Location & Incentive Opportunities and Strategies: The Value in Exploring “the Rest of the Story”
If a company can prove its value to the community where it is or wants to be located, it may be able to secure a valuable incentives package as a result of telling “its story.”
Localities seeking relocation or expansion of your business want the dollars-and-cents and job-creation of your move, but also the rest of the story: How will you benefit my community now? Later? What kind of corporate citizen will you be? How will your business mesh with what we already have? How will you contribute to our overall economic climate? Are you stable? How will your business make my community a better place to live and work?
Telling the rest of the story is the role of a narrative that expresses the value of your company to economic development officials who can make your move a better one. It’s a story they will pay to hear if the narrative is a good one. That payment takes the form of an incentives package that is more of an investment in the community than in your company. Its citizens want value if they are willing to invite you into their midst and offer you thousands — even millions — of dollars as part of the invitation.
Leaving Money on the Table
Yet, some business decision-makers who are good corporate citizens are reluctant to participate in the process, in effect leaving money on the table that could enhance the return on a relocation or expansion investment. They say incentives are too complex and that they invite too much regulation — that “we aren’t equipped to go about luring them.” Perhaps, but there are others who are equipped and who understand the rich landscape that includes opportunities for tax credits, cash grants, job credits, and other incentives — plus other local lures for your business. These consultants can lead you through that landscape to what could be a rich reward or, at the very minimum, an enhanced return on investment.
Compliance can seem overwhelming, particularly to a business that doesn’t have the reporting apparatus to generate the numbers necessary to satisfy the terms of the incentive. “They’re not really worth our effort,” some companies say. One firm reaped an incentive package totaling $10 million to help a project in which the capital investment was $80 million and 30 jobs were created. Worth it?
The argument that “we’ve got it covered” also bears investigating. “Covered” often involves qualifying for “statutory incentives,” which are the low-hanging fruit of economic development. Real value comes from “discretionary incentives,” awarded by a state and/or locality that want your business because it understands how it will benefit the community.
That understanding comes from hearing your narrative, and also from knowing that the community is in competition with others that like your story and want you to move within their midst — and are willing to incentivize you to do so. That narrative can give your company leverage in its negotiations. Your story is built from numbers, from dollars-and-cents and jobs created, but it also emphasizes corporate character.
There also are companies that say, “We’ve tried it before and we haven’t been successful.” Perhaps, but have they tried it in one location instead of another with a better business climate that would suit their move just as well, and might offer incentives that can help smooth the moving process? Has the climate changed?
Meeting Performance Metrics
The cost of incentives is your performance, and that performance has many metrics. Compliance is often among them. Compliance can seem overwhelming, particularly to a business that doesn’t have the reporting apparatus to generate the numbers necessary to satisfy the terms of the incentive.
The cost of incentives is your performance, and that performance has many metrics Consultants who can negotiate incentives, then weigh their impact among locality options — combined with the costs of real estate, transportation, labor, and other factors, including present and future operations — and then advise a company on its decision should also help set up the compliance system necessary to qualify for those incentives.
Moreover, business-friendly localities are eager for new commerce, but communities don’t want to lose what they have, and they will partner with existing companies to keep them. In their minds, expansion doesn’t have to mean a move, but it could mean more jobs, or at least not fewer jobs.
A holistic approach keeps a company executive from being blinded by a glittering incentives package. For all of their value, incentives contribute to a decision, but they should not drive it. Even a lucrative incentive package — such as that obtained by a consumer products company with a $61 million capital investment, which was lured by $14.8 million in incentives — is only part of the equation. That’s why your company needs to determine its value to the place where it is located, or the area where it is considering moving. That value isn’t always on the balance sheet. Often, it’s in the “rest of the story.”
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