Using data in Inward Investment Marketing is all about providing investing companies with solid evidence of your advantages as a business location (including versus competitors).
One way to do this is to present headline data relating to major business costs - property rents, for example, or average salaries. These can often be traced back to recognised third-party sources (e.g. government statistics), making them easy for investing businesses to verify, and therefore trust.
But there are also shortcoming with headline statistics like these. Firstly they don't tell the full story regarding the factor costs they relate to (e.g. Property Rents aren't Total Property Costs). Secondly, when they're presented in isolation, it isn't clear how important (or unimportant) they are in terms of the overall costs of a business investment project.
That's why there's a strong case for presenting more in-depth cost data: to show individual factor costs more accurately and fully (e.g. property costs), and their contribution to overall business costs. This adds value for investing companies, because it provides them with more complete information for their location evaluations. And it can add real value for you as an inward investment marketer, by revealing location advantages that you may not have been aware of!
To illustrate this, here's an example of how costs could break down for an office investment project. We would emphasise that the percentages stated are indicative only. However, they are based on our experience of real office cost evaluations, and therefore provide a useful guide.
Rents Are Not the Only Property Costs...
As this example shows, rents can represent significantly less than half of Total Property Costs. Those 'other property costs' include property taxes and building running costs, and they can be important cost differentiators between competing locations. (In the UK, for example, changes to Business Rates could make the property tax element more important than ever).
Observations for Inward Investment Marketers:
It's good to have Total Property Cost data for your location and its competitors. They can reveal cost advantages that you weren't previously aware of, and help you to add value for prospective inward investors.
...and People Cost a Lot of Money!
But just how significant are those Total Property Costs in terms of overall business costs? To place them in context, here's an indication of what could happen when Labour Costs are added to the equation:Observations for Inward Investment Marketers:
Labour Costs can represent a huge outlay for investing businesses (potentially more than 5 x Total Property Costs). High-quality Labour Cost data is therefore key to understanding and communicating your location's overall cost advantages. More generally, people are key to business success, so data regarding labour availability and quality are equally important.
Data quality, transparency and sector knowledge are key...
As always, data quality and transparency are key. For detailed cost analyses to be credible, property, labour and other cost metrics must be defined clearly. And its important to be able to tell investing businesses where the data comes from, how they were processed and based on which assumptions. Saying 'just trust us' will never be enough!Industry sector knowledge is essential too. For example, for Labour Cost estimates to be credible, it's essential to understand the labour classifications that relate to particular types of business operations.
To Summarise:
- Headline cost statistics are valuable, but they don't tell the full story
- Rent is not the only property cost: Total Property Cost data can reveal your location's true property cost advantages
- People cost a lot of money: incorporating high-quality Labour Cost data into cost analyses can help to reveal your location's overall cost advantages for businesses
- Data quality, transparency and sector knowledge are all key to establishing credibility with prospective inward investors
The Clarity team includes experts in data research and evaluation, inward investment promotion and advanced marketing strategies. Our clients for data-supported Inward Investment Value Propositions include leading developers and Investment Promotion Agencies. Contact us to find out more.
Author:
Nick Smillie
MD, Clarity Business Strategies Ltd.
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