#6 - The Funnel: How a Company Actually Picks Its Next Home (Part 2)
Think about the time in your life when you might have gone house-hunting. If it was in the last 10 years or so, you likely didn't start by calling every real estate agent in the Southeast or even your own county. You probably went online or opened an app like Zillow, typed in three bedrooms and a good school district, limited your geography to no more than 30 minutes from work, and watched a few hundred listings shrink to a couple dozen. You toured a handful. You fell for two. And only then, at the very end, did you start negotiating on price, closing terms, and the rest.
Hold onto that picture, because a growing company choosing a new location goes through almost exactly the same thing, just with more spreadsheets, more zeros, and a lot more people involved. But first, a lesson in risk management... totally what you expected, right?
Growth Is Risky. Risk Management Is Necessary.
Risk is basically a four-letter word in business. It represents the unknown: all those far-flung scenarios nobody expects but that could still happen. The moment a company decides to grow into a bigger or brand-new facility is, oddly enough, one of the riskiest stretches of its entire corporate life. Act too soon, too late, too big, or too small, and the consequences can follow a company for decades, or even possibly sink a once-growing company into oblivion. It's a decision a typical company makes only extremely rarely, so it had better be right.
So, the company gathers information. Lots of it….alongside data, perhaps some expertise, and likely a process, anything that leads to the most informed decision with the least risk in the shortest reasonable amount of time. We picture that narrowing as a funnel: many communities go in the top, and only one comes out the bottom (fingers crossed, it’s yours at the bottom).
Who's at the Table
First, there's Company X, the one with the need and the one driving this whole cycle. Some companies, usually smaller ones with a pretty defined geography in mind on Day 1, may choose to run the search themselves. Many others bring in a site selector, sometimes called a site consultant: an independent expert hired to guide the search, from building the shape and look of the funnel to negotiating with the final two or three communities near the bottom. There's no right or wrong path, but site selectors do this for a living, while most companies go through it once or twice in their entire history. Early on, the site selector is the company's eyes and ears, and frankly, the one making the early cuts, kicking communities out of the funnel.
On the other side of the table are the “ocean” of potential communities. A project might reach out to our EDC office directly, through the state's Economic Development Partnership of North Carolina (EDPNC), or through our regional partner, the Charlotte Regional Business Alliance. Either way, we're usually in response mode, and as we covered in our post on code names, we often don't even know who the company is yet.
Down the Funnel
The first cut happens online. Just like you on Zillow, most communities are eliminated from a desk before anyone picks up a phone or sends an email. Consultants pull data on workforce, available sites and buildings, and utilities, much of it from public sources, a local EDC website, or subscriptions they maintain with data providers. A community can be cut without ever knowing it was in the running, which is why keeping our data accurate and current is a bigger part of our job than most people would guess. Big credit to Tim Bolick on our team, who does this superbly!
Then comes the Request for Information (aka RFI). Every company has a list of what matters most, and as with most things in economic development, this isn't rocket science: tax policy, logistics, access to talent, business costs. The full list can delve into all sorts of minutiae (always a fun word to use), but there are usually 4 to 6 true dealbreakers. Think "an international airport within an hour," one of the most common filters we see, or "the property must sit on a Class 1 railroad like Norfolk Southern." Those requirements become a Request for Information (or RFI): a detailed questionnaire we answer with sites, buildings, utility capacity, workforce data, and more. Turnaround can be as little as a few days, which is exactly as fun as it sounds when the questionnaire can run pages upon pages of detailed questions. Again, credit to Tim here.
Site visits. If our answers hold up, the company may come see us in person: touring properties, meeting utility providers, and sometimes talking with local employers about hiring here. Every so often, we learn later that a consultant had already driven through town quietly, stopped by a nearby coffee shop, or chatted with hotel staff to get a "flavor" of the community, all before we knew we were on any shortlist or before had even started our community slide deck.
The Finalists, and Where Incentives Finally Come In
Eventually it comes down to two or three communities, often in different states, and any one of them could probably work as a site for the future of Company X. Only now does the last question come up, and it brings us to a very big misconception about recruitment: that communities win projects by writing the biggest check. Now, it does happen – communities “throwing money” at opportunities. However, I can unequivocally say that is not our community’s method and that we have dozens of wins over the years in which our community’s proposed incentives surely were the most conservative proposal the company received. It is important to remember that incentives act as a potential tiebreaker between places that already meet the company’s needs, but no incentive can make up for a missing airport or a workforce that simply isn’t there. In reality, we’ve won most of our projects through the years marrying necessary local/state incentive support alongside powerful arguments and evidence that show our community offers the least risk, best chance for long-term success.
Another point to hit while we are in the neighborhood - when a company leads with "what incentives can you offer?" before asking a single question about sites or local talent, that's usually a red flag for us. It's the house hunter asking for a discount before walking through the front door: shopping on price, not fit. Those tend to be the projects we're least eager to chase, or ones we simply don't chase at all.
And when incentives do come into play, they work the way we laid out earlier in this series: performance-based, paid only after a company invests and hires, and backed by safeguards if it doesn't deliver.
Why This Matters for You, and What's Coming Down the Pike
Most of what wins or loses a project happens early, quietly, and long before anything reaches a public hearing. It comes down to fundamentals: ready sites, a capable workforce, good data, and fast, accurate answers…and yes, the responsiveness and interest of the state/regional/local team. Thankfully we tend to be able to check many of those boxes, allowing Catawba County to stay in the funnel for many such opportunities.
Between Part 1 and this post, we've spent a lot of time on recruiting new companies from outside the county. Next up is the other half of our mission, and one that's every bit as important: business retention and expansion (BRE), or how we help the employers already here grow, hire, and stay.
Got a question about anything in this post? Send it to me at nhuret@catawbacountync.gov.