Small businesses have always played a vital role in local and regional economies.
But in recent years, economic development experts and researchers, including the Kauffman Foundation, have recommended that county and municipal governments pay more attention, time and money to help them. They see the success of small businesses as an engine for long-term economic growth and job creation.
The end effect: Many municipalities have increased the incentives that they’re offering small companies, including tax breaks, help with infrastructure costs and training and education partnerships.
Here’s a primer on what resources are available for small companies with strong local ties.
Don’t go it alone
Resist the urge to plunge yourself into the thicket of zoning, health, building and other departments, commissions and authorities that business owners must deal with to get licenses, fees, permits and approvals to open and operate.
Instead, start with the presumption that someone at City Hall can help your small business, says Joanne Foust, owner of Municipal Development Group, LLC, a New Prague, Minn., consulting firm that works with economic development agencies in that state.
Start with an insider’s picture. How would, say, a city planner or the head of the local economic development department define success in working with local businesses? Then, says Foust, adjust your tactics to ask for what they want to give.
A typical easy win is asking for a coach in navigating the process of complying with local rules. “Everyone wants to remove red tape and move through processes efficiently,” says Foust.
Be specific, she adds. If you’re opening a restaurant, ask for introductions to the staffers who are most familiar with the array of regulations you’ll have to know. If you are opening a service business, you might want to concentrate on broadband access, finding out if there are little-known connections that can keep your office in the digital fast lane.
Many different resources
Most counties and many municipalities have economic development councils or departments. Scrutinize their small business resources and programs to see how your needs align with what they offer – and with what they think builds their reputations.
Many municipalities affiliate with national programs that aim to cross-pollinate economic development ideas. It’s smart to see how the national programs build the case for investing in small businesses so you can emulate their language and logic. Small business resources and programs to research include:
- Main Street America
- Small Business Nation, which is part of the U.S. Chamber of Commerce
- The International Downtown Association, whose members are local downtown development districts
Some states have small business resources and programs to encourage municipalities to focus on business retention, such as Ohio’s “Retention First” initiative, which drove job development in rural areas.
In some areas, state and community colleges rally economic development ideas and projects. The University of Minnesota Extension, for instance, runs a Business Retention & Expansion program that outlines case studies and reports. Explore such programs for ideas for business growth and for ways to craft win-win pitches to local program managers.
Finally, every state has an economic development agency whose mission is to translate the state’s growth goals to local efforts. Find your agency through the Small Business Administration and drill down to programs that have been effective in areas like yours.
Make your case
When you score an interview, have some compelling statistics ready.
First, don’t apologize for being a startup or small company. You have greater economic impact than you might think.
A study by the Federal Reserve Bank of Kansas City found that it’s actually counterproductive to throw incentives at big companies to try to persuade them to open in one location compared to another. In fact, reinvesting in existing companies yields more jobs and sparks more economic growth.
The U.S. Census Bureau has found that companies with 20 or fewer employees generate 79.5% of net job creation – that is, the number of jobs created minus the number of jobs lost. Companies with 20 to 499 employees accounted for 13.2% of net job creation, and companies with more than 500 employees, 7.3%. This is why local government will want to offer small business resources.
Small companies tend to pay less and provide thinner benefits, but they also offer the chance for employees to cross-train, learn entrepreneurial skills and work flexible hours. If you offer these hard-to-measure opportunities, expect to explain to program directors how your workplace culture is more than meets the eye.
Be prepared with short stories and case studies that illustrate:
- How your company invests in the local economy by buying from local suppliers
- Product and service innovations that position your company – and by extension, your community – as leaders
- Partnerships and collaborations with other local companies that catalyze revenue and job growth
Think about what you most want. One way to frame your request is to think in terms of time versus money. What would be the most useful help for your small business? For instance, is it more useful to ask for help in winning a grant to renovate your historic storefront, or to ask for a streamlined zoning and building inspection process that will speed up the renovation process by months?
Seeking out the right local connections is a journey. By building relationships with other business owners, suppliers and vendors along the way, Foust says, you’re not only strengthening your business but also providing networking opportunities for yourself and others.
For more tips and other small business articles, check out Nationwide's Small Business Resource section.