Preparing an Economic Development Strategy

2010-07-30T16:58:00.001-07:00

PREPARING AN ECONOMIC DEVELOPMENT STRATEGY

TEN EASY STEPS

Chuck Eckenstahler and Craig Hullinger

3/6/2009

Introduction

Every local governmental official is now challenged with the need to promote jobs and new investment in their community. The question asked is “How does our community accomplish this task?”

This question is often answered by chamber of commerce members, government employed professional economic developers, and/or an assembled group of academics. These individuals usually work with a large group of interested individuals offering their opinions of what programs and activities should be undertaken by businesses and government to stimulate the local economy.

The recommendations might include an improved effort to retain existing businesses or an effort to attract new businesses. Tasks could also include developing a business park or improving education to provide more skilled employees. It may also include efforts to improve our neighborhoods and downtown business districts to attract young well-educated adults who wish to live and work in an attractive and exciting community.

The responses differ, typically having as many variations as there are people discussing what should be done. To the lay person preparing the community economic development strategy can be an overwhelming and complex task; being something “best left to the professionals.”

The truth is that strategic economic development planning is rather simple. It is not rocket science. This article seeks to demystify preparation of an economic development strategy, simplifying the process into ten easy tasks. By answering simple, easily understood questions, a group of people can prepare a strategic plan organizing an economic development program for their community.

Question 1 - Who are we?

A simple question! Yes, we know we are a community of, for example, 5,000 people. That’s correct, but what do we know about ourselves? How many people do we have in the workforce and what are their ages? What jobs do they do and how much and what type of education do they have? How many are unemployed or underemployed? How many kids are in school, when will they graduate, how many will go on to college and how many will obtain other advanced technical training?

Many of these questions can be answered by data obtained primarily from the US Census. This information can provide a narrative and quantified description of who we are and who makes up the workforce. It can also identity their education and job skills. According to business site locators, available workforce is one of the top criteria of any firm seeking to expand or locate a new business operation.

Question 2 - What is our economy?

It is usually simple to identify the major employers. This typically includes school district and hospital. The city or county government and a few major businesses are also major employers. They account for a substantial number of jobs located in the community. However, there is a large segment (some estimate 80%) of jobs that are provided by smaller business that often times are overlooked in this simple tabulation and small businesses are the primary generator of new jobs.

Data from the US Census, US Department of Commerce and state employment agency can be useful in providing a narrative and quantified description of the number and type of jobs in the community. This data allows examination of the number of jobs and wage scale of the current jobs in the community. It can also help identify the growth (or decline) of these jobs over time, which is important to know to determine what specific jobs the community currently has and what types of jobs that the community would like to attract.

Question 3 - What are our problems and opportunities?

This is a more difficult question answered by a detached unemotional critical evaluation of “community competitiveness”.

One way to answer this question is to complete what researchers call a “SWOT” analysis. To complete a SWOT analysis, the community lists its economic Strengths, Weaknesses, Opportunities and Threats.

The completed list provides information identifying unique opportunities for existing business expansion and opportunities for recruiting new businesses. It also identifies weaknesses and future threats which may discourage business expansion and new business location, which may be remedied by specific community action.

For example, the SWOT analysis might disclose that the workforce has a concentration of skilled computer operated machine tool makers. This workforce can be offered to prospective businesses needing such workers. It may also disclose that the farmland designated for industrial development has no water and sewer and is not “shovel ready” for a business to immediately begin construction.

Question 4 - What are our strengths?

Like a well trained prize fighter, who patiently waits to use his “best punch” to win the fight, an economic development strategy must identify the community’s economic development “best punch”. Completing the SWOT analysis helps identify unique economic strengths that can define the “economic development knock-out punch” for use in the fight to create new employment opportunities in the competitive global environment.

Identifying the “knock out punch” is sometimes easy. It might be a unique geographic location affording superior logistic transportation amenities. Or it might be proximity to a nationally rated university. Or perhaps it might be a young highly educated available workforce. It could be an attractive recreational or small town residential lifestyle that the community offers to new residents. Regardless of the type of strengths identified, analysis of community strengths is necessary to select those specific opportunities that can be used to create new jobs within the community.

Question 5 - What do we want to be - our future vision?

Of the ten questions, this question is the most difficult to answer - what do we want to be?

This question is most often answered by a carefully worded vision statement, prepared by the consensus of interests that places into words a mental image of what the desired future should be. The phrase “Our Future Vision is that our community will be the premier regional location for business investment in 2015” is an example of a vision statement.

This statement tells a big story. It proposes that the community will be the premier location for new business investment when compared surrounding areas. It also provides a means to measure comparative success by measuring economic indicators such as 1) increased jobs, 2) an increase in number of businesses and 3) and an increase in business tax base within the community. It also gives a time period to measure success.

Question 6 - How do we get there?

With an understanding of our strengths, weaknesses and opportunities plus a vision of what the community wants to be in the future, answering this question may become clear. The answers become a list of specific actions that must be completed to either eliminate defined weaknesses, or maximize identified strengths to capitalize on identified opportunities.

For example, the lack of “shovel ready” sites can be remedied by investment in utilities, roads, and governmental approvals necessary to have the site ready for construction immediately upon receipt of a building permit. Another action may be a Tax Increment Financing District or a Business Development District or a Special Service Area to provide incentives for business investment. Other actions may include completion of community appearance projects, securing worker skill training programs for laid-off workers, or conducting a national marketing program to recruit new businesses to locate in the community.

Question 7 - What resources do we have and need?

Every community has resources, typically scattered among a large number of separate organizations. Key to answering this question is identifying these resources and involving them in developing the economic development strategic plan with agreements to “take-on” and fund specific work tasks.

A chart can be prepared listing the specific work task identifying the person or organization that is responsible for the task, when the work is to be completed and how it will be funded. Preparing this chart early in the strategic planning process also identifies work tasks that do not yet have a sponsor or funding.

In our example, a work task to install infrastructure for a “shovel ready site” may be assigned to the city public works department. Obtaining necessary planning and zoning approvals would be a task for the city Planning Department. The City Council could be assigned responsibility to begin city council sponsorship of a TIF district for a future business using tool making machinery equipment. The Community College could be asked to sponsor a workforce retaining effort with the chamber of commerce assigned the task of developing and implementing a marketing program.

The chart may also identify the need to involve other organizations or recommend formation of new entities to carry out specific works tasks. We might need a downtown development organization to sponsor a downtown redevelopment plan or a neighborhood redevelopment organization to sponsor redevelopment programs.

Question 8 - Who is responsible?

The key to successful implementation requires gaining commitments from specific individuals to complete work tasks. This “buy-in” of responsibility is critical to success.

In our model economic development strategy, the Mayor, Public Works Director, City Planner, Economic Development Director, President of the Community College and Chamber of Commerce Director would be named as “responsible parties” and charged with the duty to complete one or more specific work tasks.

Question 9 - How much does it cost?

Undertaking an economic development program costs money, typically more that any single organization has within their budget. Answering this question establishes a budget for each work task and identifies who is to provide the funding for the task.

Question 10 - How do we know when we get there?

In every successful economic development program the progress towards completion of each work task is periodically reported. It gives the opportunity to celebrate success and to modify the tasks if necessary to assure successful accomplishment.

Measurement tools to gage progress are critical. Useful milestones to measure success should be included as part of the Strategic Plan.

Some strategies break the process down into a number of separate categories, such as logistics, health care, energy, agri-business, retail, etc. Other approaches include a much quicker and simpler process, with the development of a on page strategy. This approach can sometimes be used as an interim until a full blown strategy can be developed.

On Line Examples

The following web pages show examples of recent Economic Development Strategies. Each effort is somewhat different, but most of them follow most of the ten items.

One Page http://peoriastrategy.blogspot.com/

Neighborhood http://www.renaissanceparkpeoria.com/

Regional http://www.edc.centralillinois.org/content/about-edc-central-illinois

Conclusion

Preparation of an economic development strategic plan is not an overly complex process and can be accomplished by answering ten questions to define a Vision for an economically improved community. Specific answers lead to identification of weaknesses that need to be remedied. The process also identifies strengths and specific opportunities with can serve as the base for a job expansion and business investment program. It provides a mechanism to identify specific work tasks, determine their cost and assign responsibility for their completion and means to measure incremental progress.

There are numerous resources to help communities prepare economic development strategies, including regional planning organizations and private consultants. While use of outside assistance brings technical skills and greater experience to the process, community representatives are still required to answer all ten questions, develop the vision and work tasks, and accept responsibilities to complete each work task.

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Economic Development Strategy Questions

1. Who are we?

2. What makes up our economy?

3. What are our problems and opportunities?

4. What are our strengths?

5. What do we want to be - our future vision?

6. How do we get there?

7. What resources do we have and need?

8. Who is responsible?

9. How much does it cost?

10. How do we know when we get there?

EXAMPLE STRATEGIC PLAN WORK TASK CHART

Easy to Print Link Below:

http://docs.google.com/Doc?id=dgp5tpcd_118pjfvkng6&btr=EmailImport

About the authors -

Chuck Eckenstahler is 35 year veteran of municipal planning, economic development and real estate consultant serving clients in Illinois, Indiana and Michigan, and a past contributor to the Illinois Municipal Review. He teaches economic development subjects in the Graduate School of Business at Purdue North Central, Westville, Indiana and serves on the faculty of the Lowell Stahl Center for Commercial Real Estate Studies at Lewis University, Oakbrook Illinois. He can be contacted at pctecken@comcast.net or by phone at 219-861-2077.

http://www.linkedin.com/in/chuckeckenstahler

Craig Hullinger AICP has 35 years of experience in economic development, city planning, and transportation planning. He is a Economic Development and City Planning Consultant. He was the Economic Development Director of the City of Peoria, Illinois, and a member of the American Institute of Certified Planners and Lamda Alpha. He was formerly Planning Director of Will County. He publishes a number of blogs on economic development. He can be contacted at craigullinger@gmail.com or by phone at 309-634 5557.

http://craighullinger.com/

ECONOMIC DEVELOPMENT STRATEGIC PLAN
Work Tasks

Description

Funding
Source

Responsible Party

Completion
Date

Progress
Measurement
Tool