This is the great recession, right? No one is moving on anything, right? Besides, Memphis is an extraordinary city with everything to offer and if there was a move to make it would be here, right?
Then how is it that over only two weeks in July, Olive Branch, Mississippi, took the gold medal in every category?
Soladigm announced a new 300 employee operation. Hamilton Beach will move 125 jobs from Memphis south of the boarder into Mississippi. Methodist was approved for a 100-bed, 480 employee hospital. And, Grant Homes launched a 109-lot subdivision.
At Smart City Memphis we debate incentives and political baggage, crime and community, brains vs. brawn, expansion patterns vs. growth boundaries, venture capital and business retention. We know economic development is supposed to be deep, complex work. There are experts in the field that tell us how hard it is.
Well, as someone who spent six years working very closely with many Magnolia State economic developers, real estate professionals and business leaders, I’d like to share a few of their secrets. You can decide how hard it is to really do this.
Mississippians know how to build relationships
Maurice Joseph, a Mississippi real estate investor, gave me the best advice I have ever gotten. He told me one day regarding a prospect, “Don’t write them, don’t call them, go see them.” These guys get to know you before you know you want to move. They know what you need, how much you can spend and where your grandmother goes to church before you have ever mentioned expansion. They have done things for you, unsolicited, that have helped you personally and professionally.
When the day comes that you do consider a big move, surprise, surprise, here is your buddy with the perfect place for you. You don’t notice the peer pressure, the brochures or any of the other fluff because you are being asked to buy something they already know you want.
And you know this is a two-way street. When I say relationship building, I mean it. These people become your friends and that makes it real easy to do business.
Mississippians show well
Leland Speed, a national real estate investor from Mississippi, puts flowers in the bathrooms of every one of his properties. When Governor Barbour asked him to be the pro-bono director of the Mississippi Development Authority Mr. Speed went on a statewide tour visiting every single rest stop demanding that they be beautiful representations of his state.
This might sound nuts. But you don’t have to talk about burglaries or maintenance problems when management demands this level of detail. You don’t have to sell someone on having the best when there is a bouquet next to the urinal.
This also lends itself to a brief mention of marketing, enthusiasm and interest.
Take this test: Do an internet search for Mississippi advertising, marketing or public relations firms. Do the same for Memphis firms. Randomly pull five or ten web addresses from each. Compare them and decide which community has the most creative minds, latest technology and enthusiastic spirit… and what will they charge you to share it?
Mississippi brings out the big guns
Olive Branch isn’t attracting this business by itself. The Capitol is behind them. From new roads to utility expansions to job training to income tax rebates, this is largely being handled from Jackson. But that isn’t the most important part.
Having the Governor call on you and offer these things casts the line. Having another businessman in the area call on you and tell you a story about how the Governor helped his business when they were once in a bind sets the hook. Having the mayor call on you with a package of pre-approved applications and incentives reels you in. The real estate developer just has to show up with the hammer and nails because the other work is being done for him.
I belong to both the Memphis Rotary Club and the Kiwanis Club of Memphis. These people are friends, business partners and true community leaders. I took an informal poll of about 20 of them this week by asking if they could name a Memphis, Shelby County or Chamber economic development employee. Most answered no. If anyone would like to get close to these potential prospects, I can get you an application.
When the economy is slow there are some things winning communities do. They work hard on getting to know their existing businesses, defining their future needs and discovering who might be complimentary to them. They put together inspired armies of local cheerleaders. Then they tell the world what they are doing. Some things don’t require expensive initiatives or time consuming planning.
Step One – Make Friends
We have to build our relationships. And we need to do it beyond our comfort zones, outside of our circles and with some people we may not understand.
Get to know others in business. Practice selling to our friends. And ask them to commit to this city.
Antonio Ubalde and Eric Simundza did research for and published Economic Development: Present and Future. Below are their top five marketing strategies (out of 16) based on effectiveness:
* Internet/Website
* Out of town meetings with businesses
* Site selection consultants and familiarization tours
* Public relations
* Special events
Four of the top five are relationship-based. They either start with a relationship or are designed to build one.
We keep hearing about the plight of One Commerce Square, the largest building on our skyline that is over half-vacant. What if the owner or leasing agent was a member of Rotary or Kiwanis and had been building a personal relationship with several hundred potential prospects? What if an economic development official had been doing the same?
Step Two – Help new friends fit in
We have to deploy our team. That team needs all of the right information to make decisions and help others make decisions.
Do we have a team of influencers, business peers and, frankly, people it is hard to say no to? Do they fully understand what happens to this community when they make factory decisions? Do they understand how many other people they do business with nationally that could be prospects for our community? Are they armed with the knowledge and determination to recruit for us? Do they feel like this is an important part of life in a community, a last desperate measure or does that even matter?
Step Three – Give friends the right resources
We have to put our money where our mouth is.
In the Ubalde & Simundza work, they found that organizations that had an economic development component spent only around 10% of their budget on actual economic development marketing. Of that 10% budget, over half was spent on strategies that were the least effective, 17% was spent on the important portal (Internet/Website) and only 30% was spent on the other four most effective strategies.
If economic development agencies don’t put their efforts and dollars toward what actually builds business then the communities that do will continue to steal victories from us. If our most important figures, leaders and ambassadors aren’t willing to commit themselves to this effort, then more and more of their neighbors will move farther and farther away.
We need a movement that can start with very, very simple tasks. Memphians must re-learn how to build meaningful relationships. We must use those relationships to strategically tackle economic development issues. And we must start deploying the necessary resources to get the word out.
And in all honesty… this starts with every small business person. The initiative can be ours. It doesn’t have to come from City Hall, The Shelby County Office Building, a Chamber or a club.
This is good stuff, I would address the “bring out the big guns” issue, though. I’m not saying who’s fault it is, but it is a definite perception on my part that the governor of MS is out helping North Mississippi recruit while the governor of TN rarely shows his face in Memphis. Why hasn’t Bredesen (and maybe he has done this an we don’t know about it) personally visited with PInnacle and brought Matt Kisber to let them now what the STATE, not just the city, can do to keep them here. Why? Where are you Phil? And maybe the answer is that the leaders in memphis haven’t asked. IF so, shame on them.
Step four: Be close to Memphis, wait for their companies’ PILOT to run out and then offer them a fresh one to move 10 miles south.
That said, it would be nice to see Bredesen make a call or throw the kitchen sink at a company to lure them to Memphis.
One struggle I have that I would like to hear some constructive commentary on deals with how much of this is our (the public’s) responsibility and how much can be expected to be their (private business’s) responsibility and finally what do we have to do to make this everyone’s mutual responsibility?
Business faces legitimate issues like a migrating workforce (away from Memphis), incentives offered by other communities that can reduce costs and the basic thrill of getting to do something new.
But when do we look at the CEO and say, “hey man, all those years you spent sitting on this board or talking about that charity… putting your business here or there has more to do with those issues than any decision you’ll make in your entire life… are you going to walk the walk or not?”
When do we look at the Government leaders and say, “hey there, all those years you’ve talked about education, taxes and revitalization… this is important stuff and now we are seeing that businesses are tired of waiting for our image to change… can you do something for them or not?”
And how can we get these people working on this together all of the time so we aren’t surprised when businesses decide to head for greener pastures? How do we solve the problems quickly before someone throws up their hands and just moves away? How do we engage each other as community partners instead of negotiating interests?
Do the math yourself… Rent/cost rarely if ever really influences the final decision. The location of employees rarely if ever really decides this at the local level because people drive from everywhere.
I believe that we are losing because people do not feel an ownership in Memphis or sense of place in Memphis and those are as much about relationships as they are about buildings and roads and sewers.
Downtown Worker is right on the money (for lack of a better phrase). All of those great things Mr. Lawrence wrote about definitely influence decision-making. But the biggest influence is economic incentive. Mississippi is willing to sell its soul for a few low-paying jobs. Memphis is better than that. When we’re looking up at Mississippi, we’re in a bad spot.
Who saw that article in the CA about Miss. creating opportunity by manufacturing in INDIA?
What hogwash!
“Me-too-ism” isn’t just in Memphis anymore, bahahahaha!
It’s so strange that the research continues to show that incentives are a minor part of these decisions, but we keep doling them out while quality of life and college-educated citizens are driving economic success.
How much college does Fred Smith have?
BIG business isn’t a driving force, its a following force created on bubble logic swallowing or destroying REAL business and substituting it with a recapitalization scheme.
GIVE ME A BREAK.
Entrepreneurs drive economies, not suits.
You can look up your own stats on that prepare to be so wrong you’re floored.
Incentives, hogwash.
What’s the incentive to move your business to a decaying city with corrupt infrastructure, a broken expensive school system, high violent crime stats, vast illiterate unfriendly population, highest taxes in the state, lousy roads, no decent mass transit, unfriendly business atmosphere, high utilities, three shootings a day, 1 hour of bad local news for you on tv everyday, high penal system participant population second to almost NONE?
How much do you think it would take to get a company to move to hat city? In dollars.