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The Following is the executive summary of a recent study conducted by the Center for the Advancement of Small Business. If you would like the entire document, please contact us. Continue to check this site as we plan to be adding more studies in the near future.

Executive Summary

This study was initiated to gain insight into the factors which influence businesses to locate in, to remain in, or to leave Washington, DC. The fact that the District has been losing population for over a decade and has begun more recently to lose employment and business establishments also makes this subject timely and pertinent.

  • The dominant factor influencing businesses to stay in DC was closeness to customers, suppliers, home, and/or organizations within or affiliated with the federal government.
  • A second mildly positive or "stay" influence factor in the mail survey and the interviews with new arrivals was the ability to attract/retain effective employees. However the interviews with businesses that left the District did not support this finding.
  • Factors influencing businesses to leave in rank order by decreasing importance were -
    • other taxes of all types controlled by DC,
    • unemployment insurance and workman's compensation expenses,
    • cost of facilities and utilities, and
    • cooperation and support from the DC Government.
  • The final factor neighborhood quality (safety, cleanliness, ...), was essentially neutral with two zip code groupings responding positively and three responding with mildly negative averages.

Mean scores were computed for each respondent who marked a value between one (stay) and five (leave) in response to each of seven influence factors. Respondents with mean scores of 3.5 to 4.0 might be regarded as "moderate risks" in terms of their inclination to leave the District. Twenty-seven percent of the respondents to the mail survey were in this category compared to 31% of the interviewees who left and 10% of the interviewees who just moved in. Respondents with mean scores of 4.0 to 5.0 might be regarded as "high risks" in terms of their inclination to leave the District. Twenty percent of the respondents to the mail survey were in this category compared to 3 8% of the interviewees who left and 20% of the interviewees who just moved in.

Following the seven influence factors, the question was asked: "What is the most important thing that the DC Government could do to improve the climate for business in the District?" Sixty-three percent of those responding to the mail survey made recommendations having to do with the internal operations of the DC Government. Within this category, the most frequent recommendation was for the DC Government to encourage businesess, to try to attract businesses, and to create a business-friendly climate. Thirty-four percent made recommendations having to do with reductions in taxes and expenses for unemployment insurance and workman's compensation. Interviews with businesses that left followed this same general pattern while interviews with new arrivals emphasized crime reduction as the second most frequent recommendation.

The study concluded with five suggestions for the DC Government, each of which is elaborated much more fully in the pertinent section of this report:

  1. Get a deeper and more specific understanding of the product which the District has to offer the business community and develop ways to merchandise it more effectively.
  2. Capitalize on inertia and noneconomic considerations to retain existing businesses
  3. Seek ways to perpetuate and to enhance the "mystique" of being in Washington, DC.
  4. Address the "DC Government Internal" issues identified by this study which have to do with personnel selection, training, retention and promotion; operating procedures; and teamwork/comrnunication between the various boards, commissions and agencies affiliated with the DC Government.
  5. Make a determined effort to create an environment in DC which will attract people.
The research design featured a mail survey of businesses with "DC" addresses extracted from the membership lists for the District of Columbia Chamber of Commerce and the Greater Washington Board of Trade. The mail survey (790 mailed, 28 postal returns, 184 responses) was supplemented with thirteen interviews of businesses which recently left the District and ten interviews with businesses which recently moved into the District. The mail survey questionnaire probed for factors which influence businesses to stay in or to leave the District and what the respondents thought was the most important thing that the DC Government could do to improve the climate for businesses in the District. The interviews also addressed these subjects. In addition, the interviews of businesses which left the District sought information on the most important factor which caused the departure, and the interviews with businesses moving in sought information on the main factors that influenced the businesses to locate in the District. (The mail survey questionnaire and interview forms are in the appendices. )

An attempt was made to categorize the responses by geography (zip code grouping), customer type (retail/consumer, commercial, or industrial) and product type (goods or services). Since Washington is heavily populated with businesses offering services to commercial customers, these classifications were not useful in segmenting the respondents by customer type or product type. The geographic segmentation by zip code grouping produced a useful distinction only in the case of the "Neighborhood quality (safety, cleanliness, ... )" factor with the businesses around the mall and northwest of Rock Creek holding a more positive view than the remainder of the District.

The study acknowledged limitations in that members of the DC Chamber of Commerce and the Greater Washington Board of Trade may be different in important ways from the total population of businesses in the district.