Sustaining and Growing the Local Economy

Small towns and rural areas generally have a close economic relationship with their surrounding region, especially larger urban areas within a couple of hours driving distance. Unfortunately for the small town, the relationship with neighboring urban areas is almost always unbalanced, with income from the small town leaking out to the urban area to purchase goods and services, either not available or with limited choice in the small town. The challenge for the small town is to increase its income and reduce the proportion that is spent in neighboring urban markets. Let’s explore six potential paths to sustaining and growing the local economy. In each case, our objective is to identify assets and resources that increase the potential for local success and the limitations and constraints on that avenue for development. The six paths are: 1. Retain and expand existing businesses. 2. Improve local linkages and reduce leakage of income out of the community. 3. Create new businesses through supporting entrepreneurship. 4. Increase earnings outside the community (commuting to work). 5. Capture more unearned dollars. 6. Attract more outside investment. Consider each of the six alternatives, first focusing on aspects of the community that would increase the likelihood of success, then focusing on aspects of the community that would decrease the likelihood of success. There will likely be considerable overlap of both assets and limiting factors across the six areas. Retain and Expand Existing Businesses

Think about the businesses that already exist in the community and consider which types of business may be in danger, which are likely to continue at approximately their current size, and which may have potential to grow. Then begin listing positive and negative factors in the appropriate column below.

Assets and Resources to Support Retention and Limiting Factors and Threats to Existing Expansion of Existing Businesses Businesses Improve Local Linkages and Reduce Leakage of Income Out of the Community

Think about where local businesses and residents spend their money. Do businesses buy inputs from outside the community? Where do you and other residents make various types of purchases? List factors the support and discourage local linkages in the appropriate column.

Assets and Resources to Support Improvement of Limiting Factors and Threats to Improvement of Local Linkages and Reduce Leakages Local Linkages and Reducing Leakages Create New Businesses through Supporting Entrepreneurship

Some people in the community may have ideas and a desire to start new businesses, but may not have sufficient business knowledge, sufficient resources, understanding of their potential market or willingness to take risk to encourage them to actually start a business. What assets does the community have, or have access to, that would be important for starting an entrepreneurship support program, and what are the limiting factors? List positive and negative factors in the appropriate column below.

Assets and Resources to Support an Limiting Factors and Threats to an Entrepreneurship Program Entrepreneurship Program Increase Earnings from Commuting to Work outside the Community

Should unemployed and underemployed residents be encouraged and given support to find employment in neighboring markets? Does your community have the potential to attract new residents who will continue to work in surrounding markets? What makes the community desirable and appropriate as a place to live while working elsewhere? List positive and negative factors in the appropriate column below.

Assets and Resources to Support Growth as a Limiting Factors and Threats to Growth as a Bedroom Community for Commuters Bedroom Community for Commuters Capture More Unearned Dollars

Income can come from many sources in addition to earnings. Unearned dollars may include such sources as social security, pensions and investment income for individuals as well as grants to local governments and not-for-profit organizations. What makes your community an attractive place for retirees or families living on income from investments? What is your community’s potential for obtaining grant funds? List positive and negative factors in the appropriate column below.

Assets and Resources to Support Capturing more Limiting Factors and Threats to Capturing more Unearned Dollars Unearned Dollars Attract More outside Investment

The typical form of outside investment that economic developers and communities pursue is relocation of manufacturing plants, establishment of a new plant when a firm expands beyond its current location, relocation or establishment of new call centers or distribution centers and other major capital expansions when businesses grow. Other possibilities could be government offices, not- for-profit headquarters and start-up businesses. Every community has characteristics that make it more or less likely to attract outside investment. Identify your community’s assets and constraints and list them in the appropriate column below.

Assets and Resources to Support attracting More Limiting Factors and Threats to attracting More outside Investment outside Investment