Retention and Expansion: A Community-Based Model

Posted on Sunday January 02, 2000

by Harold Flaming (2000 Issue)

 
JOB CREATION and economic development are hey policy objectives at all levels of government. Every community, no matter its size, is interested in supporting
initiatives to improve the local economy. The challenge faced by communities is to identify the most effective strategies and develop the resources to implement
these initiatives. Business attraction and recruitment, community promotion, support for small business development, human resource development, and business
retention and expansion visitation activities are but a few of these initiatives.

The purpose of this article is to substantiate the case for a greater focus on business retention and expansion as an economic development strategy and introduce
a proven community-based, business retention expansion model utilizing community volunteers.

CHANGING TRENDS
Until the 1980s, economic development professionals (EDPs) focused most of their activities on the attraction and recruitment of new business. This trend, however,
is changing.

Increased global competition and consolidations resulting from mergers and acquisitions and the introduction of new technologies have altered the pattern of
business development. In view of these and other changes within the economy, EDPs are finding the need to diversify the tools they employ to achieve the goal of
economic development.

Recent studies (Morse, .199-0, p. 18), and observations from local EDPs reveal that 40% to 90% of new jobs created come from existing businesses.

A 1998 study of four U.S. industrial retention and expansion programs identified substantial positive impacts from such programs: including businesses and jobs
retained, local workers trained and existing businesses assisted in their expansion plans (Mayer, 1998).

Eric P. Canada, a marketing and economic development consultant indicated that 70% of all business comes from repeat clients, 15 % from referrals, and 15% from
new business development (CUED, 1997).

G. Borovolis (University of Waterloo) and G. Morse (NERCRD) both make a strong case for a greater focus on existing business retention and expansion strategies
as a prime means of improving local economies.

Communities across Canada and the U.S. are spending more resources on existing business development and implementing various forms of business retention
and expansion programs. In view of the mounting evidence, tools and resources need to be developed to facilitate effective retention and expansion programs at the
community level.

The basis of a good business retention and expansion program is communication with business owners, the identification oaf and immediate response to urgent
business issues, gaining insights related to company and industry trends, and supporting business development opportunities.

Information gained from surveys can be utilized to develop short and long term action plans to support business development in the community.

An effective retention and expansion program will retain jobs and tax revenues, foster the growth and retention of existing businesses, enhance a community''s
reputation as a good place in which to do business, and complement a community''s attraction and recruitment activities.

The concept of conducting business visits, as a means of supporting business development is not new in Canada. EDPs have implemented informal "business call
programs" for a number of years. These initiatives provided municipal officials with the opportunity to meet owners of major firms within the community.

A number of communities have developed a more structured survey driven retention and expansion program. As examples, the cities of Gloucester and Saskatoon
implement the Business Success and Saskatoon Tapping Industrial Programs, respectively. B.C.Hydro and the Ontario BR+E Partnership, developed and are
implementing, community-based, volunteer-driven business retention and expansion programs to support local business.

In the U. S., Business Retention and Expansion International (BREI) and the National Council for Urban Economic Development (CUED) provide training in two
different approaches to business retention and expansion programs.

BREI promotes a proven community-based, volunteer-driven business retention and expansion model utilizing local community volunteers (NECRD, 1-957).
The CUED training program focuses on economic development professionals and consultants to conduct the business interviews and implement the retention and
expansion project.

COMMUNITY-BASED BR+E MODEL

Rural and small town communities are interested in stimulating their economies but often lack the staff and financial resources to effectively achieve this objective.
A need was identified to develop a community economic development tool, which could be implemented with limited resources at the community level.

This decision lead to the development and piloting of a structured, volunteer-driven Business Retention and Expansion (BR+E) initiative in a number of rural Ontario
communities.

The intent was to design and create an economic development tool that could be utilized by communities of various sizes.

The Ontario Ministry of Agriculture, Food and Rural Affairs facilitated the development of this pilot BR+E initiative in 1997 and 1998. Representatives from pilot
communities in rural Ontario (see map) attended a 2 day BR+E training session.

Community representatives, ministry and other agency staff, received training in the BREI model. Business Retention and Expansion International (BREI) Master
Consultants, Tom Ilvento of the University of Delaware and Kathy Tweeten of North Dakota State University provided the training.

The Business Retention and Expansion initiative is a communitybased, volunteer-driven economic development tool to encourage growth and stability of local
business. BR+E promotes job growth and economic prosperity in rural Ontario by helping communities identify both opportunities for expansion and the barriers to
survival facing local businesses.

BR+E PARTNERSHIP
A public private sector partnership was established to fund and provide direction fort the pilot initiative. These partners clearly saw the value of such an economic
development tool.

Bell Canada

Ontario Power Generation

Industry Canada FedNor, Human Resources Development Canada

Ministries of Environment; Training Colleges and Universities; Northern Development and Mines; Agriculture, Food and Rural Affairs

Economic Developers Council of Ontario, and Ontario Association of Community Development Corporations.

Agriculture and Agri-Food Canada became a funding partner in the initiative, through the Canadian Rural Partnership.

UNIQUE FEATURES

Community representatives on the Leadership Team and Task Force

Volunteers trained to conduct business visitations

Structured survey

Training materials for BR+E implementation

Immediate follow-up to urgent business issues

Data analysis and development of strategic action plans

SHORT TERM OBJECTIVES

Demonstrate and provide community-support for local business;

Solve immediate individual business concerns.

LONG TERM OBJECTIVES

Increase the competitiveness of local businesses;

Establish and implement a strategic action plan for economic development;

Increase business development and job creation/retention;

Increase the capacity for local economic development.

BR+E IN PRACTICE
Community leaders and volunteers are trained in the implementation of BR+E. The BR+E model incorporates four distinct stages:
 BR+E Planning & Business Visits

Immediate Follow-up

Data Analysis & Recommendations

Public Meeting and Implementation.

A community Leadership Team introduces BR+E to a community through information sessions and trains local Volunteer Visitors to conduct a confidential survey of
local businesses. Using a pre-tested survey, the Volunteer Visitors interview business owners or managers to pinpoint business needs, concerns and development
opportunities. Volunteer Visitors are trained specifically to gather information from local firms and pass the surveys on to the Leadership Team.

A local Task Force composed of local community leaders, representatives of the business community, labour, education, utilities, and EDPs reviews the survey
results, and responds to the immediate needs and concerns identified by the local business people. A more extensive analysis of the survey data by the Task Force,
summarizing the key trends, needs and issues facing the business community, is used to develop a community-based strategic action plan to improve the local
business climate.

The Leadership Team presents the survey findings and action plan to the community at a public meeting and implementation teams are established to put the action
plan into motion.

Resource Network of economic and business development professionals and key service providers from both inside and outside the community is brought together
to help implement the action plans. This Network is key to implementing action plans as well as responding to the urgent business needs. The key to a successful
BR+E initiative is two-fold:

ensuring immediate follow up to identified urgent issues

maintaining momentum in the community to complete the action plan

PILOT PROJECT EVALUATION

The Randolph Group and Baxter & Associates, were retained to evaluate the pilot BR+E project, make recommendations regarding any needed improvements and
identify pilot project results (Randolph & Baxter, 1999).

The authors of the report describe the Ontario BR+E model as "leading to a better understanding of local business issues, creating business alliances and
cooperation for action, providing a collective response system to improve service, developing innovative solutions, and enhancing community empowerment."

Approximately 700 businesses participated in the BR+E pilot projects. Information collected is extremely useful for identifying key business needs, issues and
development opportunities within the community economy. The following is a sample of some of the business survey responses.

Businesses cited the following barriers to expansion plans:

Financing

Local by-laws

Land availability

Businesses identified the following disadvantages for doing business in their area:

Municipal taxes

Size of local markets

Skilled labour availability

Local permit process

Overall, the pilot communities saw the BR+E initiative as being very successful. Some communities reported examples of business expansions, job creation and the
retention of existing business.

All of the communities identified the creation of a pro-business attitude, greater communication between business, and government and the development and
implementation of specific action plans to support business development within the community.

CONTRIBUTING FACTORS
The following factors can contribute to the completion of successful projects:

Community readiness and capacity for economic development

An organization able to provide project leadership

Commitment to economic development and project completion

Strong community and business leadership

Ability to undertake community projects

Dedicated volunteer base

Open-minded attitude
 financial and dedicated staff resources

Dedicated project coordinator

An ability to coordinate and facilitate the entire process

PROJECT RECOGNITION
BREI recognized the City of Brockville and the Township of Beckwtih for their outstanding work in the completion of BR+E projects. The BR+E-Partnership also was
recognized by BREI for its exemplar work in developing a provincial initiative.

THE FUTURE OFF-BR+E

Based on recommendations from the evaluation, BR+E is being refined and made available to community economic development organizations, EDPs, and agencies
involved in providing community economic development services. This will improve BR+E as an economic development tool and make it more accessible to
communities.

The survey is being modified and enhanced, a database is being developed and put onto a CD ROM so communities are able to enter and analyze their own data,
training materials are being prepared and regional training sessions planned for early in 2000.

Since the development of BR+E in Ontario, economic development agencies in Newfoundland and New Brunswick have shown interest in it. It is anticipated that
similar BR+E programs will be developed in these provinces.

CONCLUSION
While business attraction and recruitment activities will no doubt continue to play a role in local economic development, community involvement in economic
development, and the support of existing businesses are being recognized as keys to successful local economic development.

BR+E provides a cost-effective, structured and proven template for aiding in the improvement of local economies. EDPs and those involved in community economic
development are encouraged to investigate this economic development tool.

References:

Borovolis, G., Business Retention: A Local Development Perspective. Economic Development Bulletin #2, Economic Development Program, University of Water- loo,
Waterloo, 1996

Canada, E., and Rendleman, T., Locked in the Twilight Zone: Business Retention Fails the Strategic Value Test. Economic Development Review, Summer 1996

Morse, G., The Retention and Expansion of Existing Businesses: Theory and Practice in Business Visitation Programs. Iowa University Press, Ames, Iowa.1990

Mayer, N.S., Saving and Creating Good Jobs: A Study of Industrial Retention and Expansion Programs. Center for Community Change, Washington. D.C. 1998

National Council for Urban Economic Development. Business Retention and Ex- pansion: A Training Course for Economic Development Professionals. Washington,
D.C. 1997

Northeast Regional Center for Rural Development. Implementing Local Business Retention and Expansion Visitation Programs: A Community-based Program to
Encourage the Growth of Local Business. University Park, PA.1997

Randolph Group & Baxter and Associates, Evaluation of OMAFRA''S Business Retention and Expansion Program: Final Report. 1999

Santarossa, J., Successful Business Visitation Programs. The Economic and Technology Development Journal of Canada. Toronto. 1996

ABOUT THE AUTHOR

HAROLD FLAMING is the CED Program Lead with the Ontario Ministry of Agriculture, Food and Rural Affairs. He is a certified BREI consultant and board member of
Business Retention and Expansion International (BREI) and has been instrumental in facilitating the development of the BR+E-initiative in Ontario. For information
about the Ontario BR+E initiative contact the Ontario. Ministry of Agriculture, Food and Rural Affairs at (519) 826-3278.
  

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