Why Trying to Get New Business to Come Doesn't Work

Posted on Tuesday July 24, 2018 at 03:21PM

When I read ads from small communities looking for an economic developer, I often notice that part of the job description involves some aspect of marketing the community so that people will bring their businesses from out of town to come and and set up shop in their town. This strikes me on a couple of levels.

One, it clearly demonstrates that the committee that is hiring does not realize that no amount of marketing your community to business is going to result in a benefit to your community. Smokestack chasing, the term for the time, effort and money spent courting these businesses is well researched and it does not work. Experience shows us that these efforts cost the community, and seldom result in any long-term benefit. Yet, it is still a dominant theme in community economic development.

 In order  for a business to relocate to your community, they need more than a nice place to live and the great quality of life we offer. They need to have the location make sense in business terms, meaning they need to have the land, the workers, and a way to make money. Tax incentives might be nice as a temporary measure, but if the other factors don't come into play, meaning that if business cannot make money, they are not coming, no matter what incentive you offer.In fact, a recent survey indicates tax incentives don't really matter much at all to determine whether or not an business sets up in your community, and has less to do with whether or not they stay, and contribute to the revenue.

Two, the economic development officer they hire for this work is bound for failure at the outset. Community economic development plans are not one size fits all, and hiring an EDO with a goal to market the community sets them up for failure with a capital F. If a new business does respond, and it causes an existing business to close, there is no community gain. There is a lot more to community economic development then going courting. There is a lots of training available these days, much of it online.

When a community posts an ad like this, it tells me a lot more needs to happen in that community before they hire an economic development officer. This frustrates me, because I can see the community is in for a bit of a process, and yet, I hesitate to reach out, because I am pretty certain I'll come off as a know it all, or a bit of an ass, and the community will still want what it wants...someone to fix this.

If you want real development, it starts at the roots of the community and blossoms out. Achieving this means conversations with the people that live there, working with existing businesses to help them expand and grow, and keeping current relevant information on your website and promo so that people who are looking for you can find you. No outside business is coming in to save you; they are coming to make money, and if they don't see how to do that, they are not coming at all.

Author: Solomon Matthewson Consulting


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