Economic development

Better living in small towns

Submitted by acohill on Fri, 07/07/2006 - 08:05

This article was sent to me by a county administrator who has long recognized the potential of small towns, good quality of life, and broadband. Forbes has selected 150 small towns and small cities and divided them into six categories, based on amenities and quality of life. It will be no surprise to many of you that the one thing Forbes has identified as a key enabler of economic growth is not water, sewer, or industrial parks.

It is affordable broadband.

If your economic developers have not yet completely overhauled their economic development strategy, print out a copy of this article and send it to them. The author talks about geographic arbitrage, meaning that a lot of white collar professionals are selling their high-priced homes located in major metropolitan areas and using the cash to buy an equivalent home for a lot less money somewhere else. How do they find work? They bring their work with them, using broadband to stay connected to clients and contacts.

A lot of these folks are working out of their homes, making neighborhoods the business districts of the 21st century. As I do periodically, I will list the four elements of my 21st century economic development plan.

If your economic developers do not have a plan like this in place, you may want to ask them why. And of course, underlaying all this is the understanding that a community-based digital transport system (shared fiber and wireless digital roads) is the new water and sewer--it's basic and essential infrastructure needed to support economic growth. If your locality does not have a line item in its budget for regular annual expenditures to develop and expand a common digital roadway, it should. How else will you attract businesses and business professionals? Great quality of life without affordable, high performance broadband gets you nothing.

Economic development news

Submitted by acohill on Fri, 06/16/2006 - 07:45

If you have not already made EDPro part of your regular blog news network, you should. Ed Morrison, an economic development professional in Ohio, has the best roundup of Knowledge Economy news and information, bar none. He is also promoting the notion of Open Source Economic Development, which stresses the importance of regional collaboration and a strong focus on innovation. It's great reading.

Roanoke tries to attract youth

Submitted by acohill on Mon, 06/12/2006 - 12:35

Roanoke is a city near Blacksburg, and the city's demographics are skewed, like many rural towns and cities, toward older people. The City recently decided to stop wringing its hands about the paucity of young people and actually do something. First they hired someone whose primary job responsibility is to solve the problem, and then gave him free rein. Stuart Meese, who landed the job, has both a blog and a city-sponsored online database of young people looking for work in the area.

With over 450 young people in the database after just a few months, the database is fast becoming a valuable resource for area businesses looking for talent. A hat tip to Roanoke and Stuart Meese for putting resources behind the problem and doing something other than just complaining. And while you might ask, "What about" I'd say, "What about it?" They are two different tools, and employers searching the Roanoke database can do so with a reasonable certainty they are looking at motivated potential employees who really want to work in the area. You can't say that with any certainty when you pull up a bunch of listings.

The work from home movement

Submitted by acohill on Fri, 06/02/2006 - 12:23

When I talk to communities about the need to view residential neighborhoods as business districts because of the growth in home-based workers and businesses, economic developers often get upset. They get upset because having lots of small businesses driving a local economy does not fit the old Manufacturing Economy model of just trying to attract businesses from other regions.

This article from Fortune (hat tip to Slashdot) illustrates an increasingly common business--one with a majority of its employees working from home. MySQL AB is a major tech firm with 320 employees in 25 countries, and 70 percent of those employees work from home.

What that means is marketing industrial and business parks with great water and sewer offers nothing to a company like this one. Instead of the company relocating, it is employees and business owners that are relocating, and they want two things: great quality of life and affordable broadband. And the affordable broadband has to be in residential neighborhoods, not the local industrial park.

It's not that you give up on your business and industrial parks--far from it. But it does mean that you have to expand your economic development strategy to include new kinds of businesses, new kinds of workers, and new kinds of infrastructure, like fiber to the home. One interesting tidbit from the article is that MySQL relies heavily on Voice over IP (VoIP) telephone services to keep things working smoothing--and that means, once again, that broadband service in worker homes is critical.

How does your community rate in this new global economy? Do you have programs and strategies in place to attract work from businesses and employees? If not, why not? Why ignore the double digit job growth increases from work at home businesses?

Do high energy prices help rural areas?

Submitted by acohill on Mon, 05/01/2006 - 08:43

Jerry Fuhrman, who writes from rural southwest Virginia, has an interesting observation today that I think is applicable to many rural areas of the country.

He notes that one of Virginia's main exports is wood (mostly to China), and one of Virginia's main imports is furniture (mainly from China). Fuhrman's question is how will high energy prices affect the cost of goods, since it takes a lot of energy to haul wood to China, turn it into furniture, and then haul it back to the U.S?

Higher energy prices are going to change things in ways we are not thinking about right now. The current focus on automobile efficiency is, I think, extremely short-sighted. Fuhrman is more on track, looking at indirect effects and trying to ferret out business opportunities. There is a business boom at the end of every downturn. Thinking in a futures context means less handwringing about the present and more consideration of where things might end up.

Virginia used to be a furniture manufacturing powerhouse. And Fuhrman may be right that it could be again.

Small businesses hurt by lack of broadband

Submitted by acohill on Mon, 04/17/2006 - 08:07

Chicago area small businesses are hurt by the lack of broadband. But that is a story that applies to small businesses everywhere in the U.S., but rural businesses suffer the most.

In rural areas, the longer distances make it more difficult for incumbent phone companies to justify the investment, but the need is still there. I was at a county council meeting last week in a community working to develop a broadband master plan for the county, and the incumbent phone company used the same tired arguments against the community effort.

The phone company representative said that it was too expensive to do. This is patent nonsense. It may be more expensive, but it is not "too expensive." We need only look at the existing telephone and electric lines to virtually every rural home and business in the country--mostly provided by well-run and profitable coop ventures. Common sense alone suggests that if we have already run two cables to rural homes and businesses, we can certainly do so again.

What we need are honest phone and cable companies that are willing to say, "Okay, we understand the market has changed. We'll work with any local community that builds an open access infrastructure. This will lower our costs and expand our potential market. And we understand we will have to compete."

That would be honest and forthright, and companies that would embrace an open access communitywide network would, I am convinced, make more money than they are now. Why? Because they would have access to more customers at lower cost, and could offer a wider variety of advanced services.

But it requires corporate honesty first to prosper in that kind of environment. In the meantime, communities and community leaders can't just sit by and watch their local businesses wither away because basic infrastructure is missing. If it were 1960, we have the equivalent, in many communities, of leaders who are saying good water and sewer is not important because the outhouse still works just fine.

Local businesses need affordable high speed broadband to compete in the global Knowledge Economy. And they can't wait forever. What are your leaders and economic developers doing to remedy the situation?

Web search: get on page one

Submitted by acohill on Fri, 04/14/2006 - 09:42

A new study confirms what most people already know intuitively, but it is always nice to have data to back it up: Most people stop looking at search results at page three, and many expect to find what they want on page one.

It is an issue for businesses, but also for communities and economic developers. With most relocation research starting on the Web, if your community is not getting relevant community site links on the first page of most search engines, it is telling relocation consultants you are not "connected." And your community is probably not even getting on the short list for consideration. Worse, you won't even know, because no one is calling the economic development office at this stage of relocation search.

It also underscores the importance of a broad, communitywide cooperative effort among local Web sites. Without a comprehensive and collaborative effort, few of your community sites--government, economic development, tourism, civic--will show up on page one of search results.

Unfortunately, I still see many communities managing (or not managing) community Web sites as private fiefdoms that get little time, attention, or resources. And at the same time, the community is wondering why so few businesses are taking a serious look at their town or region.

Design Nine has been helping communities design Web strategies longer than any other company on the planet (we started designing community portals in 1993). Call us if you want to get your community on page one.

Kentucky "gets" economic development

Submitted by acohill on Mon, 04/10/2006 - 12:50

The state of Kentucky is beginning to get the hang of a 21st century Knowledge Economy economic development strategy. From this article[link no longer available] (hat tip to EDPro), here is Kris Kimel, president of the Kentucky Science & Technology Corp:

"We are not going to recruit ourselves to prosperity in this state," Kimel said. "That's a piece of it ... but by and large, because of the shift in this knowledge economy, our economy's going to be driven in the future ... by how good a job we do at creating the kinds of knowledge and entrepreneurs that can grow those companies."

Notice Kimel's emphasis on knowledge creation and entrepreneurs as part of an overall economic development effort. That is where many of the new jobs are coming from, not from traditional industrial recruitment. The article goes on to note that the state can no longer recruit primarily based on lower cost (e.g. lower wages, lower cost of utilities, lower cost of land). Why not? Well, if you want low cost for your factory, you will take it to Asia, not to Kentucky, or any other state in the U.S., for that matter.

It is a whole new ballgame in economic development, and an effective regional ED strategy should be developed using a clean sheet of paper and expert advice. One of the biggest problems I see? It's the boards that guide ED groups; too often, the board is comfortable with a Manufacturing Economy approach that produces lackluster results. Who is on your local ED board? Are entrepreneurs and Knowledge Economy businesspeople well represented, or does the board make up look pretty much like it did in 1983--the last year that industrial recruitment was effective as a primary strategy?

Blogging and economic development

Submitted by acohill on Tue, 03/28/2006 - 11:53

I generally get a cool reception when I tell communities that they need to promote community portals and local blogging. It just does not sound like something that is going to bring jobs and businesses into a region.

This short article is just one data point, but illustrates perfectly how the Web and what is available on the Web from a community or region drives relocation decisions. Here is the key quote:

"...One of the things that encouraged me to make that move with my family was the realization that the vitality, innovative spirit, and collegial atmosphere of the region around B-burg was a good bit higher than I realized. Your weblog was a key part of that, along with the discovery of a growing community of writers, musicians, and creative businesses."

Community portals and a rich, interconnected web of local community sites and blogs tell the world that your community is online, understands technology, is not afraid of it, and is using it to connect people. It's the cheapest and easiest way to promote what your community has to offer people looking for a great place to live and to work.

Lack of broadband hurts business recruitment

Submitted by acohill on Mon, 03/20/2006 - 12:27

A recent story in the Washington Post (registration required, unfortunately) discusses how the lack of broadband is hurting business and employee recruitment in rural areas. Here is a key statement from the Telework Consortium, a group that helps businesses set up work from home programs.

"I think Loudoun County needs to look at broadband as being another utility as important as electricity and the telephone."

Businesses today are making relocation decisions based on the availability of affordable broadband, and that is not just broadband availability in business parks. Companies want employees to have access to business systems from home, and that means broadband.

Think of it another way. If the CEO of business prospect can't find affordable broadband in the town or area where he or she will live if the business moves, the business probably is going to go somewhere else.

USDA's Dorr says quality of life a key factor for rural communities

Submitted by acohill on Mon, 02/13/2006 - 14:22

Tom Dorr is one of the most knowledgeable people in the Federal government when it comes to rural issues. At a seminar in Iowa, Dorr discussed a key advantage that he thinks rural communities have when attracting entrepreneurs--quality of life (hat tip to EDPro).

Dorr is under secretary of rural development at the USDA, and he cited several factors that are becoming a major influence for relocating entrepreneurs, including peace and quiet, short commutes to work, good schools, and lower taxes. The "good schools" is an issue rural communities need to study carefully. As family needs drive business relocation, local schools need to have high graduation rates, low drop out rates, and good college prep and advanced placement classes.

Yes, that's right. Schools are an economic development issue. So does your ED strategy include goals and objectives for local schools? If not, why not?

Georgia creates "Entrepreneur Friendly" communities

Submitted by acohill on Mon, 02/13/2006 - 14:15

Georgia has created Entrepreneur Friendly communities (hat tip to the excellent EDPro blog).

It takes about a year for a rural community to qualify for the award, which is managed by the Georgia Dept. of Economic Development. In order to qualify, local leaders have to take leadership training, receive training on entrepreneurship needs, and work with local businesses (often a new concept for economic developers). Some communities are already reporting that they are seeing results.

Businesses hate red tape

Submitted by acohill on Mon, 01/23/2006 - 07:57

Take a tip from what Europe is doing wrong, and use it to give your own region a little boost. This report says businesses are moving their plants and investments into the U.S. and Asia, where the regulatory climate is less onerous.

Do your economic developers regularly talk to local businesspeople to find out about red tape problems? Can you do more to make it easier to start and to run a business in your community or region?

And do you have a modest program to attract European businesses to your area? How about some welcome pages on your site in several different languages? Do you have the phone number of one or more interpreters who could help with questions and negotiations in a different language?

The iPod generation

Submitted by acohill on Fri, 01/20/2006 - 11:17

If your job involves working with youth, or if it should (economic developers take note), you may want to read this article about the kind of people that visit Apple's iTunes Music Store. You might call people that fit the profile the "iPod Generation."

Not only do these folks comprise nearly 14% of everyone on the Internet, they have very specific interests and preferences, and I'm not talking about their musical preferences. If you are wondering why young people keep leaving your community or region, or why you can't attract young workers to your area, you should probably print this article out and circulate it widely in your community while asking, "What do we have that is of interest to these young people?" Some of the interesting data includes:

If you want to solve the disappearing youth problem in your community, you have to start by understanding their interests. Here's an easy way to get started.

Communities with broadband prosper

Submitted by acohill on Thu, 01/12/2006 - 11:07

One of the problems with community investments in broadband is the lack of data showing the value of such investments. Community leaders are somewhat wary of spending public money on unproven infrastructure. A new study from Carnegia Mellon and MIT shows that communities that have invested in broadband infrastructure are doing better from an economic development perspective than communities that have not.

The research team used extensive government data to analyze these investments and to develop the conclusions--this is not some casual vendor report.

Among the findings are these:

In the summary section of the report, here is welcome news for community leaders that have been promoting the benefits of broadband:

"Policy makers who have been spending their time or money promoting broadband should take comfort that their efforts and investments are not in vain.....Broadband is clearly related to economic well-being and is thus a critical componenent of our national communications infrastructure."

In other words, broadband infrastructure investments by the community pay off, by creating jobs and attracting businesses. This is welcome verification, indeed.

Here is the whole article, as a PDF file.

Economic development of the future

Submitted by acohill on Tue, 01/03/2006 - 10:18

With a hat tip the excellent Connecting People blog, here is a link to what looks like a great new source of economic development ideas and concepts for the Knowledge Economy.

One of the great things about blogs is that the good ones are typically written by people with a passion for a particular topic, like future-oriented economic development. The short article style of blogs, coupled with the fast scanning offered by RSS feeds, gives you access to a lot of information that has already been vetted and reviewed by someone that knows more than you do about a topic outside your own area of expertise.

One of the problems I see over and over again, especially in rural communities, is a lack of information. Rumor, innuendo, and misunderstandings often get in the way of bringing focus and commitment to a problem. If more community leaders were blogging about local affairs, it would be more difficult for roadblocks to develop. Open discussion of problems is a good thing, not something to fear.

Thirty percent of households shop online

Submitted by acohill on Fri, 12/30/2005 - 12:13

The New York Times (registration required) has an article on the growth of online shopping during this holiday season.

Two numbers stand out: There was a 25% increase in Internet sales over last year, and about a third of all U.S. households bought something online. And L.L. Bean took more orders over the Web than over the phone, which is a watershed.

I have thought, since the early days of the BEV, and still think that local and small businesses are missing out on this boom. Many have never tried to sell anything online, and others were burned in the go-go dot-com days by the then high expense of online catalogs and the low sales rates.

Anecdotally, I see lots of small businesses doing very well on the Web when they have identified a unique product or service *and* develop a marketing strategy around it.

Economic developers ought to be doing a lot more to help local businesses grow in this area, but still see very little effort being made here.

Economic Development blogging

Submitted by acohill on Wed, 12/28/2005 - 11:31

This new blog is a great example of the potential of local blogging to enhance economic development and to educate/inform local leaders and citizens. This new Blacksburg area blog has a nice mix of job opportunities, economic development news, and leadership issues. It is just what is needed in many local areas.

To make it successful, though, most communities will also need some training sessions to teach people about blogs, RSS feeds, and how to make good use of this new communications styles. Blogs are still poorly understood, and few people, even among the young, can tell you exactly what a blog or an RSS feed is.

Every economic development authority should be running a blog and a series of RSS feeds on a variety of topics, including enterpreneurial news, local quality of life issues, retail/commercial real estate opportunities, business management, and local governance.

How about your region? Are your economic developers using this new medium to communicate more effectively? If not, why not?

Bottom line: an economic development group that is blogging and using RSS feeds sends a strong message to businesses and entrepreneurs who might be looking at the region that the community is technologically savvy and connected. It's a powerful marketing tool. If your economic developers won't do this, maybe you need some new leadership at the helm.

Denmark nurtures microbusinesses

Submitted by acohill on Fri, 12/02/2005 - 11:29

Here is a report from Denmark about how one group is trying to nurture and promote the growth of microbusinesses. Stick with the article to the end, and you will find a useful list of activities and projects that would apply in any community or region. Does your economic development game plan include these kinds of activities?

iPod for real estate

Submitted by acohill on Fri, 12/02/2005 - 10:27

This very short article discusses a new use for the video iPod. Real estate agents are making short video clips of homes for sale and making them available for download into a video iPod. Other agents can download the videos and to learn more about a property and/or show the videos to prospective home buyers.

I've been writing a lot about the iPod recently. I don't own any stock in Apple, and have no financial interest in the iPod. But I see the iPod as the first of a whole series of transformative devices that are going to emerge over the next five to ten years that will, like the iPod, transform the way we do things.

Bottom line: If you don't understand the iPod phenomenon, you will have a very difficult time correctly assessing economic development activities and what direction to take your community or region. My articles are not really about the iPod itself, they are about what the iPod represents--entirely new ways of doing business, new kinds of businesses, and new kinds of jobs. Ignore the iPod at your peril.

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