Three Signs that your Economic Development Strategy needs a Refresh

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The economy is much different today than it was 50 years ago. But you wouldn’t necessarily know it based on some communities’ approach to economic development.

In my work I meet with people from across the country who are looking for ways to grow their local economies. Too often, though, people are looking in all the wrong places. They are using a model left over from the middle of the last century, when big empty plots of land in the middle of nowhere were the answer, gas was cheap, people grew up and stayed in town. Today things are pretty different. Downtown space is in demand, transportation costs are high, and people often pick a place to live and then figure out how to make a living.

Every local economic development effort needs to acknowledge this new reality. Not sure whether your community is successfully doing that or not? Here are three common signs your economic model might need an update:

1. Missing the micro.

Microbusinesses are defined as having fewer than 20 employees. Depending on your local economic landscape, that could actually be a pretty big company. Helping a microbusiness grow from two employees to five, or from ten employees to twenty might be the best way to build good paying jobs in your community. And with the right small business programs you can do it with dozens of small businesses at once. These businesses are more likely to keep money within your community and put down (or already have) deep roots there. Small-scale manufacturing in particular pays an average of 50 to 100% better than service or retail sector. Plus, you’ll be creating jobs while also supporting the entrepreneurs who are already at work growing your economy from the ground up.

2. Waiting for the cavalry.

Recruiting companies from outside your region might be part of a long-term economic development strategy — but you’ll have a lot of work to do before that can even possibly succeed. These businesses are looking for great downtowns, skilled workforce, and a place they can feel a part of. Plus focusing on outside companies can be a strategy that simply never pays off. As one local leader I worked with said, “I eventually realized, the cavalry is not coming.”

3. Feeding the big fish.

Related to item #2 on this list, some towns give away *enormous* amounts of money to lure big companies. Between tax breaks, grants, and infrastructure giveaways, it can take years or decades for a municipality to break even on a big corporate deal — with no guarantee that the corporation will even still be around by then. Investing even a fraction of that money into local and growing businesses could be transformative for that sector of your economy. At a minimum, make sure any benefit you’re offering to big businesses is available to small businesses too.

The most innovative economic development efforts I’ve seen recognize that small businesses are important, especially the ones already in your community, and that they’re worth investing in. They’re not waiting for the cavalry — they’re getting started with the entrepreneurs and businesses already in their community that just need some support. They are building their own pipeline for the future. And they’re not giving away the piggy bank to some unknown business from afar. They’re investing in homegrown companies and getting a huge bang for their buck in return.

Changing these three things can transform your work and your community. And now is the best time to start! Your small businesses are waiting for you.

Ready to get started? Book a call with me here.