects it will implement, and develops action plans to immplement the projects.

"Communities are known for the companies they keep."