20. Business Recruitment Recommendations

This section explains in brief how market analysis data and recommendations developed from prior sections of this guidebook can be used in the various steps of a business recruitment program.

Communities can influence business investment decisions by drawing attention to local market characteristics that might otherwise be overlooked. A business recruitment team can assist by identifying high potential retail sectors, compiling information of interest to retail prospects, and marketing to those prospects. The key is to demonstrate that the community is a profitable place to do business.

The following recruitment strategies pertain to downtown and business districts. These strategies were drawn from four valuable resources on the topic:

• Fill-in-the-Blank Business Recruitment published by the National Main Street Center of the National Trust for Historic Preservation;
• Successful Retail Recruitment Strategies published by the consulting firm of HyettPalma, Inc;
• Making Downtowns & Village Centers More Attractive For Development, a conference report prepared by the Vermont Forum on Sprawl, 1998; and
• Wisconsin Main Street Program – business recruitment workshop notes.

Getting Started

Before beginning a business recruitment effort, it is important to understand its objectives. For most districts, the program should help:

• Encourage entrepreneurship;
• Maintain and develop the district as a mixed-use, multi-purpose center; and
• Strengthen the businesses and the business mix to enable the district to compete successfully in the market.

Establish Your Business Recruitment Team

To begin the recruitment process, a proactive business recruitment team needs to be assembled. This team should bring a clear and realistic understanding of the market analysis, have skills in economic development and real estate, and have an ability to sell and follow through. Training for the team may be necessary. A team of five to seven participants could include:

• Established (and retired) business owners;
• Local real estate professionals;
• Current building owners who are interested in exploring various uses for their property;
• Bankers;
• Local development organization representatives;
• Elected officials; and
• Chamber of commerce and visitor bureau directors.

The team will help serve as a management entity for recruitment efforts, focusing on those properties and areas that are critical for the economic success of the business district. Through the process, the team will coordinate efforts with local real estate professionals.

Market Position Statement

For a recruitment program to be successful, the team must be ready to articulate a clear market position statement for the district.

A market position statement should characterize the type of retail mix, the shopping environment, and the target customer market. The statement distinguishes your district from surrounding shopping districts. Often, a community’s market position statement will serve as background for identifying the types of businesses that could be recruited.

Using the Market Analysis: Use the market position statement developed for your district using the Marketing Plan recommendations section of this guidebook.

Identify Business Wish List

A wish list of potential businesses should be developed by the team. These potential businesses should complement and strengthen the existing businesses and reflect the market position and vision statements. Realistic annual recruitment goals (number of businesses on the wish list) should be set.

To identify appropriate business candidates (retail, service, restaurant, etc.) for your community, first analyze your business deficits (or opportunities) by specific category as outlined in Part II (Identifying Opportunities) of this guidebook. Those categories that make market sense are then analyzed to make sure they fit into the niche, space utilization (specifically clustering) and marketing (specifically target market) recommendations discussed in the prior sections of Part III.

Use the following criteria in finalizing your wish list:

• Is there appropriate space in the district for this type of business?
• Will it complement existing businesses?
• Will it serve targeted market segments?
• Does it fill an important gap in the business mix?
• Will the business strengthen an existing cluster of businesses?
• Was this business category identified as important in local consumer research?
• Does market demand and supply data support the need for this types of business?
• Does the business fit it with the market position and vision statements?

Using the Market Analysis: Identify growth and expansion opportunities using the Retail, Service Business, and Restaurant Opportunities analyses as discussed in Part II of this guidebook. Refer to the Business Mix, Customer Demographics and Lifestyles and Consumer Attitudes sections in Part I to identify additional opportunities that could be included in the wish list.

Creating a Supportive Business Environment

Before actual recruitment can begin, the team must make sure that the district presents itself as an inviting place to do business. The commercial center must present a quality business environment in order to attract viable businesses and ensure the successful operation of businesses within the commercial center. It must appeal to the rational investor who is seeking to minimize risk and maximize financial return. Often, this supportive business environment will include incentives to help “level the playing field” with other commercial centers including those developed on the edge of town.

Make the Environment Appealing

To attract retailers, a community must first make its business district visibly active, attractive, convenient and safe. This is often more difficult for non-shopping center locations including downtowns as they typically do not operate under a central management. Before the recruitment process begins, work with existing business operators and city officials to ensure:

• An aesthetically pleasing commercial environment;
• A safe and secure commercial center;
• Adequate and conveniently located parking and transportation services; and
• High business operational standards and service which project a quality, unified and consistent image for the district.

Using the Market Analysis: To help understand how your business district is viewed by outsiders, consider using the First Impressions Program listed as a link under “Contents”. Also, refer to findings from local Consumer Attitudes research as discussed in Part I of this guidebook.

Overcome Barriers to Business Investment in the District

Many retail and service businesses choose "edge" locations on the outside of town because such locations have proven successful and expansions are easy to replicate. According to the Vermont Forum on Sprawl, downtown and other in-town commercial areas need to recognize and overcome barriers to business investment in their districts. Barriers often include:

• Higher land costs;
• More title problems (because of their history, properties often present complex title issues);
• Permitting that is more complex and time-consuming;
• Zoning that may be more restrictive;
• Site preparation (for new construction) that is more complex;
• Construction and renovations that are more complex;
• Building footprints that are typically smaller; and
• Parking that is more restrictive.

The recruitment team should understand these barriers, both perceived and real, and work with business and community leaders to minimize them. Sometimes creative incentives can be developed to make the district more competitive from a business investment perspective.

Offer Incentives

It is also important that the team fully understand what the community can to offer the prospective business. Incentives might include:

• Technical assistance including market and feasibility analysis, business plan development, governmental regulations, advertising and physical design.
• Negotiation and leasing of space if the prospect is not working with a broker or not familiar with the area;
• Centralized retail management in which business district organization gains the right to lease property from owners and place businesses in locations prescribed by an overall commercial center plan;
• Financing of building improvements, facades, displays, fixtures, inventory and start-up costs including a low-interest loan pool;
• Counseling with local financial institutions and assistance in completing loan applications;
• Financing options and incentives appealing to developers such as low-interest loan, TIF or CDBG funding programs;
• District wide image and marketing programs and advertising and promotion assistance for individual firms;
• An effective business to business networking system;
• Private development partnerships made up of local investors who might develop, own and operate a needed business; and
• Business incubator(s) to help establish new businesses at a reasonable cost and provide them with space and common services.

Using the Market Analysis: Identify locally valued business incentives by referring to findings from the Business Owners Survey described in Part I of this guidebook.

Assembling Recruitment and Marketing Materials

Attractive recruitment and marketing materials should be developed to convey the market potential of the business district. Business recruitment materials must help convince a business operator that your district is unique and that it offers a competitive edge over other locations.

General Marketing Materials

Market analysis data already collected earlier in your study will help potential business operators evaluate the potential for their venture. When developing marketing materials, provide only relevant information to avoid information overload. Consider the following in your package:

• Letter of introduction including compelling reasons why the district makes economic sense for them;
• General information and photos of the community highlighting its assets;
• Market position and vision statements;
• Wish list of new businesses supported by market demand and supply data;
• New developments demonstrating investment downtown;
• Information on past openings and closings of businesses;
• Trade area geographic definition and demographic and lifestyle data;
• Trade area economic data including actual and potential sales data if available;
• Nonresident consumer data (including daytime population and tourism visitation);
• Descriptions of target market segments served;
• Major employers and institutions;
• Vehicle and pedestrian traffic volume;
• Mix of existing retail, service, dining, housing, office and lodging in the district;
• Press coverage and testimonials highlighting success stories;
• Promotional calendar; and
• Summary of incentives and other business assistance available in the business district.

Using the Market Analysis: Summarize applicable data and recommendations from your market analysis as assembled using prior sections of this guidebook.

Assemble Maps

Graphs and maps are particularly effective ways to describe the region, the local area, retail competition, and development trends. For the business district and trade area, include:

• • Current district vacancy map;
• Business mix and clustering map displaying information on all district buildings;
• Major employers, institutions and points of interest map of area;
• Traffic volume map;
• Trade area maps defined by customer origin and drive-times; and
• Consumer spending demand and supply maps.

Using the Market Analysis: Include maps from your market analysis assembled using instructions in prior sections of this guidebook.

When targeting retail prospects, remember that not all retailers have the same requirements. A grocery store typically requires a different market than a discount department store. Communities should customize information to fit the needs of the particular prospect.

Building/Site Specific Materials

In addition to market data, information on specific buildings may also be useful. This information might include:

• Maps and photos describing the location, building and it history;
• Complementary businesses/clusters nearby;
• Sales and rent per square foot (with comparison market data);
• Available commercial and residential space and floor plan;
• Operating expenses including utility rates and taxes;
• Current tenants and how the building could be optimally reused; and
• Property owner or other contact for more information.

When completed, recruitment and marketing materials should be assembled in an attractive packet and offered online. Quality content, graphics and formatting are required.

Using the Market Analysis: To help summarize building specific data, refer to Creating a Building and Business Inventory in Part I of this guidebook.

Generating Leads

The team’s next responsibility is to find appropriate businesses that might be interested in a site in your market area or need new space to expand. Leads can be broken town into four general categories:

1. Existing Businesses within or near the business district – Often the best leads are found near home. Leads might include existing businesses seeking more space or a better location in the business district. The district’s business owner’s survey as well as ongoing conversations and personal contacts of the recruitment team, chamber of commerce and other economic development professionals can help identify these leads.
2. Emerging Entrepreneurs - Downtowns and business districts are often attractive to independent businesses. Accordingly, leads might include home-based or garage-based businesses seeking more fitting space and a convenient location for their customers. These leads might include managers of existing businesses wishing to go into business on their own. Commercial lenders, business schools, Small Business Development Center (SBDC) counselors, Main Street program business specialists, Service Corps of Retired Executives (SCORE), chamber of commerce and other public or private small business professionals should be asked to help identify these leads.
3. Existing Local or Regional Businesses - Local or regional businesses, particularly those that have branch stores between miles away and are ready to expand, are often excellent prospects. These business operators typically have a good knowledge of the market area, and may already have multiple stores. They are often interested in expansion as a way to improve their penetration of the market. These leads can be identified through your team’s knowledge of the business mix in other communities in the region and information collected from your local consumer research. In addition, realtors, commercial brokers, sales representatives and supplies that work within the region can be helpful. Sometimes ads in regional business, real estate and regional lifestyle periodicals can generate leads.
4. National Chains If local or regional businesses are not interested in expanding, larger national chains can be contacted. It is important to be realistic about the kinds of chains that might be interested in a small community as their market, store size and parking requirements may preclude them from considering your district. Leads can be identified through directories and private databases listing chain site selection criteria and contacts. In addition, leads can also come from commercial brokers, trade shows, “deal making forums,” and conferences such as those offered by International Franchise Association or the International Council of Shopping Centers.

Once leads have been identified, a retail assessment checklist can be developed by the community to ensure quality standards for prospects and to make sure the business would fit the market. The checklist could be completed by a team member on a reconnaissance visit to the business. It might include:

• Business category (type);
• Target markets;
• Businesses’ location requirements;
• Image;
• Inventory and selection;
• Pricing;
• Presentation;
• Exterior appearance;
• Interior décor, lighting and fixtures;
• Service; and
• Traffic generated.

Courting Prospects

The recruitment team must now focus on a personalized sales effort that conveys a message that the district is a good location for expansion or new business development. Efforts to personally communicate and then follow up with potential businesses is essential to the success of a recruitment effort. Presented below is a sequence of steps to reach potential business owners or developers.

Send Letter of Introduction

Initial contacts with a prospect can be made through a personalized letter. In the letter, explain why your district would be an excellent place to do business. Identify selected incentives and summarize the most relevant market data that would interest the prospect. Your recruiting and marketing materials can be enclosed or include as a link to a web site with the information.

Make Recruitment Calls and Personally Visit their Business

After the letter of introduction, a call should be made to the business to set up an appointment for a personal visit by someone on the recruitment team. The purpose of the appointment is to explain why your community is interested in their business. Explain why their business would be profitable and what incentives might be available. Provide recruitment and marketing materials and any other information to demonstrate the pro-business character of business district. Offer an invitation to the business operator to visit your community.

Host the Prospect in Your Community

It is the host’s job to persuade the prospective business or developer that your town has a distinct advantage over other locations. The site visit is a critical opportunity to persuade the business owner to invest in your district. Prospects should be personally invited to tour the community. The tour (previewed ahead of time) should include stops at possible business sites, competitive business districts, residential neighborhoods, employment centers and City Hall. Set up visits with key local merchants. Lunch or dinner should be included with selected business operators and public officials.

Throughout the prospect’s visit, the host should be prepared to answer questions such as why similar businesses have closed, the history of adjoining businesses next to prospective sites, and how to contact local landlords. Local property owners, lenders, government officials, and other retailers can be part of this welcoming and persuasive effort.

After the visit, it is important that thank you letters be sent from various community leaders including the mayor and selected business representatives. Mail or fax articles and publicity about downtown events and businesses during the following weeks. Deliver a basket of merchandise offered in your downtown. Finally, make sure the recruitment team is prepared to promptly answer follow up information requests in a prompt and professional manner.

Making the Sales Pitch

A leader on the recruitment team should close the deal by selling the merits of locating in the business district. Remind the prospect that your district is looking for a business with their characteristics. Practice effective sales presentation skills and focus on key selling points of interest to the prospect:

• Key market data (such as a population density surrounding the district);
• Findings from your analysis of demand and supply in the particular business category;
• Expected sales per square foot and reasons why they would be successful there; Examples of comparable businesses in the district that have prospered; and
• Why the district is a better place to do business.

Continue to stay in contact with the prospect. If the prospect is interested, follow-up immediately with an action plan and necessary assistance (however, do not attempt to broker the property). If only marginally interested, call the prospect again in six weeks. If not interested at this time, include the prospect on your mailing list.

After businesses have been recruited, they must be welcomed and supported as are existing businesses. Marketing the new business and helping the owners network with others in the district will be especially important in its early months of operation. Ongoing advocacy and follow-up will be essential.