Assist businesses identify local sources for raw materials, supplies, and services – When local businesses purchase materials, supplies, and support services locally, money remains and circulates in the local economy, multiplying its economic benefit. Because outside revenue is both scarce and valuable, Magnetic Communities work with local business to retain money as long as possible. Making businesses aware of locally available products and services and of the local economic benefits of buying local is an amazingly cost effective way to retain outside revenue.
Recruit, expand, retain, and start businesses that fill gaps in the local availability of materials, supplies and support services – When local businesses purchase raw materials, supplies and services locally, money is retained and circulated in the local economy. If gaps exist in the availability of critical raw materials, supplies and services, businesses are forced to make outside purchases, creating an outflow of money. When gaps appear or are identified, Magnetic Communities work to stem the outflow by recruiting, expanding, retaining, and starting businesses that fill the gaps. The first step is to approach the current supplier to see if they are willing to relocate or expand. One alternative to recruiting or starting a business is to find a local business in a similar line of work and evaluate the feasibility and their willingness to expand. On the flip side, it is important to make sure that local suppliers remain successful and in business. The last thing a community wants to happen is for a local supplier to move or close.
Entrepreneurship is one of the most effective economic development strategies available to communities. A successful local startup with local employees can not only provide a missing product or service, but also keep wages, profits and ownership close to home. A missing product or service may represent an opportunity for an entrepreneur to start a business. When I was teaching entrepreneurial classes, one of the first questions I got was, “What kind of a business should I start?” Knowing what products and services are missing answers the question for entrepreneurs and keeps money in the local economy.
Assist businesses identify and hire qualified local workers – By assisting local business identify and hire qualified local workers, money is retained in the local economy. Even though employees can live where they choose, Magnetic Communities do everything they can to have workers live locally. Giving hiring preferences to residents and workers willing to relocate strengthens the relationship between businesses, its workers, and the community. Communities that assist in the relocation process, and provide incentives to live locally are implementing strategies that create prosperity. Also, by developing training programs, internships, and a job registry, communities create an environment that promotes local employment and job growth. Aggressively marketing the community and courting transferees to live locally is essential to keeping paychecks working in the local economy. Living locally benefits both workers by shortening the commute and businesses by strengthening their image as good corporate citizens.
If incentives are involved in the relocation or expansion negotiation, it is important to at least discuss targets for local hiring. Most companies want to be good corporate citizens and will agree to work with the community to hire locally qualified workers.
The ability and willingness to commute or work from home provides a real challenge for communities located near resort areas, and areas of natural beauty such as beaches, lakes, and mountains. Also, rural communities with good jobs may have a hard time convincing workers to live in the community when the school system and other quality of life factors are inferior to those of neighboring communities.
Convert in-commuters to residents – Converting local workers who live outside the community into residents retains money in the local economy. Not only are in-commuters taking jobs that could be filled by residents, they are taking money out of the local economy. They may buy gas and lunch from time to time but the bulk of their spending is most likely taking place where they live.
If a substantial number of local workers, especially highly paid workers, choose to live outside the community, their paychecks and associated spending is going to leave with the employee on payday and provide little if any benefit to the local economy. With direct deposit, the paycheck probably never even enters the local economy, but rather goes straight to the in-commuter’s bank. Because highly paid workers have more resources and options about where they live or have second homes, the outflow of money can be substantial. For example, if local doctors, plant managers, and business owners live outside the local economy or live locally and leave for the beach on Friday afternoon, the local economy is not going to fully benefit from their income and potential spending.
In most cases a worker’s natural inclination is to reduce commute time, distance, and cost. If they continue to commute, it is important to know why they are still not willing to move closer to work and become part of the community. There are probably reasons like family, a spouse’s job, etc. that no one will ever be able to overcome. But, if quality of life issues related to education, housing, recreation, and safety are the reasons for not moving, the focus needs to be on community development. A starting point is to survey local employers to determine the number of employees and the amount of pay flowing out of the local economy. A simple spreadsheet with home zip codes and take-home pay will determine the scope of the issue, but it will take a more indepth community development effort to determine the reasons behind the problem.
Request that transferees and new hires live locally – When local businesses recruit employees, convincing them to live locally helps retain money in the local economy. It is usually easier to convince a transferee or new hire to live locally during the hiring process than to convince an in-commuter to move later on.
Communities lose a lot of economic benefit by not getting involved early on with new and expanding companies to insure that they market the local community to transferees. Once transferees make a decision not to live locally, their paychecks are probably lost for quite some time. Additionally, once a top executive or other transferee makes a decision on where to live, others will follow suite. If that decision is to live locally, great! But if the decision is to in-commute, the negative consequences can be substantial.
Local businesses that understand and support Magnetic Community strategies are able to make a big difference in the growth and prosperity of the local economy. By giving local job applicants preference and by requesting that new hires and transferees relocate to the community, local businesses keep wages working locally, improving both local prosperity and the company’s business environment.