Business Retention Is Best Community Option

Last Updated: September 21, 2020

Typically communities don't work hard enough at business retention or cultivating entrepreneurs. Too much effort is devoted to convincing companies to relocate to your city or town, when actually your best prospects for adding jobs often already are located in your town. If you can improve business perception of your location and address specific needs of existing local enterprises or branches, the community may benefit from unexpected added jobs.

You need more than a one-time campaign to keep the businesses you have; you need a periodic check-up. This process sometimes not only will identify a business that might leave, down-size, or expand elsewhere, but also it might give you clues about how to provide incentives for business expansion in your own city.

One time one of these little chats tipped me off to another business that might be thinking of leaving. So not all of the informational tidbits pertain to the plush office where you're sitting.

Your business retention program might identify potential partnering opportunities in your community, which in turn would solidify each company's reason for being in your location and not in some other city that gives them a pile of cash or tax breaks.

I can't tell you enough how important a business retention contact program is to your community. Of course you can't prevent all relocations because it's a global economy out there. It's driven by the financial bottom line and shareholder return far too much.

But you can do your best at giving a human contact that might provide a social bottom line for a business, and you can give a listening ear that might pick up problems early enough for you to do something about them.

So get organized. Decide whether there will be any consultants involved. Figure out if you will do interviews, and if so, who the team will be. Write an interview script or questionnaire. Implement, implement, implement.

A sophisticated questionnaire and professional interviewer isn't nearly as important as a sympathetic and alert ear. So regardless of your budget, let's get this program up and running.

If you're in an established economic development organization and tempted to cut back on business retention efforts because business attraction or even retail attraction is more exciting, we have one word of advice: Don't.

And if the worst news comes, that the business will probably be leaving town, reorganizing elsewhere, bought out, merged, bankrupt, or laying off half its workforce, don't you want to start planning your next steps? I would.

Setting Up a Business Retention Program

The first step is to decide whether this work will be performed within the economic development organization and municipal or county government, or whether outside consultants will be needed. And of course a compromise position is that you could use a consultant to set up the program and local people to carry out the program year after year.

Let's be clear on this point: every business needs a personal visit, if they will tolerate it, once a year or even more often if you have reason to doubt that particular business or industry's ability to survive in your environment.

If personal visits are out of the question due to cost and time considerations, at least send a detailed questionnaire and make a follow-up phone call.

There are positives and negatives to having locals making the business retention visits. The positive is that a business executive sees that the mayor (in a smaller city) or whoever is sent takes their personal time for this task. Relationships are built over time.

If you're in a small city and have only a few industries or offices of any size, the relationship-building value of sending the same team year after year can be of great benefit for solving business problems and also integrating the company and its employees into the community successfully.

If you're small enough and have the luxury, I'd recommend sending the mayor and executive director of the chamber of commerce to each employer of consequence.

The disadvantage of sending a local team will be that in smaller cities, the business may not be as candid as they might be if they felt that the interviewers were impartial. One way to mitigate that difficulty might be to use local college students as interns. Students from out-of-town will hear honest comments.

On the other hand, executives may think students too unsophisticated to understand complex business problems, and therefore may not tell the full or real story.

In a large city, you should be able to find business retention interviewers who are in a dissimilar industry and who have no knowledge of the particular firm or its executives.

If possible, send a team of two to three people to interview each firm. What one person misses, another will "hear."

If you wish, ask permission to tape record the meeting, but unless you do a video recording, you're still going to miss the nonverbal communication. So thus it's wise to have more than one human being in the room if possible. This gives the business being interviewed the opportunity to build rapport with someone else if one particular interviewer makes a wrong move.

Of course, these interviews should occur during advance appointments, and the purpose and duration of the business retention meeting should be well explained.

Learn who you will be meeting with, and their position in the company. Try for the highest executive in your location.

If repeated attempts to schedule that person fall flat, you may have to settle for a lesser luminary, but don't expect the same level of business intelligence about the company's true intentions.

During the 2020 pandemic, we heard that a couple of communities were unable to schedule their interviews due to executives working at home or unwilling to risk inviting an outsider into the facility. In the event of something similar in the future, assess how soon the interviews likely could be scheduled. If months drag on, it may be worthwhile to do a video interview to gain some intelligence, but then schedule a regular in-person visit shortly after conditions permit.

Questions for a Business Retention Visit

The interviews should be scripted carefully. In other words, make your list of business retention visit questions, and write follow-up questions should you receive particular responses that are either cause for concern, or that indicate a possible opening for expansion in your location.

The best business retention questions are:

• How satisfied are you with Hooterville? (Substitute your place name!)

• What problems are you having here?

• How can we serve you?

• What financial incentives or deregulation would make your life here easier? (Heaven forbid), do you need tax increment financing?

• What are some creative ways we can make you eager to stay and expand here?

• How can we increase quality of life for your executives and your employees?

• Are you able to find employees with the skills, education, and attitudes that you need?

• Which trends relevant to your industry will determine your future business environment?  How can you influence or respond to those trends?  Is there anything we can do to help?

Of course, add questions that may be unique to your environment. You know, include inquiries about the volcano, strike, national energy standards, or whatever is pertinent. Put the questions in your own words.

If these will be oral, face-to-face interviews, make sure the questions feel comfortable rolling off the tongue. If your wording is stiff and more formal than your normal speech pattern, you'll feel awkward during the entire business retention visit.

Mailed Business Questionnaires

Some of you will find that you don't have enough suitable volunteers to make personal visits. Or you will want to limit your face-to-face interviews to your top five employers and then send other businesses a written questionnaire.

Often you can safely drop the businesses that are least likely to add employees, if you have to make choices. These would include home-based businesses, sole proprietor professionals, and tiny boutiques and artisans where the business owner is the prime mover.

But even in these cases, if you can afford it, send the questionnaire.

Now that I've cut your mailing list, and therefore your mailing expenses and complexity, a few of you will say you want to send the questionnaire by e-mail.

I'd prefer the nicer touch of a real piece of paper with a stamp on the envelope, but if you are certain your e-mail will go through, and your budget is truly limited, be my guest.

However, if you use the e-mail option, the follow-up phone call is even more essential than when you send the paper questionnaire.

On-line survey tools, such as Survey Monkey, could substitute for a personal interview every six months, or could extend the interval between visits to 18 months, unless you see a red warning flag.

For the paper questionnaire, prepare a good cover letter explaining the purpose of the business retention project. Center the reasoning on business, not government. What's in it for them? Then ask open-ended questions.

An open-ended question means it's not easily answered yes or no. Give plenty of space for response, subtly indicating that detail is desirable.

Incidentally, an important occasion for using the mailed paper questionnaire will arise if you ever want to give businesses anonymity. Usually in a business retention strategy, you want to hear specific responses, but if you had a community crisis, for instance, you might want to solicit opinions from the business community in a way that does not tie the response to a particular business.

Follow-Up in a Business Satisfaction Survey

If you send a paper or online questionnaire, follow up with a phone call either to remind and urge the firm to send a response, or to thank them for their participation.

The follow-up call should be carefully scripted also, to obtain additional information where needed. Often both the interview and questionnaire responses will include questions back to the community.

If you have obtained a face-to-face interview, send a follow-up letter or phone call thanking the business profusely for their time and inviting them to contact you freely throughout the year. Notice that you should have set up the expectation that you'll be calling again next year to set up an appointment.

Make sure the questions to the community are answered fully and promptly. If you need further investigation, such as perhaps needing to see how you could apply a state-provided incentive, provide regular progress updates.

Feel free to ask your state's economic development agency to help you with any research on legal, financial incentive, taxation, or regulatory matters. They should bend over backwards to help you, but if they are harried, remember that the squeaky wheel gets the grease.

FOR FURTHER READING:

Community Attachment

Business Attraction

Location Quotient

Higher Education and Economic Development

1. Making and Keeping a Good Community
 >
2. Community Challenges, Common Topics & Concepts
 >
3. Economic Development > Business Retention for Communities

ShareFacebookXPinterestRedditWhatsApp