Recruit, expand, start, and retain businesses that make products or provide services sold outside the local economy – When local businesses make products or provide services and sell them outside the community, new money is attracted to the local economy. By recruiting, expanding, starting and retaining manufacturing/service businesses, communities are able to maintain and increase the inflow of outside revenue.
Starting new businesses that attract money from outside the local economy is an especially effective Magnetic Community strategy. According to the Small Business Administration, startups and small enterprises create more than 50% of all new jobs. This is not to discount larger established firms that contribute to the local economy, but entrepreneurship and small business development can be a more effective job creator. Startups drive both economic growth and contribute to the creation of additional startups. By facilitating and incentivizing entrepreneurship, communities create new jobs, stimulate creativity, increase spending, and, most importantly, create new sources of outside revenue for the local economy.
Prioritize the expansion, retention, and start-up of locally owned and operated businesses – Locally owned and operated businesses not only have the potential to attract new money from the sale of products and services outside the local economy, they also attract profits earned by the businesses. In addition, locally owned and operated businesses are more likely to use local services such as engineering, legal, banking, accounting, insurance, etc. Many locally owned businesses are also headquartered locally, which is likely to include higher paid functions associated with management, banking, payroll, marketing, research, and sales. Locally operated and headquartered businesses attract meetings, conferences, and marketing calls from vendors who stay in hotels, eat meals and purchase gas, etc. With roots in the community, locally owned and operated businesses are not as sensitive to cost increases and are more likely to sponsor events and contribute to local nonprofits. Locally owned businesses add to the character, culture and uniqueness of a community.
An important subset of locally owned and operated businesses includes family owned firms. These firms have all the positive attributes of locally owned and operated businesses and in many cases grow faster than nonfamily owned firms.
Add value to local products and services sold outside the local economy – Increasing the value of products and services sold outside the community increases the amount of outside revenue attracted to the local economy.
Many farmers sell their harvests in bulk on commodity markets. Even though this generates a flow of new money into the community, it can be increased by adding value to the harvest. For example, the simple act of branding a product increases recognition and opens up opportunities to differentiate it from competitors. Other examples of adding value include turning cucumbers into pickles, onions into relish, and strawberries into jam, etc. Many farmers have considered this strategy from time to time but face obstacles such as funding, regulatory requirements, and/or expertise.
Assist local businesses expand markets beyond the local economy – Helping local businesses expand sales beyond the local economy attracts outside revenue to the local economy. For example, local electricians, house painters, and computer repair technicians who restrict their business to local clients all have the potential to expand their markets outside the local economy. Some businesses may not want to expand but others will welcome any support and resources the community can provide. For example, assisting a local machine shop acquire the certification necessary to supply parts to the aerospace industry expands a local company’s market, attracts outside revenue and creates a new support service that now can be marketed to other aerospace companies.