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Sunday, 04 August 2013 22:00

‘Hunting’ for business?

Written by  Birgit Klohs
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Birgit Klohs Birgit Klohs

One of the unfortunate results of the jobs and incentives race of the past decade has been the increased focus on business attraction as a magic bullet for economic growth. If there is one thing I have learned in the past 25 years as an economic development professional, it is that there are no magic bullets for economic growth.

Business attraction, or “hunting” as some incorrectly call it, is an important component of economic development, but it is only one part of a comprehensive economic development strategy — a strategy that starts with the retention and expansion of existing businesses and then spreads outward. Without a strong local economic base on which to grow, attracting new companies and jobs to a community is nearly impossible.

However, it is that balanced approach to economic growth that is too often forgotten or misunderstood, resulting in fractured initiatives that create competition, not collaboration. This is where the fracture starts. Assisting existing companies and attracting new businesses to West Michigan is not an “either/or” proposition. For our region to continue to grow and expand, it must be a “both/and” strategy.

This may sound like arguing motherhood and apple pie, but for some reason, the discussion continues to be framed as an either/or choice. As if the only options for economic growth lie either in turning our backs to the world and focusing only on the existing business community, or abandoning the local community, picking up our incentive arms and going hunting for the next new business interested in locating in West Michigan.

Neither option is effective, nor will either spur long-term, sustainable economic growth.

In many ways, a comprehensive economic development strategy of retention, expansion, and attraction is very similar to the business environment. Successful businesses are regularly tasked with determining how much of their growth should come from new customers versus existing customers. Unfortunately, when that same business process is applied to regional economic development, the parallels are often lost.

Economist David Birch’s landmark study The Job Generation Process found that up to 80 percent of job growth in any community is generated by existing businesses already operating in the region.

This holds true in West Michigan as well. Over the past four years, The Right Place has completed 51 business development projects, totaling 8,821 new and retained jobs.

Seventeen percent of those projects were new businesses coming to West Michigan, totaling 1,166 jobs, while 83 percent involved businesses that were already based in the region.

It is this healthy balance of economic growth that has made West Michigan one of the strongest economic areas in Michigan for both job creation and investment.

While opinions vary on the exact amount, it is largely accepted that there are approximately 300 major business relocation or attraction projects announced annually in the United States. And with over 20,000 economic development agencies pursuing those projects, communities that focus only on business attraction lose more often than they win.

The Right Place is not in the “hunting” business, it is in the economic growth business, and has spent over 28 years developing and implementing on-going, multi-year strategic economic development plans. Each plan was rooted with a balance of business retention and expansion efforts with business attraction initiatives.

The Right Place is dedicated to the long-term economic growth of West Michigan’s economy — period. That dedication starts with a solid business retention and expansion strategy to support our existing businesses in the region. The strongest selling point to any business considering a move to West Michigan is witnessing the continued growth and success of another business already here. That business may be yours. Success begets success.

“Hunting” for new businesses armed with tax and other incentives is not a strategy for economic growth. Ensuring existing businesses in West Michigan have the resources and support they need to grow and then leveraging that growth to attract new jobs and investment to the region is a strategy.

The business community in West Michigan is a key component of our ability to attract the next generation of successful businesses and entrepreneurs to the region. I have always said that economic development is team sport, and you are part of that team. Investments in your business and the jobs you create enable us to market West Michigan as a region of economic growth and vitality.

Together, we will build a region on long-term economic growth that will last decades, not days.

Read 5026 times Last modified on Sunday, 04 August 2013 14:00

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