As an economic developer you have many goals and challenges. But some universal goals are
- Business Expansion
- Business Retention
- Business Creation
- Jobs, Jobs, Jobs
- Tax Revenues
Historically, many economic developers have focused on large company attraction to meet these goals but in reality, these “elephant hunts” can be counter-productive , sapping resources that could otherwise be deployed to achieve higher (local) impact. Arguably, nurturing and growing your small business community can provide significantly more “bang for the buck”, however, as a group, small businesses are frequently overlooked in the broader economic development operation. Let me provide some facts and figures on the subject:
Why Small Businesses?
- 99.7% of all employer firms
- Employ 50%+ private sector employees
- Represent 44% of private payroll
- Create > 40% non farm GDP
- Account for 68% net new jobs
- Typically where the growth occurs
- Typically more seasoned, stable and loyal
- Can grow in rapid but controlled manner
So exactly what constitutes a small business? Perhaps the most cited definition would be those set forth by the U.S. Small Business Administration which are:
- Manufacturers 500 or less employees
- Wholesale/Distribution 100 or less employees
- Retail/Service $6.5 mm or less in sales
- General/Heavy Construction $31mm sales
- Special Trades Construction $13mm Sales
- Ag Industry 0.75mm Sales
More common definitions are
- Small Businesses are 100 or less employees
- Micro Businesses are 1 – 5 Employees
To be efficient in your economic development activities, you cannot be all things to all businesses and you need to focus on specific subsets to have the most impact. A good (general) observation and definition of these high-impact businesses would be established businesses with 5 – 100 employees that are currently growing or have significant potential for growth. I/we suggest that every economic developer needs to know who these businesses are, what opportunities they might be pursuing, what barriers they may be facing in achieving their growth goals and develop strategies and tactics that can help these businesses achieve their potential.
So, what can you do to help nurture these businesses? Here are some thoughts to consider:
- Conduct site visit/surveys to determine needs and avenues of assistance
- Provide connections to governmental (federal, state and local) programs that might prove valuable to them.
- Provide a point or venue of connection for peer support.
- Coordinate with business professionals and support services to offer high impact training and consultancy services.
- And of course, many more tools and tactics can be developed and delivered as needs analyses may indicate.