As individuals go about their daily lives and businesses work to make a profit, money flows from business to business, individual to individual, and between businesses and individuals. Money also flows within and between towns, cities, counties, regions, states and countries. As a result, some individuals, businesses and communities generate a positive cash flow, have more money to spend and prosper, while others do not. There are winners and losers!
It is important to understand how money flow works and how it impacts prosperity. Money flowing into a community not only replaces money that leaks out, it is also the source of new money that funds economic growth and prosperity. As one might expect, Magnetic Communities focus on two money flow strategies: (1) increasing inflows and (2) decreasing outflows. Communities increase inflows by attracting money to the local economy and decrease outflows by stopping or slowing the flow of money out of the local economy. Both of these money flow goals are encompassed in the Magnetic Community strategies of attracting and retaining money.
The blue line in the above chart depicts the inflow of money into a community over eight years. In this example, the steady growth of money flowing into the community is accompanied by a slower increase of money flowing out and is represented by the red line. The diverging lines represent an increase in the amount of money available for spending. More money is being retained over time which may be the result of local businesses employing more residents or purchasing more goods and services locally. In addition, residents may be spending more money locally, rather than outside the community. Overall, the amount of money available locally for spending is increasing, providing the community with a positive cash flow, more money to spend and prosperity.
By converting the line chart into a bar chart, it is easier to see that the money available for spending is increasing. The green bar on the chart shows that the money available for spending increases from $4.0 million to $7.5 million over eight years. These two charts depict the Magnetic Community model. By steadily increasing inflows and decreasing outflows, communities create a positive cash flow, thereby increasing both the amount of money available for spending and local prosperity.