center for community and economic development people who excel – businesses that innovate –...

Center for Community and Economic DevelopmentPeople Who Excel – Businesses That Innovate – Communities That Prosper

Greg WiseProfessor and Community Development SpecialistCenter for Community and Economic Development

University of Wisconsin-Extension

Sauk County Development Corporation Board of DirectorsDecember 1, 2014

Sorting Out Business Development, Economic Development, and Community

Development


What is economic development?

Is there a distinction between business development, economic development, and community development?

How are they related?


What is economic development?

Community Development

• Satisfaction

• Security

• Quality of Life

Economic Development

• Jobs & Income• Consumer Spending• Tax Base

Business Development

• Payroll

• Revenues

• Return on Investment


Growth versus development

more businesses, more jobs versus sustained business activity and quality jobs

expanding tax base versus services and revenues in balance

any growth is good versus growth that promotes a community’s values

bigger is better versus better is better


Triple Bottom Line &Community Capitals Framework

Source: Cornelia Flora, Jan Flora, Susan Fey, Mary Emery


Industrial Recruiting 1950s to 1980s

Cost Competition Early 1980s to Early 1990s

Regional Competitiveness Early 1990s to Present

Driver Export Base Scale Economies

Innovation & Entrepreneurship

Strategies Financial incentives to firms Industrial parks

Industrial consolidation and cost cutting Deregulation

Entrepreneurship Clusters Commercial research

Keys to Success

Government funds for subsidies and tax breaks Industrial infrastructure

Health of existing industries

Distinct regional assets such as: Human Capital, Higher Education, and Amenities

Source: Mark Drabenstott, Kansas City Federal Reserve Bank and Rural Policy Research Institute (RUPRI)

Eras of economic development


The “new normal” economic developmentTraditional Model New Model

AttractionIndustrial Recruitment

EntrepreneurshipSmall Business Startups

The relative amount of attention given to the three major ingredients is reversed

The nature of the three ingredients themselves fundamentally change from narrowly conceived approaches to broadly defined strategies

Traditional Model: Local and Competitive / New Model: Regional and Cooperative

Expansion Retention

Source: Adapted from Brian Dabson, Rural Policy Research Institute (RUPRI)


Regions or clusters?Regional Economic

Development Organizations

Renewable Energy Manufacturing

Agriculture, Dairy, and Food Processing

Software Development Medical Device

Manufacturing FIRE (Financial Services,

Insurance & Real Estate)

Sources: Wisconsin Economic Development Corporation; UW-Extension Center for Community & Economic Development

Clusters


Asset Based Community Development 75% of Americans under 28 believe a “cool city is

more important than a good job” (Rebecca Ryan) Young people “insist they need to live in places

that offer stimulating, creative environments” (Richard Florida)

Young people want: a place to raise a family; safe streets; affordability; good schools; and scenic beauty (Will Andresen)

Sources: Rebecca Ryan; Richard Florida; Will Andresen


What does the evidence say? Economies with higher rates of entrepreneurial activity are

stronger and more competitive—70% of economic growth comes from entrepreneurial activity

35% of the Fortune 500 companies are displaced every 3 to 4 years

Firms of fewer than 20 employees generate the majority of new jobs

Each year 7 to 8% of all jobs are lost; they’re replaced in the following ways:• 55% of new jobs come from expansion of existing firms;• 45% of new jobs come from new business startups; and• 1% of new jobs come from business relocations

Sources: Global Entrepreneurship Monitor Project; National Governor’s Association; Public Forum Institute; Goetz


Establishments by employment size

Establishment Sector

Non-com-mercialNon-residentResident

Resident Firm Stage

Self-employedStage 1 (2-9)Stage 2 (10-99)Stage 3 (100-499)Stage 4 (500+)

Source: YourEconomy.org, Edward Lowe Foundation

Resident — stand-alone businesses in the area or businesses with headquarters in the same stateNonresident — businesses that are located in the area but headquartered in a different stateNoncommercial — public institutions and nonprofit organizations

Wisconsin, 2013

90.3%

6.6% 3.1%

59%28%

11.8%

Stage 3— 1.0% Stage 4— 0.2%

Stages — classifications of businesses by the number of persons they employ


Establishments by employment size

Establishment Sector

Non-com-mercialNon-residentResident

Resident Firm Stage

Self-employedStage 1 (2-9)Stage 2 (10-99)Stage 3 (100-499)Stage 4 (500+)



Sauk County, 2013

90.3%

6.8% 2.9%

56%28%14.4%

Stage 3— 1.5% Stage 4— 0.14%



Sauk County establishments byemployment size, 2013

Establishment sector Non-commercial: 286 (6.8%) Non-resident: 120 (2.9%) Resident: 3,776 (90.3%)

Resident firm stage Self-employed: 1,166 (27.9%) Stage 1 (2-9): 2,341 (56%) Stage 2 (10-99): 607 (14.5%) Stage 3 (100-499): 62 (14.5%) Stage 4 (500+): 6 (0.14%)



90 percent of the firms are resident and 84 percent of the resident firms are 9 employees or less in size—that’s a significant market segment!


Wisconsin establishments versus jobs

Self-em-

ployed

Stage 1 (2-9) Stage 2

(10-99) Stage 3 (100-499)

Stage 4 (500+)

0

10

20

30

40

50

60

Businesses

Resident — stand-alone businesses in the area or businesses with headquarters in the same state• 90.2% of establishments are resident • 78.0% of jobs are resident

Percent of Resident Establishments by Stage, 2013



Wisconsin establishments versus jobs

Self-em-

ployed

Stage 1 (2-9)

Stage 2 (10-

99)

Stage 3 (100-

499)

Stage 4

(500+)

0

10

20

30

40

50

60

BusinessesJobs


Percent of Resident Establishments & Jobs by Size, 2013



Sauk County establishments vs jobs

Self-em-

ployed

Stage 1 (2-9)

Stage 2 (10-

99)

Stage 3 (100-

499)

Stage 4

(500+)

0

10

20

30

40

50

60

BusinessesJobs


Percent of Resident Establishments & Jobs by Size, 2013


78 percent of the jobs are resident and 67 percent of the resident jobs are in firms with 9 employees or less in size—that’s a significant market segment … as

are the 10,000 jobs in the 68 resident firms employing 100 persons or more!


Growth or decline in establishmentsSelf-em-

ployedStage 1

(2-9)Stage 2 (10-99)

Stage 3 (100-499)

Stage 4 (500+)

-4-3-2-10123456

ResidentNon-residentNon-commercial


Percent Growth of Establishments, 1995-2013

Perc

ent C

hang

e



Growth or decline in jobsSelf-em-

ployedStage 1

(2-9)Stage 2 (10-99)

Stage 3 (100-499)

Stage 4 (500+)

-4-3-2-1012345

ResidentNon-residentNon-commercial


Percent Growth of Jobs, 1995-2013

Perc

ent C

hang

e



Wisconsin resident establishments by stage 1995-2013

0

50000

100000

150000

200000

250000

Self-em-ployedStage 1 (2-9)

Stage 2 (10-99)

Stage 3 & 4 (100+)Es

tabl

ishm

ents

1995

2000

2005

2010

2013

Total establishments increased 32%; high of 411,206 in 2010Self-employed increased 36.5%; high of 168,211 in 2010Stage 1 increased 34.5%; high of 204,514 in 2010Stage 2 increased 11.6%; high of 38,370 in 2013Stage 3 & 4 increased 22.3%; high of 3,673 in 2012



Sauk County resident establishments by stage 1995-2013

1 3 5 7 9 11 13 15 17 190

500

1000

1500

2000

2500

3000

Self-employed

Stage 1 (2-9)

Stage 2 (10-99)

Stage 3 & 4 (100+)

Esta

blis

hmen

ts

2000

2005

2010

2013

Total establishments increased 24.2%; high of 5,096 in 2008Self-employed increased 28%; high of 2,000 in 2008Stage 1 increased 25%; high of 2,538 in 2008Stage 2 increased 11.9%; high of 511 in 2004Stage 3 & 4 increased 31.3%; high of 49 in 2008


1995


Wisconsin resident jobs by stage 1995-2013

0

200000

400000

600000

800000

1000000

1200000

Self-employed

Stage 1 (2-9)

Stage 2 (10-99)

Stage 3 (100-499)

Stage 4 (500+)

Jobs

1995

2000

2005

2010

Total jobs increased 19%Self-employed increased 36.5%; high of 168,211 in 2010Stage 1 increased 22.9%; high of 618,776 in 2008Stage 2 increased 14%; high of 13,209 in 2004Stage 3 increased 20.7%; high of 563,154 in 2012Stage 4 increased 20.2%; high of 495,275 in 2013

Source: YourEconomy.org, Edward Lowe Foundation20

13


Sauk County resident jobs by stage 1995-2013

1 3 5 7 9 11 13 15 17 190

2000

4000

6000

8000

10000

12000

14000

Self-employed

Stage 1 (2-9)

Stage 2 (10-99)

Stage 3 (100-499)

Stage 4 (500+)

Jobs

1995

2000

2005

2010

Total jobs increased 25.2%; peaking at 34,832 in 2008Self-employed increased 27.9%; high of 2,000 in 2008Stage 1 increased 14.2%; high of 7,843 in 2008Stage 2 increased 15.6%; high of 13,209 in 2004Stage 3 increased 33.6%; high of 7,399 in 2013Stage 4 increased 65.5%; high of 4,670 in 2006 thru 2008


2013


This is the tip of the iceberg


Worker Flow for Sauk County – 2011

County Count ShareSauk County, WI 14,756 50.3%Dane County, WI 2,825 9.6%Columbia County, WI 1,825 6.2%Juneau County, WI 1,184 4.0%Richland County, WI 999 3.4%Adams County, WI 671 2.3%Iowa County, WI 625 2.1%Monroe County, WI 415 1.4%Grant County, WI 373 1.3%Vernon County, WI 362 1.2%All Other Locations 5,290 18.0%

County Count ShareSauk County, WI 14,756 50.8%Dane County, WI 5,705 19.6%Columbia County, WI 2,870 9.9%Milwaukee County, WI 1,005 3.5%Waukesha County, WI 831 2.9%Iowa County, WI 557 1.9%Richland County, WI 358 1.2%Fond du Lac County, WI 314 1.1%Rock County, WI 302 1.0%Juneau County, WI 296 1.0%All Other Locations 2,061 7.1%

Employees Working in Sauk County Place of Residence (n = 29,325)

Employees Residing in Sauk County Place of Employment (n= 29,055)

Data Source: U.S. Census Bureau OnTheMap LODES Data


Framing economic development with quality of life assets

Natural…environment, recreation and leisure

Cultural…arts and culture, community

Human…education, health, home

Social…community, learning, safety, self-sufficiency Political…community, safety Financial…home, self-sufficiency, work Built…home, environment, recreation and leisure


Growing the economy takes everyone

The private sector creates jobs But the public sector influences the conditions

• regulatory reform• reducing the tax burden• adequate infrastructure• necessary public services• a skilled, reliable workforce• a support network


A prescription for business development Create climate and culture in which business

(entrepreneurs and entrepreneurship) can flourish 3 organizing principles:

• community-driven• regionally-orientated• entrepreneur-focused

Does it make sense for an agency such as SCDC to help promote community development in order to be effective at economic and business development?

Source: Brian Dabson, Rural Policy Research Institute (RUPRI)


SCDC’s unique challenges

Is the job of the agency different when the economy is good versus bad?

What’s different about a multi-community entity? What is the value-added proposition that SCDC

offers it’s community partners? What can’t [insert name of city or village or

business interest] do effectively on it’s own? How does SCDC engage those partners and

communicate with them?


Discussion

center for community and economic development people who excel – businesses that innovate –...

Documents

economic development

community development

business development

better slide

s regional competitiveness

mary emery slide

industrial recruiting

s cost competition