{"id":204992,"date":"2019-01-22T05:03:05","date_gmt":"2019-01-22T13:03:05","guid":{"rendered":"https:\/\/www.esri.com\/about\/newsroom\/?post_type=wherenext&p=204992"},"modified":"2024-05-10T05:57:07","modified_gmt":"2024-05-10T12:57:07","slug":"growing-companies-with-economic-gardening","status":"publish","type":"wherenext","link":"https:\/\/www.esri.com\/about\/newsroom\/publications\/wherenext\/growing-companies-with-economic-gardening","title":{"rendered":"A Little-Known Alternative to Wooing Amazon"},"author":501,"featured_media":0,"parent":0,"menu_order":0,"template":"","format":"standard","meta":{"_acf_changed":false,"sync_status":"","episode_type":"","audio_file":"","podmotor_file_id":"","podmotor_episode_id":"","castos_file_data":"","cover_image":"","cover_image_id":"","duration":"","filesize":"","filesize_raw":"","date_recorded":"","explicit":"","block":"","itunes_episode_number":"","itunes_title":"","itunes_season_number":"","itunes_episode_type":"","_links_to":"","_links_to_target":""},"categories":[791,1561,691],"tags":[313012],"department":[488812],"wherenext-category":[],"industry":[],"class_list":["post-204992","wherenext","type-wherenext","status-publish","format-standard","hentry","category-digital-transformation","category-economic-development","category-smart-communities","tag-business-growth","department-emerging-technologies"],"acf":{"short_description":"Across the nation, economic development agencies are quietly nurturing small companies while complementing efforts to attract big corporations.","pdf":{"host_remotely":false,"file":null,"file_url":""},"flexible_content":[{"acf_fc_layout":"content","content":"When Amazon announced in September 2017 that it was looking for a second headquarters location, the news set off a 13-month competition that had 238 cities outbidding each other to woo the internet retail giant with billions in tax and financial incentives. Some observers watched with chagrin. They knew a different way to grow local economies.\r\n\r\nThe eventual winners\u2014Long Island City, New York, and Arlington, Virginia (along with Nashville, which will host a new operations center)\u2014awarded Amazon more than $2.4 billion in local and state tax breaks.\r\n\r\nThe passion with which many cities pursued the expected prize of 50,000 new jobs showed in \u00a0Columbus, Ohio\u2019s<\/a> offer of $2.8 billion in direct tax incentives\u2014more than the three winning cities combined. Detroit and Michigan<\/a> upped the ante to $4 billion and New Jersey<\/a> was willing to provide $7 billion in city and state tax credits.\r\n\r\nBut an analysis<\/a> by The Atlantic<\/em>\u00a0highlighted the fact that companies with big tax incentives don\u2019t always meet their goals and may still lure cities into bidding wars every few years. The Brookings Institution<\/a> also found that many incentive packages do not require the sought-after company to invest heavily in job training for local residents or in improving their living conditions.\r\n\r\nPursuing Titans or Nurturing Homegrown Businesses<\/strong>\r\n\r\nFor cities that can\u2019t\u2014or don\u2019t want to\u2014compete for market giants, there\u2019s another proven option: economic gardening."},{"acf_fc_layout":"form","form_type":"aside","form_position":"Right","form_title":"THE ESRI BRIEF","form_desc":"A biweekly email connecting senior executives with thought-provoking articles on location intelligence and critical technology trends.","form_button_label":"Sign up now","form_content":"https:\/\/go.pardot.com\/l\/82202\/2017-10-12\/jw1bmb","form_tag":"low-commitment-form\/sign-up-form"},{"acf_fc_layout":"content","content":"\u201cChasing the big corporation is expensive, it's time-consuming, and the likelihood of being awarded that business to your particular community is pretty low,\u201d says John Gendron, who manages the Kansas Economic Gardening program within the Kansas Center for Entrepreneurship, known as NetWork Kansas.\r\n\r\nThough rarely in the national spotlight, economic gardening is the lower-cost alternative, free from tax breaks or complicated agreements with multinational corporations that could still pull up stakes if a better deal emerges elsewhere.\r\n\r\nThe economic development agencies that practice it focus on helping moderate-sized local businesses grow. They do so through research, business consulting, and a technology called a geographic information system (GIS). For companies small and large, GIS reveals new market opportunities, uncovers subtle consumer trends, and tracks demographic shifts in locations across the country and around the world. Economic gardening advisors suggest how companies can turn that deep analysis into profitable action.\r\n\r\nThe result is locally cultivated economic growth.\r\n\r\nEconomic Gardening Grows Local Businesses <\/strong>\r\n\r\nIn Florida, for example, GrowFL<\/a> used economic gardening to help generate nearly 11,000 net new jobs between 2009 and 2015. Those companies added more than $81 million in net state and local tax revenues, meaning Florida received a return of more than $9 for every dollar invested in economic gardening.\r\n\r\nNetWork Kansas\u2019s Gendron, who has worked in economic gardening for nine years, says that this less splashy option often can \u201cspike revenues and create jobs at a lower cost while supporting the businesses right in your backyard.\u201d\r\n\r\nEconomic gardening can\u2019t promise 50,000 jobs from one company, as Amazon did. But 235 cities spent more than a year and hundreds of thousands of dollars to pitch the internet powerhouse and ended with little to show. Meanwhile the Kansas Economic Gardening Network only needs to spend 45 days and invest services worth $4,500 to help a local company add an average of 12 new jobs and $1.5 million in new sales. Over time, that process can create meaningful job growth without sacrificing local tax revenue.\r\n\r\nA Young Company Grows up through Location Intelligence<\/strong>\r\n\r\nRodney Greenup<\/a> had developed a successful business in Louisiana by providing facilities management and construction services to the oil and gas industry, which requires security clearance for all contractors and subcontractors.\r\n\r\nLike most successful entrepreneurs, Greenup relied on great instincts to get his business started and stabilized. He also wanted to keep growing. He thought the simplest way would be to market the services of Greenup Industries<\/a> in as many states as he could. He was ready to open offices elsewhere and initiate a wide-ranging marketing campaign when he came across the Louisiana Economic Development (LED) agency and its programs. During the approximately 45-day analysis and consultation program with LED, Greenup learned a lot that surprised him."},{"acf_fc_layout":"sidebar","layout":"standard","image_reference":null,"image_reference_figure":"","spotlight_image":null,"section_title":"","spotlight_name":"","position":"Left","content":"

Location Intelligence: A Smarter Approach<\/h2>\r\nOrganizations in many industries use location intelligence to improve their operations. To learn about them, read this e-book on location intelligence<\/a>.","snippet":""},{"acf_fc_layout":"content","content":"The agency delivered a slew of economic gardening services, including location intelligence<\/a> on Greenup\u2019s customers, competitors, and markets. That GIS-powered insight is often the most important tool in business growth. In simplified terms, GIS is a form of business intelligence that integrates demographic, customer, and economic data into digital maps. Those maps often bring to light hidden or little understood relationships between a company and its current or potential customers.\r\n\r\nLED\u2019s research, business consultation, and GIS-based maps led Greenup in new directions.\r\n\r\n\u201cGoing in, we initially thought we would try to get every client that we could possibly encounter,\u201d Greenup says. \u201cBut economic gardening really focused our attention and showed us which potential clients were predicting the largest amount of growth and the biggest spend on their facilities for the next three years.\u201d\r\n\r\nEconomic Gardening Took Root after Layoffs<\/strong>\r\n\r\nChris Gibbons, CEO of the National Center for Economic Gardening<\/a>, is credited with helping to originate the idea of economic gardening when he was director of business and industry affairs for the city of Littleton, Colorado, in the 1980s. The idea stemmed from the need to replace approximately 7,000 jobs lost when Littleton\u2019s major employer, a defense contractor, laid off employees into a local economy that could not absorb them.\r\n\r\nThe methods Gibbons helped develop to stimulate growth set a pattern of similar successes across the nation. During the 20-year period that followed the massive layoffs, Littleton doubled jobs from 15,000 to 30,000 and more than tripled sales tax revenue from $6 million to $21 million\u2014all without recruiting any outside companies, offering tax incentives, or experiencing a large population increase.\r\n\r\nGibbons says GIS-driven insight on potential customers, competitors, and markets allows a typical small business to sharpen its strategy and increase its growth rate from 3\u20135 percent to 15\u201335 percent."},{"acf_fc_layout":"quote","image":204972,"text":"[Economic gardening is] an alternative way of doing economic development that focuses on growing local stage-two companies as opposed to attracting outside companies. Both methods work, but I really believe strongly in what we do.","author_name":"Chris Gibbons, National Center for Economic Gardening","author_profession_organization":""},{"acf_fc_layout":"content","content":"Local Businesses Generate High Percentage of New Jobs<\/strong>\r\n\r\nNationally, the typical business that is a candidate for economic gardening has from 10 to 100 employees and sales of $1 million to $50 million. (Ranges vary in urban and rural areas.)\r\n\r\nThese are businesses that no longer face a day-to-day struggle to survive and whose owners want to keep expanding but don\u2019t know the best way to market beyond their own location. Often called second-stage businesses, they also happen to generate a disproportionately high percentage<\/a> of new jobs.\r\n\r\nStage-two businesses may have represented only 17 percent of all US businesses from 2005 to 2015, but they created more than 35 percent of the jobs and sales, according to the Edward Lowe Foundation, which supports the entrepreneurship of second-stage companies."},{"acf_fc_layout":"sidebar","layout":"standard","image_reference":null,"image_reference_figure":"","spotlight_image":null,"section_title":"","spotlight_name":"","position":"Right","content":"

Digital Watering Holes<\/h2>\r\nOne way Louisiana Economic Development helps stage-two companies find opportunities to expand is to show them the digital \u201cwatering holes\u201d\u2014websites, blogs, and social media\u2014that potential customers or competitors frequent. This helps young companies stay up-to-date on relevant trends and identify marketing channels that may contribute to their expansion.","snippet":""},{"acf_fc_layout":"content","content":"Communities in 25 states from California to New York and from Minnesota to Texas have found economic gardening a successful way to grow locally owned and operated businesses. Yet while it\u2019s seen as a cost-effective way of helping homegrown companies expand, it\u2019s often a supplement, not a replacement, for other approaches.\r\n\r\nLED, for example, has adopted a multipronged strategy that looks for opportunities at both ends of the business spectrum. The agency works diligently to attract large corporations to the state and retain its current businesses, and it works just as intensely to accelerate the growth of local companies through economic gardening.\r\n\r\nFor Greenup Industries and others that have gone through the LED program, results have been impressive. Louisiana companies participating in LED\u2019s economic gardening program have collectively added nearly 2,000 net new jobs and increased their gross revenue by $338 million. LED, like GrowFL, calculates a return of more than $9 for every $1 invested in the effort.\r\n\r\n\u201cTypically, when we grow what we have, a number of things take place,\u201d says John Matthews, senior director of small business services for LED. \u201cOne, the businesses are here already, so they more than likely are here to stay. Two, they understand the culture of Louisiana. And, three, they're more readily supportive of the community and its quality of life.\u201d"},{"acf_fc_layout":"quote","image":204982,"text":"A Michigan pie company learned to increase sales through GIS-powered location intelligence that showed where Michigan college sports fans tended to watch games in West Florida sports bars.","author_name":"","author_profession_organization":""},{"acf_fc_layout":"content","content":"Saving Marketing Costs by Focusing on Core Services and Concentrated Areas<\/strong>\r\n\r\nThrough GIS technology, economic gardening teams have access to databases that most stage-two business owners don\u2019t know exist. That data can be layered onto smart maps to reveal economic and consumer patterns. For Greenup Industries, the economic gardening team used market research and GIS technology to illustrate some surprising facts.\r\n\r\nNot only hadn\u2019t Greenup realized his core business contained services that would be transferrable to the automotive, food services, and pharmaceutical industries, but also that those same businesses were growing at a faster rate than his oil and gas clients.\r\n\r\nMoreover, by using location intelligence to find clusters of potential new clients within those overlooked industries, LED was able to show that he had many more opportunities in the Gulf Coast states of Louisiana, Texas, Mississippi, Alabama, and Florida than he had imagined. It caused Greenup to rethink his strategy of opening offices in far-flung locales.\r\n\r\n\u201cYou have to listen to the data,\u201d Greenup says. \u201cEconomic gardening really clarified a lot of things for me\u2026 I really thought I had a good plan for where I was going, but what they did was make me focus and realize my other plans would be distractions and an inefficient use of time and money.\u201d\r\n\r\nVariety of Crops Arise from Economic Gardening<\/strong>\r\n\r\nThe array of businesses helped by economic gardening stretches over many market sectors<\/a> and includes both B2B and B2C companies.\r\n