Economic developers play an important role in keeping Main Streets alive in smaller municipalities and they have to learn a great deal both from readings and job experience to be effective in their role. This post will give readers a brief overview of what work goes through in retaining, growing, and attracting business investments in a community. Most of the content is adapted from the Investment Readiness Toolkit from the Economic Developers Alberta.
For starters, communities actively pursue investment for a variety of reasons such as creating more employment, maintaining or improving community infrastructure, or creating economic diversity. The ultimate goal of economic developers is to get enough funds to meet the needs of locals and make their communities livelier. How do they do that? They make their communities “investment ready.”
There are a variety of investments that economic developers pursue and they can be classified as resource seeking, market seeking, efficiency seeking and strategic asset seeking. You may frequently hear “foreign direct investment” and that simply means the transfer of financial assets or other economic assistance from a foreign company to a recipient, which in our case is a community. It comes in a variety of forms and arrangements but that’s a different story. Going back, the classifications of investment is based on its purpose and they are described as follows:
So you know the basics of economic development that may as well be from a textbook, but how do you now generate leads? An economic developer can take a proactive or passive approach in getting investors but either way, one has to start with collecting data and putting one’s community out there so people know it’s open for business. For the most part, an economic developer may not even know its community is being considered for an investment until the later parts of the investment process. Therefore, it is important for economic developers to always be ready with the information companies are looking for and what investments it is looking for and are good fits for the community.
The first point of contact one would like potential investors to see is a community profile. Even though an investor has not personally visited your community, at least they would have a quick rundown if your community even has enough population to meet the minimum market size they require, as an example. At a minimum, a community should have the following information up on their website or platforms:
Due diligence is required as these need to be 100 percent accurate. In high stake deals, any misinformation is viewed as unreliability and may cost a community losing the business. Townfolio is one of the tools that can help economic developers set up a community profile that can help communities be investment-ready.
After putting all the work in collecting the basic data that any investor would need to make a decision, an economic developer has to assess what kind of deals it would like to attract and further customize its community profile and investment attraction package to attract those specific deals. To do so, an economic developer needs to have a plan similar to that of business plans.
The first step will be identifying the community’s goals. Then, external trends need to be examined while the community’s internal attributes are to be assessed through a SWOT analysis. After mapping out the strengths, weaknesses, threats, and opportunities, one can formulate their community’s strategy. An economic developer needs to maintain, improve, and leverage the community’s strengths, remedy (if possible) or play down weaknesses, minimize and manage threats, and prioritize or work towards opportunities identified. Other analyses that can be done are the location quotient analysis and the shift-share analysis. To further narrow down a community’s focus in investment attraction, targeting geographic sources of investment through a competitive strength analysis is required. It is useful in helping communities prioritize the best investment opportunities.
Like a business plan, a community’s investment attraction plan will need a marketing strategy. To get started, an economic developer will need to identify its competitive advantage that may have been identified through the SWOT analysis. Next, a target market should have been defined through either the SWOT analysis or the competitive strength analysis. Given what the target market (can be a specific company or a group of companies with the same set of attributes) requires, an economic developer need to tailor a list of benefits the community can provide and show how the community’s brand fits well with the type of business the investor represents. The economic developer should also use the appropriate marketing tools that this target market uses or is constantly exposed to. There are numerous tools available but those often used by economic developers are trade missions, websites, social media, direct emails, special events, trade shows, press releases, direct advertising, direct mail, marketing collaterals, partnerships, and association memberships. After laying out these, the last thing left is execution and regularly improving the plan and execution on a regular basis.
After going through the planning and implementation, an economic developer should have been able to generate investments for the community. While this task is hard, the more difficult portion of the job is keeping investors happy and keeping their business in the community over the long-term. To do so, economic developers need to have a system in place to keep a record of current investors, the investments they have made, and potential investments. The process involves first developing a list of potential investments by tapping trade commissioners and looking at investors in other communities similar to one’s community. Economic developers should also populate their databases with up-to-date contact and other relevant information about their current investors. A tool economic developers find useful to maintain a database of investors is Executive Pulse, which has a feature to track the progress of one’s investment attraction efforts.
Economic developers should contact and nurture relationships with potential investors while following up and continually be listening for areas of improvement from current investors. It will also be useful to set metrics and track the community’s success in attracting investment. The Economic Development Association of Canada provides guidelines on how to select the appropriate measures:
So that’s it! That’s a walkthrough of the investment attraction process. For the next blog post, we’ll be providing a bonus section about hosting delegations or trade missions. Economic developers will find this useful if they are anticipating visits from potential investors.