Economic Development Best Practices for Rural Communities Mike Kirchhoff, CEcD - PowerPoint PPT Presentation

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Economic Development Best Practices for Rural Communities Mike Kirchhoff, CEcD
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Economic Development Best Practices for Rural Communities Mike Kirchhoff, CEcD

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  1. Economic Development Best Practices for Rural Communities Mike Kirchhoff, CEcD Principal, DPI Group

  2. Economic Development Best Practices for Rural Communities- Marketing/Business Attraction Approaches

  3. Why Is Attracting Business Important? • Economic base jobs • Community wealth • Property values • Property tax base • Sales tax revenue • Multiplier effect • Linked industries • Construction jobs • Quality of life • “Service after the sale”

  4. Successful Communities • Know their product • Know their targets • Are ready to respond

  5. Know the Product • Study the area – to identify strengths to exploit and weaknesses to strengthen • Prospect perspective is key to this process • Community leaders must be willing to be self-critical • Plan to prepare/position • Assemble key information about the area (Labor costs, workforce quality & availability, and commute shed; community data & demographics; site & building data, maps, & photos; utility information; tax information; financial assistance & incentives; major employers; and MORE!)

  6. Be Ready to Respond Not Optional • Current data - timely, accurate, and appropriate • Adequate real estate • Effective programs • Professional presentation • Web presence Optional • Target industry business case • CEO testimonials • Community “viewbook” • Video/CD/data disk

  7. A Unified Message…

  8. …Not an Inconsistent Message

  9. E.D. Marketing Toolkit • Web Page • Other Web-Based Tools • Direct Mail • Newsletter • Blast e-mail • Telemarketing • Advertising • Article Placement • Referral Services • Direct Sales Calls • Trade Shows • Association Marketing /e-Newsletter • Consultant/Broker Outreach

  10. Other Web-Based Tools • Location One Information System (LOIS) – Owned by KCPL, DCEO is a subscriber ( • – Created by Area Development Magazine • Economic Development Directory – listing of economic development organizations by state and region ( • GIS Planning/Zoom Prospector ( • LinkedIn, FaceBook, Twitter




  14. Marketing Strategies • Regional Marketing Approach • Individual Marketing Approach • Target Marketing • Ally Marketing

  15. Regional Marketing Approach • Most cost-effective approach • Leads from regional program are shared with regional partners • From a site selector perspective, a region can generally demonstrate critical mass better than a single area • As an example, JREDC partners with the Western Illinois Corridor Council

  16. Individual Marketing Approach • Best suited for areas where a regional effort is not practical • Success depends to a great degree on the knowledge base of the organization’s staff and leadership • A solely independent approach is less likely to generate interest among prospects and allies unless the organization represents a large urban area • Not as cost-effective as a regional approach; a blend of individual and regional marketing can be very effective • Only the best-funded independent organizations are able to use the more sophisticated tools due to cost and logistics issues

  17. Target Marketing Preparation • Target business segments identified based on a strategic analysis of the area • Segment-specific research to understand the nature of each segment(market structure, competitiveness, products, cost structure, business linkages, etc.) • Developing a business case for each target based on business advantages in the region

  18. Ally Marketing Program • Partner with DCEO/IDC at CoreNet Global national events and participate in Chicago Chapter events • Chicago CoreNet Chapter sponsor • Partner to participate in Industrial Asset Management Council (IAMC) conference • Arrange and conduct meetings with targeted entities in Chicago and St. Louis • Conduct an annual allies event, either locally or on-site in Chicago/St. Louis • Regular meetings with key allies, including state, utilities, railroads, site selection consultants, corporate realtors, etc.

  19. Ally Marketing Components • Newsletter • Other Direct Mail • Office Visits • Community Tours • Association Participation • Special Events • Joint Marketing Efforts

  20. Economic Development Best Practices for Rural Communities- Existing Business Retention/Expansion Approaches

  21. The Importance of Existing Industry • Economic base jobs • Community wealth • Property values • Property tax base • Sales tax revenue • Multiplier effect • Linked industries • Construction jobs • Quality of life • “Service after the sale” • IDENTICAL to the reasons for attraction, but often easier and less expensive!

  22. Typical Program Goals • Build goodwill and relationships with business clients • Improve company’s familiarity with/perception of the economic development organization • Gather data about the status of the local economy • Serve as early warning system – company or community problems • Assist companies at risk of downsizing or leaving • Assist companies seeking to expand • Identify potential opportunities for inter-firm collaboration, expansion, or attraction activities

  23. Existing Industry Program Elements • Recognition activities • Educational workshops/seminars • Industry linkage programs • Targeted technical assistance • Company visitation programs • The “next wave”

  24. Recognition Activities • Industry Spotlight • Industry of the Year • Newsletter recognition • Media assistance • Other activities

  25. Educational Workshops & Seminars • Based on need • Targeted subjects/audiences • Financing workshops

  26. Industry Linkage Programs • New Managers Reception • Industry Index • Services Index • CEO Roundtables • HR Managers Group • Industrial Alliance • Buyer/supplier relationships

  27. Targeted Technical Assistance • Needs are frequently identified during Synchronist visits • Customized, confidential assistance to clients • Referral to SBDC, IMEC, IDES, other allies

  28. Synchronist Visitation Program • Questionnaire focuses on industry, management, products, satisfaction, and community connection • Detailed data/trend analysis – analytical and reporting capabilities • Identification of red flags • High quality, predictive data • Enables proactive programming • EDC acts as an opportunity catalyst (market, cluster, joint venture, partnership, linkage opportunities, etc.)

  29. Corporate HQ Visitation Program • More general in nature • Strategic discussion • No set questionnaire • Company-specific • Visits arranged in partnership with local plant manager

  30. The “Next Wave” Sophisticated Approach • Business model approach to existing industry development • Adapted from “Rocketing out of the Twilight Zone: Gaining Strategic Insight from Business Retention (Blane, Canada) • Local companies as “clients” • New vocabulary: “service delivery, business drivers, accounts” • Extensive use of diagnostic tools • Portfolio management approach • Maximize return on investment – consciously direct resources toward high value and high growth opportunities (and away from risk)

  31. Is Proactive BRE Important? Here’s Why… The CYBERTEK Deal

  32. Company History • CYBERTEK has been located in Jacksonville for more than 70 years in one form or another • Founded as Central National Life Insurance • Purchased by John Deere in 1985 (150 employees) • John Deere sold policies to Reassure America in 1995; CYBERTEK was created by PMSC to service the policies (50 employees) • PMSC leased the facility and equipment from John Deere • In 1998, PMSC sought to build a new 50,000 s.f. facility and expand by 200-300 employees

  33. The Problem • PMSC asked to extend their lease for an additional two years • John Deere said “buy it or get out” • PMSC had no interest in owning the building and began seeking interim space in the region around Jacksonville • Space was identified in Springfield • The company planned to construct the new building in whichever community its interim space was located • Lease expired December 31, 1998

  34. The EDC Gets Involved • With six months remaining on the lease, PMSC approached the EDC for help • By mid-October, no suitable space had been found in Jacksonville • The EDC suggested an alternative…why not make the current space the interim space? • Perhaps the City or the EDC could purchase the existing building and extend the lease to allow CYBERTEK to complete it’s new facility • PMSC, John Deere, the EDC, and the City of Jacksonville began building negotiations on November 20, 1998

  35. Crafting a Creative Solution • A variety of scenarios were examined – City purchase; EDC purchase; John Deere donation of the building to a 501 (c) 3 • A City purchase would mean that the ultimate disposition of the building would be restricted by government requirements • A purchase by EDC was a problem because of a lack of funds • Jacksonville Main Street, the best choice for the 501 (c) 3 donation option didn’t yet have it’s IRS status • Negotiations left the problem unresolved, and time was running out – CYBERTEK’s lease was due to expire in less than 45 days • A deal was completed by phone the following week

  36. An EDC Purchase • Purchase price $375,000 ($100,000 down) – 8 ½ % interest (imputed) • Funds for the down payment came from the City, which purchased two parking lots near the building for $50,000, and… • CYBERTEK, which agreed to purchase the building contents for $50,000, subject to the EDC’s repurchase at the end of the lease for $25,000 • CYBERTEK also agreed to lease the building through December 31, 2000 for $24,000/month • The EDC sold the building and first-floor equipment in August, 2000 (negotiated down from full- price offer; PMSC saved $95,000 in rent expense)

  37. Everyone Won! • John Deere sold its building • CYBERTEK/PMSC (now CSC) was able to extend its lease without relocating during construction of its new 60,000 s.f., $10,000,000 facility • The City retained the company, and is benefiting from an increased employment base and (ultimately) an increased property tax base • The EDC sold the building, retained ownership of $25,000 in equipment and furniture (later sold), and netted $232,000 during the 18 months it owned the building!

  38. Today – A Downtown Destination • The first floor has been redeveloped to include a premier fitness center and various retail shops • The second floor (more than 16,000 s.f.) is now the finest banquet hall in Jacksonville, comparable to hotel facilities in nearby Springfield • The three banquet rooms can accommodate a total of up to 600 people • During its first year, the popular facility exceeded projected bookings three-fold • The Jacksonville Rotary Club, EDC, Chamber of Commerce, and other groups use the facility extensively

  39. Lessons Learned • NEVER GIVE UP when negotiating a BR&E or prospect deal • Think “out of the box” and use creativity to find a solution where none appears to exist • Work diligently and proactively to retain and expand existing companies; it’s easier (and much less expensive) to retain and expand the companies already in the community than to hit a home run and attract others to relocate to the community

  40. Contact Information Mike Kirchhoff, CEcD Principal 1212 NE 94th Terrace Kansas City, Missouri 64155 317.554.9660