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IEDC CEcD > Business Retention & Expansion > Flashcards

Business Retention & Expansion Flashcards

1
Q

True or False.
An economic development dollar spent on existing businesses can have a better rate of return than a dollar spent on attracting new business.

A

True.
It’s easier and cheaper to retain an existing company and help it expand than to attract a new one.

70% of all business comes from repeat clients
15% comes from referrals
15% comes from new business development

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2
Q

True or False.

80% of job growth is home grown through existing businesses.

A

True.

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3
Q

True or False.

70% of Foreign Direct Investment originates from a community’s existing investor base.

A

True.

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4
Q

Why are utility companies involved in business retention and expansion efforts?

A

The survival and profitability of utility companies depends on the preservation and growth of the customer base.

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5
Q

What are some results of a successful BRE Program?

A

1) Help businesses become more competitive and maximize their growth potential
2) Remove / Mitigate obstacles to relocating
3) Develop contingency plans to respond to company closings and economic changes
4) Maintain confidentiality and follow IEDC Code of Ethics

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6
Q

What is the intent of a BRE SWOT analysis?

A

Identify strengths, weaknesses, opportunities and threats to:

  • provide a clear picture of community assets important to the community
  • provide a clear picture of community weaknesses to be addressed
  • identify which industries are most successful and why
  • results compared against benchmark of competing communities to determine competitive advantages.
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7
Q

List some of the factors that should be analyzed to determine a community’s internal strengths and weaknesses.

A
  • Labor Force
  • Access to Markets
  • Transportation
  • Education
  • Site Availability
  • Business Climate
  • Utilities
  • Quality of Life
  • Resources available
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8
Q

List some of the factors that should be analyzed to determine a community’s external opportunities and threats.

A
  • Outlook (are industries / clusters growing or declining?)
  • Technology
  • Legal and Regulatory Changes
  • Large Employers
  • Economic Trends
  • Competitors
  • Health of other important industries
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9
Q

In building goals and objectives for a BRE program, what logical considerations can be factored into the process?

A

Be both Realistic and Practical!

1) utilize the results of a SWOT analysis
2) build upon the community strengths to exploit external opportunities
3) utilize existing resources available to achieve goals
4) minimize community weaknesses or reduce their impact
5) include measurable results

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10
Q

BRE surveys / interviews should evaluate the following:

A

1) Impact on the business
2) Effectiveness of assistance to targeted businesses
3) Jobs created / retained
4) Effectiveness of leveraged resources
5) Impact on community

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11
Q

What is the difference b/w Outputs and Outcomes? Which is a more effective measure of the impact of a BRE program?

A

Outputs refer to how many people participated in a program.

Outcomes refer to the results of those people participating int he program.

Outcomes are a much clearer measure of the impact of a program. They provide more information to evaluate & improve a program.

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12
Q

What is the recommended time limit for BRE site visit questionnaires?

A

45 minutes - to 1 hour

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13
Q

What categories of information are typically included on a BRE questionnaire?

A
  • Company Background
  • Business Climate
  • Labor and Training Needs
  • Marketing and Trade
  • Financing Needs
  • Regulatory Issues
  • Barriers to Growth
  • Satisfaction with Public Services / Facilities
  • Past Utilization of and Satisfaction with Local Business Assistance Programs
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14
Q

What follow-up steps should be conducted after the BRE Survey and how soon should they be completed?

A

Immediate (within 2 days of receiving completed surveys)

  • Review surveys for Assistance Requests
  • Red-Flag any At-Risk Firms for Rapid Response

Short-Term (within 2 weeks of receiving surveys)

  • Send Thank you Letter
  • Tabulate Completed Surveys
  • Create file for each company

Medium-Term (within 4 weeks of receiving surveys)
- Ensure all agencies have responded to all requests for services (City, County, Workforce Training, etc.)

Long-Term (approx. 3 - 4 mths after conclusion of surveys)
- Update companies on progress in dealing with community-wide issues that impact the business climate

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15
Q

What is technical assistance?

A

It’s the deployment of experts with the specific skills and knowledge required to address business needs.

It’s an interactive, hands-on process that engages businesses in solving problems.

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16
Q

What are the steps in organizing and implementing a BRE technical assistance program?

A

1) Identify technical assistance partners
a. Local resources that can serve as partners
2) Set program policies
a. determine policies for operation of the program
b. determine criteria for participation
c. determine cost structure for services
3) Provide technical assistance
a. scope of services
b. time period for services
c. expected outcomes
4) Follow-up and Evaluate

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17
Q

What 2 ways can an EDO address business climate issues and concerns?

A

1) EDO can educate policy makers on what is helping / hurting local business climate (based on data obtained from business surveys / interviews) and advocate for policy change.
2) EDO can educate local businesses on different gov’t processes and laws and work with the businesses to meet those requirements.

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18
Q

What is reshoring?

A

It is the return of offshored jobs to their home soil.

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19
Q

The Workforce Innovation and Opportunity Act (WIOA) of 2014 simplifies job training and employment services how?

A

1) Training programs designed and managed at the local level
2) Customers access all services through One-Stop Center
3) Customers choose training program that best meets their needs
4) Customers have access to results of training programs
5) Businesses play active role in ensuring program prepares people for current and future jobs
6) Program is held accountable through performance standards

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20
Q

What is a labor shed analysis?

A

It’s a labor availability study.

It helps EDOs understand the skill sets, employment levels, underemployment, wages, hours worked, availability of employees to change employment and where employees reside.

21
Q

The US Dept of Labor and American Society for Training & Development identified a new set of skills (in addition to reading, writing and basic arithmetic) to determine a worker’s ability to successfully perform and retain a job, as well as his or her ability to progress to more responsible positions. What are those skills?

A
  • Ability to learn
  • Speaking / Listening well
  • Adaptability
  • Creative thinking & problem solving
  • Skills involving self-esteem, goal setting and motivation
  • Effectiveness in groups through interpersonal, negotiation and teamwork skills
  • Self-sufficiency
  • Influencing and leadership skills
22
Q

What are 4 ways colleges and universities can help a BRE program address workforce issues?

A

1) Infrastructure Improvements (creating a more diverse quality of place)
2) Management Training (provide courses / training in mgmt useful to local firms)
3) Recruitment of Graduating Students (market local employment opportunities to graduating students)
4) Targeted Academic Programs (academic program specializing in target industry cluster)

23
Q

What’s the difference b/w angel investors and venture capitalists?

A

Angel Investors are wealthy individuals who invest their own money in start-up companies. They invest typically b/w $25K - $100K and do not get involved in business operations.

Venture Capitalists are employees of risk capital companies who invest other people’s money. They invest substantially more $$ and require a seat on the BOD

24
Q

List 5 non-tax incentives that can be considered in a BRE program.

A
  • Customized workforce training
  • Technical assistance
  • Technology commercialization and deployment
  • Land acquisition assistance
  • Productivity assessment and evaluation
  • Infrastructure improvements
  • Loan guarantees (CDBG Section 108)
  • Financial incentives (venture capital; direct loans; RLF; utility discounts; small-issue IDB financing; loan guarantees for construction or machinery)
25
Q

What are 3 criteria to consider for performance-based incentives to be awarded?

A

1) Number of jobs created
2) Quality of jobs created (wages, benefits, etc)
3) Minimum investment requirements

26
Q

List 5 types of incentives for to keep companies / jobs in a community.

A
  • General Obligation Bonds
  • Tax Increment Financing
  • Enterprise Zones
  • Tax Abatements
  • Foreign Trade Zones
  • Tax Exemptions on
    Land & Capital Improvements
    Equipment & Machinery
    Goods-In-Transit Inventories
    Sales / Use
    Raw Materials Used in Mfg
    Encourage Research & Development
    Excise Fees
  • Renewal Communities
  • Tax Incentives for Job Creation in Areas of high unemployment
  • Tax Credits for
    Creation of Jobs
    Use of Specified Products & Industries
  • Accelerated Depreciation of Industrial Equipment
27
Q

What is a tax abatement and what are it’s advantages?

A

Tax Abatement is the reduction or elimination of certain taxes granted for a specific period of time.

The benefits include:

1) lower up-front costs
2) relatively inexpensive to administer

28
Q

The purpose of a Foreign Trade Zone (FTZ) is to facilitate trade and increase the global competitiveness
of US based companies. List the ways a company benefits from using an FTZ.

A
  • Imports admitted to or held in an FTZ without paying US customs duties
  • FTZ users can pay duty rate on component material or merchandise produced from component material, which ever is lower
  • Customs duties never paid on merchandise exported from the zone
  • Duties are reduced or eliminated on materials subject to defect, damage, waste or scrap
  • Merchandise may be exported and returned to an FTZ without duty payment
  • Spare parts may be stored, returned or destroyed without duty payment
  • Delays in Customs clearances and duty drawback are eliminated
  • Quality control inspections can identify substandard goods to be destroyed or returned without duty payment
  • No duty is owed on in-bond, zone-to-zone transfer of FTZ merchandise
29
Q

What are claw backs and why should they be used?

A

Claw Backs are sanctions applied against a company that has received incentives but failed to achieve the performance goals in the incentive agreement.

They provide accountability and serve to protect a community from businesses that don’t deliver on jobs or investment promised.

30
Q

What is Tax Increment Financing (TIF) and how is it utilized in a BRE program?

A

TIF is a self-financing program that municipalities use to support infrastructure projects.

A geographic area is designated as a ‘TIF district’.

The assessed valuation of the property within the district is frozen just before the project begins.

It’s assumed the project will result in higher property valuations and increased tax revenues. This ‘incremental’ tax increase above the pre-project frozen level is used to pay off the debt incurred for public improvements such as infrastructure, land acquisition, demolition / clearance costs, etc.

TIF is usually limited for use in areas designated as blighted or substandard.

31
Q

List 3 ways EDOs can assist businesses in opening / accessing new markets?

A

1) Procurement Opportunities (RFP process to open up opportunities and increase competition)
2) Networking (Organizing new support networks or referring to existing networks for sharing ideas, skills & resources)
3) Technology Transfer (foster information exchange from R&D to businesses & between businesses)

32
Q

What 2 purposes does technology transfer serve?

A

1) Technology Deployment - brings new or underutilized technologies to companies that enable them to be more efficient, productive or competitive; or to enable them to produce new products and enter new markets.
2) Technology Commercialization - uses companies to transition new products from the research lab to the marketplace for the purpose of commercializing the technology.

33
Q

How can the federal Manufacturing Extension Partnership (MEP) program assist a local BRE program?

A

MEPs are intermediaries in the technology transfer process, with the primary mission of conducting evaluations and assessments that will help companies identify and solve their problems.

Their services include business planning, integration of computers into the mfg process, improving plant layout / automation; upgrading quality controls; improving production planning and providing specialized training.

34
Q

True or False.

Approximately 4/5 of the world’s economic growth is occurring outside of the US borders.

A

True.

35
Q

What are the reasons companies choose to export?

A
  • Access new customers / markets
  • Mitigate risks
  • Moderate seasonal fluctuations in sales
  • Keep up with competition
  • Encourage innovation
36
Q

How does a company know if they are ready to export?

A
  • Organizational readiness (financial security and domestic marketing experience)
  • Product demand abroad
  • Ability to compete in the chosen market
  • Strong domestic sales growth within US market
  • Low price relative to US competitors
  • Better features, quality relative to US competitors
37
Q

What is included in a company’s export plan?

A

1) Attributes of target markets
2) Goals for sales
3) Required resources
4) Potential partners (including financing & marketing)
5) Timelines

38
Q

What are the 2 types of exporting when entering in the export market?

A

1) Indirect Exporting - company sells through intermediaries

2) Direct Exporting - company handles most steps of exporting themselves

39
Q

What are the advantages of Indirect Exporting?

A
  • Intermediaries are the “market insiders” with knowledge of the buyers & how business is conducted
  • Buyers prefer to deal with local agents as opposed to buying direct from overseas
  • Agents take care of the admin tasks (sales orders, arranging payments, preparing import documentation, clearing goods through customs)
  • Intermediaries are commission-based and don’t take title to the goods
  • Distributors are often equipped to stock, install and service the goods
40
Q

Which agency is the official export credit agency of the US with the mission to assist in financing the export of US goods and services to international markets?

A

Export-Import Bank

41
Q

List 3 federal agencies that assist companies with export financing.

A 
Export-Import Bank
SBA
Dept of Agriculture
Overseas Private Investment Corp (OPIC)
Multilateral Development Banks
42
Q

List the pros and cons of foreign mergers and acquisitions (M&A).

A

Pros:

  • foreign owners tend to invest more in R&D than US owners
  • foreign owners pay higher wages than US owner
  • foreign investors import new technology in their processes that can be transferred up/down the supply chain
  • helps to internationalize or diversify a community and provide opportunities for local firms to serve additional foreign markets and open additional export markets
  • advances a community’s marketing efforts by signaling it is an attractive place for foreign investment

Cons:

  • new ownership could lead to restructuring, consolidating facilities or layoffs
  • new ownership could transfer purchasing to suppliers in their home country & away from local suppliers
  • they may import foreign staff to fill local positions & displace local employees
43
Q

What are some of the services an EDO can provide to new foreign M&A buyers?

A
  • Info on local regulations, permitting processes, taxes
  • Arrange translation of pertinent documents
  • Info on local service providers (attorneys, lending institutions, accounting, etc.)
  • Info on state and federal services (SelectUSA)
  • Refer to local workforce training programs & resources
  • Work with foreign owners to maintain local workforce
  • Assist with immigration needs and securing staff visas
  • Act as an ambassador to introduce foreign buyers to the local business networks, associations, suppliers, etc.
  • Assist with family members acclimation to the community (secure visas, enroll in schools, find housing, acquire health care, learn language, etc.)
44
Q

What is an international joint venture?

A

IJV is the joining of 2 or more partner companies from different countries to share resources, risks, rewards and management in a temporary enterprise.

45
Q

Why are International Joint Ventures formed?

A

1) Distribute a foreign company’s products
2) Assemble or manufacture a product in the US
3) Research and develop a new product

46
Q

What are the benefits of an International Joint Venture?

A

1) Synergy, collaboration, economies of scale
2) Sharing facilities and human capital
3) Risk pooling
4) Capital pooling
5) Foreign partner gains market access
6) Domestic partner gains access to technology

47
Q

List the elements of a Business Continuity Plan in preparing for disasters.

A
  • Determine staff, materials, procedures, equipment necessary to keep the business operating
  • Identify shippers, suppliers & resources
  • Define crises mgmt procedures & responsibility
  • Plan for facility to be inaccessible
  • Plan for payroll continuity
  • Share contact information and business continuity plans with other businesses
  • Keep copies of important records in secure locations
  • Include co-workers from all levels in planning
  • Review the plan semi-annually
48
Q

What are some action steps EDOs can take to retain businesses after a disaster?

A
  • Establish a Business Recovery Center (1-stop shop to provide resources to businesses)
  • Deliver services through a Case Management approach (recovery staff assist individual businesses)
  • Establish a strong communication plan that includes:
    a Business Recovery Hotline (to provide into on services and the center)
    online Portal (facilitate communication b/w local gov’t, businesses and recovery agencies)
    outreach program for priority businesses
  • Advocate for service restoration from utility companies, cities, etc.
  • Survey local businesses (track impact, assess needs, obtain data required for federal $$ assistance)
  • Host workshops to address recovery issues
  • Provide financial services (short-term for working capital; long-term for changing markets, equipment & inventory)

IEDC CEcD (10 decks)

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