Business Development Agencies (BDAs) are an essential tool for supporting local and regional economic development. Their primary role is to promote new business opportunities and help businesses overcome barriers hindering their development. Their effectiveness depends on the leadership skills and business experience of the Director and staff. They are set up and funded by a wide range of partners, including national, regional and local government with the support of the business community, particularly major employers, and providers of business services.

In Russia and the NIS countries, the CNCP programme is supporting the development of agencies and commercialisation units to stimulate local business development and create sustainable employment for former weapons staff. In Russia it has worked in partnership with the Local and Regional Administrations and the Cities’ Main Enterprises to support the formation and work of Business Development Agencies in Seversk and Ozersk and through contracts with the IDC’s in Snezhinsk and Zheleznogorsk, which were set up under the American NCI programme.

Their key role is to seek out and identify promising new projects with the prospect of creating sustainable jobs for former weapons staff and assist them to develop market research and business plans and to secure funding locally and from CNCP.

With the anticipated reduction in employment in the city’s main enterprises and research institutes, there is an urgent need to broaden the economic base of the Closed Cities. The three most important sources of local and regional economic development are:

• The formation of new firms
• The expansion of existing firms already in the area
• The attraction of new businesses to the local area

Promotion and the creation of a positive image for business in a local area is critical. Entrepreneurs and managers have to believe that the local area is the best place for them to develop their business, particularly in relation to their ability to hire staff and market their products and services. Business people will tend to consider areas and locations that they know. If they are to be persuaded to consider another area, that area has to raise its profile and address questions and doubts that the business may have. BDAs staffed with people that understand business needs are well placed to take the lead.

New business projects will only go ahead in a particular location if all the most critical doubts and uncertainties are addressed. It is the job of the BDA to understand the factors inhibiting the start of the proposed project and help the business overcome these barriers. The most common barriers include uncertainties about whether and how to start the business, access to finance, finding a suitable site or premises, concerns about the market and the recruitment of suitable staff.

Uncertainties about starting a business: an important role of many agencies is to encourage and support people thinking of starting a new business. They may be people in employment with a burning idea for a new business, or people faced with unemployment. In both instances, they require access to advice and training.

Securing funding: The most common barrier inhibiting new projects from going forward is a lack of finance. A high proportion of BDAs’ work is providing help to entrepreneurs and existing businesses to secure investment funds.

Sites and premises: finding a suitable site and premises is critical, particularly if the enquiry is from a mobile investor looking at several different locations for the business. These businesses require quick and reliable feedback. The Agency will need to work closely with the Local Administration and the utilitites to search out suitable property options which meet the investor’s particular requirements. This will include a range of issues such as the size and specification of the space, the provision of key services such as electricity, water and gas, land ownership and planning considerations.

Recruitment of key staff: critical to the attraction of new investment to an area and the subsequent success of the business is access to key staff and a skilled workforce. The Agencies maintain information on the skills base and training facilities of the local area. They liaise with the local offices of the Employment Service and major employers.

Good agencies build up a reputation and gradually become the ‘eyes and ears’ of the business community in a local area and, therefore, a first point of contact for businesses with a problem.

A key challenge for all BDAs is the recruitment, training and development of staff. Staff are required to work across a wide range of sectors and have a basic understanding of all the key areas of business (including innovation/product development, sales and marketing, production, organisation and management, and finance). They need to develop their consultancy skills, to be able to understand the dynamics of each of their client businesses and to highlight potential opportunities.

The long term value and sustainability of the agencies themselves depends on the dynamic of the Board of Directors and their ability to secure appropriate funding. Continued core funding from national, regional or local public sector bodies is an essential pre-requisite.

Agencies are primarily a tool of regional and local economic development and need to be assessed in terms of increased business activity (business formation, investment, sales and profitability), impact on employment (the number and types of jobs safeguarded and created, training and upskilling), and improvements in a local area’s overall competitiveness (e.g. through innovation, enhanced productivity and increased exports).

Charles Monck, CNCP Expert