Research Study Reveals Lessons Learned from Business Support Efforts during Construction

By: Brian Pittman, Wilder Research
2/28/13

In the fall of 2011, the Business Resource Collaborative and Central Corridor Funders Collaborative invited Wilder Research to partner on a research study to investigate the service use and business loss mitigation efforts of businesses and support organizations on the Central Corridor. Wilder Research worked with these two groups as well as other organizations—including the City of Saint Paul, Neighborhood Development Center (NDC), the Asian Economic Development Association (AEDA), and the University Avenue Business Preparation Collaborative (U7)—to develop a survey and a sample of businesses on the corridor. During the spring of 2012, Wilder Research interviewers set out across the Central Corridor to talk with business representatives about their experiences with the construction and services. In total, 201 Central Corridor business owners and managers completed surveys in person and over the phone.  These surveys provided rich information about the types of assistance and mitigation efforts the businesses were using, how effective those services and efforts were, the improvements that could be made to services and assistance, and the lessons learned that can help to inform future efforts.

How were businesses being affected by construction?

As part of the survey, representatives were asked a series of questions about the impact of construction on their business in the previous year, and from their responses, it is clear that businesses experienced disruptions in relationship to the construction. Common disruptions included reduced sidewalk access, street closures, and loss of on-street parking. Business representatives also felt that the disruptions led to negative impacts on business or customers including customers having or perceiving difficulty navigating construction, fewer customers coming to businesses, less automobile and pedestrian traffic in front of businesses, and excess noise, dust or other disruptions.

What mitigation efforts are used and effective?

The mitigation services and assistance offered by organizations on the Central Corridor fall in to two categories; those that are intended to increased traffic or customers to the business and those that are intended to compensate for revenue loss due to decreased customers or traffic. While more than one-third of the businesses in the study participated in at least one of the services asked about in the survey, this number is high because the study intentionally chose businesses identified through the services in order to get better information about experiences with those services. Business representatives reported general effectiveness and satisfaction with the services they received and indicated that the services were user-friendly and well designed. Businesses participating in the revenue replacement programs also reported that those programs met specific needs for their business and that the terms of the programs were favorable.

More than one-half of businesses also reported implementation of their own strategies to mitigate the effects of the construction; these businesses spent an average of $2,311 on those mitigation strategies. About one in three businesses spent money on additional signage or promotional offers. About one in five businesses purchased additional advertising. In general, these strategies were seen as effective in increasing customer traffic.

What is the future outlook for businesses?

Business representatives were also asked questions about their prospects for the future of their business. Three-quarters of the business representatives expect that their businesses will be operating at the same location in five years. Outlooks were more positive among larger businesses and businesses operating in space that they own. About two out of three business representatives expect their business’s sales and profits to increase in the next five years. For the business representatives reporting that they may not be operating in the same location in five years, the primary reasons were general uncertainty, significant financial losses, and not wanting to stay in the area.

What did we learn?

One of the most important things learned in this study is that outreach is critical to participation in services. Outreach can help business become aware of services, identify the services that are best for their business, and help businesses successfully apply for and implement those services. It is also clear that businesses prefer revenue compensation (e.g., loans or grants) over services intended to increase customers. While the flexibility and simplicity of revenue compensation is understandably appealing, the advantages of technical assistance-oriented services should not be overlooked. Mainly, that because they are generally more “hands-on” they can be effective in identifying and addressing structural or systemic concerns within the business in a way that loan programs may not. Finally, the study also shows that the services offered in the Central Corridor were reaching businesses in greatest need, and provided a diverse range of options to meet the varied needs of those businesses. This is excellent in the short term, but the true measure of success will be during the coming years as the light rail trains begin running, and the businesses, organizations, and service providers shift focus from mitigation strategies to building a thriving business corridor.

For more information about this study, please refer to the full report or contact Brian Pittman at Wilder Research.