MadREP survey: Arrow's pointing up for local biz

There’s no need to beat around the bush with the results from the Madison Region Economic Partnership’s (MadREP) expansive Business Retention & Expansion (BRE) Survey that was conducted in 2015 to better understand the challenges, opportunities, needs, and concerns of companies in the region. Businesses in Madison and the surrounding region are remarkably healthy and optimistic about their future, according to respondents.

That’s not to say there aren’t still areas that local businesses can improve on, says Paul Jadin, president of MadREP, but he believes overall the survey results suggest that our economy is strong and is expected to get even stronger in the next couple years.

According to Jadin, MadREP typically works with its economic development partners throughout its eight county region, which represents Columbia, Dane, Dodge, Green, Iowa, Jefferson, Rock, and Sauk counties, to distribute a 30-question business retention and expansion survey to local businesses. However, this latest BRE survey was a more comprehensive supplement aimed at getting a feel for how many companies in the region are exporting, how many have offices beyond the United States, whether companies are growing or contracting, how companies feel about their local services, and how they feel about their ability to hire labor.

The survey was distributed to 2,500 businesses in the Madison Region and 10% responded, representing all eight counties.

In spite of its comprehensive nature, Jadin says he believes there are only ever two questions that really matter: 1) How are you doing? 2) Is there anything we can do to help?

The answers to that first question is local businesses appear to be doing well.

The majority of responding companies project growth in both employment and physical expansion over the next three years.

  • Nearly 52% of respondents say their employment needs are increasing, while 42% say that their employment needs are stable. Only 4.5% of respondents indicate decreasing employment needs, while the remaining 1% report not knowing.
  • Over 56% of respondents say their company plans to physically expand in the next three years, reporting an increase in investment, jobs, and facility size.
  • These projected expansions account for $270M in potential investment, 1,126 potential new jobs, and over 975,000 square feet in potential new facility space.
  • Respondents report their top concerns for hindering business growth as labor force, competition, the overall economy, and regulations.

“I think in general the results suggest that the regional economy is strong,” says Jadin. “I think it’s the strongest region in the state of Wisconsin, certainly, and one of the strongest economies in the country, as well. So, no surprises there, but obviously we want to make sure that we take something that’s going well and build on it to the point where it’s a model for the rest of the country.”

One area of the survey results that stand out is innovation.

  • Nearly 73% of respondents have introduced new products, services, or capabilities in the last five years.
  • More than 60% of respondents anticipate launching new products or services in the next two years. Over 11% of respondents report not yet knowing if they will introduce new products or services, but may still have the potential to do so.

“I think it suggests that mature companies are still entrepreneurial and there is an environment in the Madison region in which it is easy to continue to be entrepreneurial,” Jadin notes. “There are places where you can find the type of assistance that you need, places like Sector67, for instance, where even some of our oldest, best established companies still go to do a little R&D.”

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One area Jadin sees room for improvement is international sales, and that addresses the second of Jadin's important questions.

  • Nearly 78% of respondents do not have any international sales. Among companies that do have international sales, 45% report that these sales are increasing, 49% report that these sales are stable, and 6% report that these sales are decreasing.
  • Among the small pool of respondents who report international sales, 78% say those sales account for 20% or less of their total sales.

“I think the international questions were fairly revealing to us in terms of just how much work we need to do to expose our economy to international opportunities,” Jadin says. “It was a disappointment but also presents an opportunity.”

One other area of the survey Jadin finds particularly insightful concerns local support for the UW System. According to Jadin, the survey was distributed during the height of state budget negotiations last year and the survey’s only advocacy question asked whether funding for the UW should remain the same or be increased.

  • Nearly 32% of respondents report that funding to the UW should increase and another 46.5% report that it should remain the same, for a total of more than 78% of respondents indicating continued support for the UW.
  • Just over 21% of respondents report that funding to the UW should decrease.

Additional results from the MadREP Business Retention & Expansion Survey include:

Responding Companies
Responding companies largely report their primary market as local or regional, and the majority have fewer than 50 employees.

  • Over 74% of respondents indicate that their primary market is local or regional. Of the remaining respondents, 21% report a national primary market, while just 4.5% report an international primary market.
  • Over 71% of respondents have fewer than 50 employees, with 32% of these having 10 or fewer employees. Nearly 20% of respondents report 50 to 199 employees, with the remaining 9% reporting 200 employees or more.

Workforce
The large majority of responding companies are tapping into a local workforce, hiring employees who live within a 60-mile radius of their location. Respondents also report a favorable response about the availability of workers in this area. 

  • Over 91% of employees hired within the last twelve months by responding companies live within 60 miles of the company location.
  • On a scale of 1 to 7, respondents rate the availability of workers in this area at 4.05, suggesting a generally favorable assessment of the local talent pool.

Company Ownership
Survey results indicate that regional company ownership is stable, with the large majority of respondents reporting no recent or anticipated change in ownership. Similarly, very little turnover in top management has occurred or is expected among respondents.

  • Over 85% of respondents cite that their company does not anticipate a change in company ownership. About 15% of respondents report a pending change or change in ownership over the last 18 months. 
  • Over 81% of respondents cite that their company does not expect turnover in top management in the next 18 months. The remaining 19% of respondents report a pending change or change in top management.

These results are just a sampling of the questions asked in this Business Retention & Expansion Survey, with additional topics covering air travel, mass transit, intermodal shipping, housing availability, and other regional services.

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