Mainebiz

V O L . X X I I I N O. X X I X D E C E M B E R 1 1 , 2 0 1 7 26 H R / R E C R U I T M E N T F O C U S H OW TO B Y C A T H E R I N E R E I L L Y D E L U T I O T he best Maine businesses know that long-term success means look- ing beyond industry fads to the macro economic and demographic trends that infl uence long-term profi ts. e closures of maternity wards in rural Maine remind us why. Even the best obstetric amenities can't drum up business if the number of pregnant women in your service area is on a decades-long decline. Businesses that prosper over generations watch the horizon. ey maximize the gains from useful trends and minimize the fallout from adverse trends. But for many small-business owners, horizon-gazing is a luxury that just doesn't happen — they can't even gaze at lunch. For those busy people, here's a simple equation that explains Maine's long-term growth: Economic Output = Population x Participation x Productivity. Along with Region, those are the primary forces that will infl uence your long-term profi ts. Let's break them down. Population: Upsell or out-sell Maine's population is old and projected to start declining in number around 2019, according to the Maine Offi ce of Policy and Management. ere are two ways to increase sales when facing a declining customer base. First, off er more or higher-end prod- ucts — upsell. ink of a local bank adding wealth management services or L.L.Bean launching its Signature Line. Second, fi nd new customers outside your region — "out-sell." e lobster industry is leading the way here, aggres- sively marketing overseas to more than double exports of live lobster since 2010. Participation: People fi rst, plan second As more and more Mainers reach age 65, workforce participation will fall sharply. In many regions, it will become even harder to fi nd workers. is will have fundamental implica- tions for how businesses grow. In the past, you could make a plan and then hire people with the skills to execute it. A lack of qualifi ed workers could make this approach obsolete in some regions. e most successful future Maine companies may be those that start with people. ey will discover and cultivate new skills within their existing workforce, fi nd market opportunities that align with those skills, and then form plans. Productivity: Up the ante In 2016, Maine's gross domestic prod- uct per worker ranked No. 46 among the 50 states, according to the U.S. Bureau of Economic Analysis. Like the Maine economy overall, increasing productivity is key to suc- cess for businesses. How to do that? By giving workers better tools, better skills or better inputs. For instance, with 10,000 fewer workers, Maine's manufacturing industry now generates the same out- put as 10 years ago, adjusted for infl a- tion. Manufacturers have achieved this by investing heavily in technology and equipment, hiring and training a well-skilled workforce and, where possible, shifting to products with a higher profi t margin. All of these increase productivity. Businesses can also increase revenue- per-worker by shifting to better inputs. For instance, it takes a food server just as long to deliver a $10 entree made of basic ingredients as a fancier, $20 entrée, and it takes housekeepers just as long to clean rooms that cost $100 per night as $200, but the revenue is double. More revenue for the same task means higher productivity and more profi ts. Region: Connect to cities Finally, an inescapable trend aff ecting all Maine businesses is the diverg- ing fortunes of rich and poor regions. Since 2009, 40% of Maine's job growth has been in greater Portland. In today's knowledge-based econ- omy regions that are densely populated and well-connected to other econo- mies are enjoying greater prosperity than many rural areas. is means Maine's rural busi- nesses will gain by strengthening their connections to urban areas such as Portland and Bangor, through a physical presence, marketing, business partnerships, co-branding or other creative approaches. Catherine ReiLLy DeLUtiO, a former Maine state economist, is chief research offi cer at North Research LLC. She can be reached at Kate@NOrthresearch.cOm AAA Energy's preventative maintenance programs can extend your mechanical equipment's life, while increasing its reliability and eciency. Be proactive, to keep your customers and employees comfortable, your products consistent, and your processes running smoothly. To learn more call 207.883.1473 or email info@aaaenergy.com Serving Maine, New Hampshire, and Massachusetts aaaenergy.com Proper Maintenance or unexpected repairs? HEATING AIR CONDITIONING REFRIGERATION MAINTENANCE DESIGN/BUILD CREATING CREATING SUCCESSFUL OUTCOMES Plus a whole lot more. To our lawyers, meeting expectations is a starting point. We partner with you to deliver the results you seek, as well as an experience you can feel good about. We're here to help you succeed in all aspects of life. What matters to you, matters to us. 75 Pearl Street, Portland, ME 04101 | 207.773.5651 | MPMLaw.com A d v o c a t i n g f o r y o u Turn macro trends into micro profits

• Cover