Most local economic growth is generated by small- and medium-sized businesses that are already established in the community. Encouraging local business growth involves providing advice, support and resources to enable these existing local businesses to grow. These strategies are sometimes called business retention and expansion strategies. The range of initiatives to support local businesses is vast. Some can be expensive, but others are not. Programs and projects include:

Business retention visits and surveys:
Visits to and surveys of existing firms can help identify problems, determine how the business is performing, from where it sources its inputs, whether it is expanding, etc. These visits can be used to encourage local businesses to source more inputs locally, identify and finance training and skills needs, and contribute to LED strategy development. An important role at these visits is to identify factors that might forestall a business leaving the area.

Technical assistance to business:
This can include broad-based management and marketing programs, quality and environmental standards training and advice, through to more specialized export training or research and development support. The focus here should be on providing accredited, demand-led, technical assistance, paid for on a fee-for-service basis, if possible. Often these services are provided through one-stop business service centers.

Financial advice and assistance:
One of the hardest issues for businesses is to access capital. An appropriate financial support program will be able to give advice and training on financial planning, access to capital and credit, etc. In some cases it may be possible to establish small grant or loan programs to encourage, for example, investment in modern technology. Great care should be taken with these to ensure fairness; these schemes should always be transparent.

Public procurement policies and "buy local" campaigns:
These are local, business friendly policies where the local government, public sector organizations and larger local businesses make their contracts more accessible to local companies. This has to be done within fair-practice laws. Initiatives could include adjusting the size of contracts so that smaller companies may bid, encouraging and accepting bids from groups of local companies, holding procurement events for local businesses, publishing local business competency directories and so on.

Bureaucracy reduction programs:
The number of permits and approvals that local government require for businesses, and the time it takes to obtain these can act as disincentive to register into the formal economy or expand. A good place to start is to review existing regulations and laws, consult with stakeholders and develop a remedial plan. This will probably include streamlining local government processes and may also include a lobbying program to reduce bureaucracy in other government areas. A program to minimize the complexity, costs and bureaucracy associated with approval processes will improve the competitiveness of an area.

Provision of sites and premises:
Since local authorities and the state are often the owners of industrial and commercial land and buildings, they can use these to encourage business investment and expansion. A good understanding of the local property market should enable a local authority to plan for growth. Funding such hard infrastructure investments is a challenge, however, rents and sales should provide a market return for the authority. The option of private sector intervention or partnership should always be examined to ensure best use of local authority resources.

Back to Previous Page

---