Four Trends in Small Town Economic Development

by | Jan 11, 2022 | Economic Development

Two Trends to Try, and Two to Leave Behind

Two Small Town Economic Development Trends to Try:

Small town economic development is about building a community, not just an economy. In my travels across Canada and the United States, one thing has always stood out . . . everyone wants economic success. Why wouldn’t they? Economic success helps our communities grow and become stronger. The challenge most communities face, however, is they forget that developing their economy is a virtually fruitless effort unless they focus on building a strong community first.

Communities often work on building a business-friendly mantra and reputation. Their singular goal is to attract new business and industries, and retain current ones, through a regime of low taxes, reduced regulations, and shop-local initiatives. Those are great undertakings, but they are rarely enough to ensure enduring prosperity if that is where all the community’s efforts go.  

Such singular focus is like deciding that only one feature is needed to attract someone of the opposite sex, such as just having a nice smile, or just having lots of money, or just being smart at puzzles. Sure, any one of those things might get you a lot of dates, but they don’t necessarily ensure building anything meaningful and enduring. That requires more of a complete package. If your community wants to grow an enduring economy it should focus on creating a complete package that attracts business and industry for a myriad of reasons, not just one.

A community looking to explore opportunities for growth should always look first to establish an understanding of itself.  I have called them community personality assessments, or values assessments, or two-lists assessments. Really, the name isn’t as consequential as how deeply you want to understand your community. Once you understand who and what you are, you will see how your community can become better, and where its opportunities lie.

I watched in horror as a wonderful community, thriving and successful, destroyed itself because it never stopped to consider or understand what made it great. It was a bustling community with a vibrant downtown core of mom-and-pop stores, appreciating home values, and lots of visitors that dropped a lot of money in town. It was quaint. It was picturesque. It was almost a fairy tale community. Then they decided they needed a small town economic development plan just like everyone else. They hired an economic development officer, handed him a generic economic development plan, and set him to work. He worked hard and managed to attract a lot of businesses to town. They were mostly those big box stores that say to everyone, “We are successful now.” They put them between the town and the highway to lure the traffic in, just as those economic development strategies suggest.  

It destroyed the town. It lost all the reasons that made it great. It was no longer the quaint picturesque place everyone wanted to visit and live in. It lost its charm. One resident said to me as he was filling up his moving truck on the way out of town, “If I wanted to live in the city, I would have stayed in the city.” Not establishing an understanding of what makes your community strong, not realizing what it values, not consciously thinking about what it can be, and what you want it to be can spell death for you community. Attracting big box stores isn’t a bad thing in itself, but it was for this one because they lost what made them great and what was already making them successful. Without a deep understanding of who your community is, you risk trading away what you want most, for what you want now.    

If you don’t know who you are, what makes you strong, what makes you weak, and what you want your community to become then it makes it pretty difficult to market yourself. You will not be able to identify your brand, and your brand is what is so critical in making you attractive to prospective businesses, industries, and citizens. A business or industry may find a low tax regime and few regulations appealing, but in order to successfully move to a community they also need to attract employees. Employees don’t get excited about living in a community whose brand is low taxes. In fact, that isn’t a brand at all. Employees . . . people, want to live in a community that has a good quality of life for their family. When people buy a house they look for one they feel can be a home for them. When people look at communities they view it as an extension of the home they want to be in. Is your community branding itself to feel like home?

Branding yourself appropriately to feel like home and to be a great community people want to be a part of is very important. Actually becoming a community that feels like home and that people want to be a part of is even more important, and is even more critical to your economic success. In fact, becoming that type of community is often an economic driver in itself. We often put these initiatives off to the side as ‘nice-to-haves’, but in reality economic success requires investing in beautification, developing a vibrant arts community, celebrating cultural diversity, encouraging youth to return some day, and addressing the needs of the seniors in your community. Small town economic success often comes to communities that put those issues front and center.

Imagine the business opportunities that could arise from providing services to seniors in your community. I have seen communities attract seniors because there is an entire base of business services within the community to serve them. The existence of those businesses draws more seniors, which in turn draws more businesses. I watched communities grow because they have created what I call ‘boomerang programs’ that encourage youth to return after they are done school. They come home and bring their education with them, often starting businesses of their own. I know of communities that have developed an entire thriving niche economy that are all based around a thriving arts district. I have witnessed communities grow because they are beautiful places to be, and still others become tourism meccas because of their cultural or historic celebrations. What we think are often costs, with the right plan and a little work often become economic drivers for our communities.

Finally, I can often judge the state of a community over one lunch meeting with their economic development officer. For many communities the notion of small town economic development focuses only on attracting businesses. When that is the case, the economic development officer is often a lonely, frustrated person whose work is sabotaged by policy, isolated from the rest of the community, and limited to simply trying to get industries and businesses to move. Small town economic development is not about one particular hire, or simply taxes and regulations, or just about business. Economic development efforts don’t make a community great, a great community makes economic development efforts succeed.

The second trend is focusing your marketing inward before you look outward. Almost every community would like to see reasonable growth in their population and their economy. It is important to create a strong tax base so you can build new infrastructure and add new services expected by the public. If you don’t grow and don’t add those new services, people – young, old and everyone in between – will move to communities that do make those offerings. A decline in the economy and population decreases your tax base and will lead to increased taxes and lower service offerings. Even if you are hoping your community simply holds its own in terms of population and the size of its economy you must market your community to at least replace the population and businesses that will inevitably be lost. 

Marketing isn’t what it used to be, however. It goes far beyond buying an advertisement that names your community, its slogan, and its contact information. You can’t effectively market using pamphlets anymore either because they don’t get picked up like they used to. Even if you do get those pamphlets into people’s hands, you can’t be sure you have effectively got them into the hands of those interested in your community. Many communities turn to online media like Facebook with the hope of being more effective, but even Facebook isn’t what it used to be. The average age of Facebook users is over 40 and rising quickly. It also uses an algorithm that means your posts don’t show in users’ feeds unless you pay, and the value in that for community marketing strategies is minimal if it isn’t done properly.

Communities need smarter marketing strategies if they want to be successful. Before you consider spending money to market your community ask yourself a few key questions. What makes your community unique? What is it you are going to sell to potential new residents, and new businesses? Once you know what it is you are selling, you should ask yourself what segment of the population would be open to buying what is offered by your community. These few questions alone allow you to focus your resources on a target audience that will maximize results for your limited budget. 

A great deal of the marketing of your community can also be done without any budget whatsoever. We often forget that we have a built-in base of salespeople who can assist us, and themselves, at every turn – our resident population. Consider a community with a population of 1,000 residents that is working on a marketing strategy. The average American knows about 600 people. That community would potentially have 600,000 people to market to. If we remove people already residents of the community, duplicates, family members, and factor for demographics and age we still get a factor of 20. That means the community of 1000 members collectively knows about 20,000 unique people with whom they can share the story of their community. 

Focusing on internal marketing strategies such as this turns the entire community into brand ambassadors and community salespeople. All that’s needed is to provide residents with honestly positive messages and details about the community and turn them loose. If only 0.5% of those 20,000 folks consider the community as a place to live or open a business, that is potentially 100 new people in the community (who will also bring their families), which would be a boon to many of our towns.

Every community is trying to attract more people and businesses, and some spend a lot of money on marketing. Good campaigns that use precious dollars as effectively as possible should start with marketing to those already in the community, leveraging the people they know. Even if it’s not as effective as you hoped, you will have got a positive message out to your own citizens, and you won’t have spent precious resources on brochures no one will see.

Two Trends of Small Town Economic Development to Forget:

There are many mistakes a community can make working on a local economic development strategy. However, there are two things I consider to be the deadly sins of economic development. You aren’t going to hell for committing these deadly sins, but you are certainly going to ensure your attempts at economic development will fail.

The first (don’t) trend is doing what everyone else does. There is a very common path that so many different communities take, because there is no hard work involved in breaking new ground. First, such a community will hire an economic development officer. The person is usually very affordable and very local. The next step is to push that often mildly qualified economic development officer to create an economic development strategy. There are some decent strategies already written that can be easily downloaded from the internet, and often that is what happens.

Those economic development strategies are decent in the sense that they look very professional and say all the things they are supposed to say. Zone commercial land – check. Service commercial land – check. Do the same with industrial – check. Have a fair tax rate – check. And then there is nothing left to do but wait for them to all show up – check. Except sometimes they don’t, and sometimes they won’t, because those types of plans are generic, and not about you.

Generic economic development strategies are easy to come by and completely ineffective. A good economic development strategy should start with an assessment of what, or rather who, your community is. What are your strengths and weaknesses? What makes you unique? Economic strategies should start with such an honest assessment, and focus on what sets you apart from the rest of your competitors. Apple does not sell more phones by trying to be like its competition. Its advertisements don’t say, “Hey, we sell cell phones too.” It focuses on selling what makes it distinct. What makes you distinct. I assure you simply having commercial and industrial land ready to go does not make you distinct. It makes you look just like everyone else. That isn’t a strategy. That’s fitting in.

The second trend to ditch is forgetting to include the people. If your community’s economic development strategy doesn’t have people – attracting them, training and educating them, addressing where they will live – at its core, then you have missed the most important part of economics – PEOPLE. So many communities work on land, taxes, regulations, marketing, resources, supply chains and so on. Those are all very important, but if you don’t have people nothing happens.

When I was working on a rural community development strategy so many years ago, I got into a discussion about which comes first, economic development or people? I set about to find out. I found communities that were working hard on growing their economy. They kept the taxes fair and regulations minimal. They partnered with the Chamber of Commerce to ensure policies supported businesses. They invested in servicing new commercial and industrial space, yet not much happened. The businesses that were there seemed to do all right, but there was no real growth. 

Yet, I found a lot of communities that had not invested in economic development strategies or plans, but seemed to attract a lot of new people. Some communities attracted people because of the value of housing, others for the quiet quality of life, and others for the weather or the landscape. Each community drew people for different reasons and in different ways. The interesting thing was that the local businesses always seemed to be doing better, and new businesses were always opening. And that was when it occurred to me that an economic development strategy that doesn’t include people isn’t worth the paper it’s written on.

Think of it this way. If you had a deserted tropical island and dropped an economic development strategy in there, nothing would happen. If you put a bunch of people on the island, however, an economy will build and develop whether you have a plan in place for it or not. I know that might sound too cute by half, but the point is valid. If you want to ensure economic growth, start by making sure your plan attracts people, and much of the rest will follow.

Our world is changing fast. Old industries die out, as new ones rise. Major industries that drive so many of our economies are under attack, and we often feel left behind. When that happens, we can desperately grasp at whatever straw we see, and often that straw is a generic small town economic development strategy that holds a lot of promise, but no water. If you really want to get results you must do things differently than everyone else. That can be a daunting feeling, but don’t let that deter you. You can find a new path to success in the face of challenge.