© 2007 LM3 Online Welcome to LM3 Online LM3 Online enables you to calculate your organisation’s economic contribution to its community. Whatever your reason.

© 2007 LM3 Online

Welcome to LM3 Online

LM3 Online enables you to calculate your organisation’s economic contribution to its community.

Whatever your reason for looking at your local economic impact, LM3 Online is the fastest, most user-friendly, and most cost-efficient method available.

This document will walk you through how LM3 Online works and what you can expect.

Contact us for more information to get started on your own LM3 Online.

© 2007 LM3 Online

Background to LM3 Online

The LM3 tool was developed by nef (the new economics foundation). Since its original development period in 2000-2002, LM3 is now a Government-recognised tool for measuring economic impact, particularly for public procurement.

LM3 has been and continues to be used by the public, private, and non-profit sectors. There are bespoke versions of LM3 Online for each sector.

LM3 Online is brought to you by a partnership between Justin Sacks, Adam Wilkinson, and Richard Wilde. The objective has been to make LM3 more widely useable by reducing the work effort required.

© 2007 LM3 Online

What LM3 means

LM3 stands for Local Multiplier 3. The name represents how the tool works.

Local: LM3 looks at a specific local economy or set of local economies. This stands in contrast to traditional multiplier analysis, which looks at larger areas, such as whole nations.

Multiplier: The multiplier is an economics concept used to denote how much a specific inflow of income into an area then circulates (or multiplies) in that area.

3: LM3 looks at three rounds of spending -- the original inflow, how that inflow is spent, and how that money is re-spent.

© 2007 LM3 Online

The LM3 process

The LM3 process entails analysis three rounds of income/expenditure:

Round 1: Inflow of money to be measured.Round 2: How that inflow is spent in the local economy.Round 3: How the people who received money in Round 2 then re-

spend their incomes in the local economy. Total: Add up Rounds 1-3.LM3: LM3 is a relative figure, or ratio. It shows you how much

you get out relative to what you put in. The final step is to divide the total of Rounds 1-3 by Round 1 to understand the ratio between the original inflow and total income generated.

© 2007 LM3 Online

LM3 example

Imagine that Acme School is renovating its premises and uses LM3 Online to assess the impact of its most recent capital project so they can make improvements:

Round 1: £2,000,000 (original income/budget)Round 2: £ 800,000 (amount spent on locally-based suppliers & staff)Round 3: £ 300,000 (amount spent locally by suppliers & staff)Total: £3,100,000 (Rounds 1-3)LM3: 1.55 (Total divided by Round 1, ranging from 1.0-3.0)

This means that the capital project generated an additional £0.55 for the local economy for every £1 spent by Acme School.

© 2007 LM3 Online

How LM3 Online works

LM3 Online makes measuring your economic impact quick and easy, leaving you with more time to take action.

The overall steps to LM3 Online are below. Each step is explained in the slides to follow:

• Project name• Budget info• Identify local area• Upload data• Supplier survey• LM3 Results

© 2007 LM3 Online

Project name

You need to give your project a name that you can use for external communications. This is how you will communicate your LM3 project to suppliers, so it should be something that people outside your organisation understand and ideally indicates the objective and geographic area of your LM3 evaluation.

© 2007 LM3 Online

Budget info - Non-payroll budget

The starting point of LM3 is a source of income into your area. This is best thought of as a budget. You can use LM3 on any budget, whether it is your organisation’s turnover or a specific contract. Your project budget should include all non-payroll items.

© 2007 LM3 Online

Budget info - Payroll budget

You may choose to include or exclude payroll, depending on the nature of the project. LM3 Online uses proxies for how people spend money locally since businesses are frequently uncomfortable surveying staff. Leave this area blank if you wish to survey staff.

© 2007 LM3 Online

Defining what your local area is can be the trickiest question in the LM3 process. The short answer is: whatever area you are passionate about. The most common definitions organisations use are: • Political boundary, e.g. a local authority area • Radius, e.g. a 30-mile radius from your location • Neighbourhood, e.g. a part of your area such as BN1

Identify local area

© 2007 LM3 Online

Upload data

The largest piece of work required of you is to upload your supplier data. You will need to create an Excel document (or use our template) with information about your supplier spending: name, contact, email, contract value, and postcode. You can usually obtain this data from your financial accounting system. LM3 Online can clean up your data if you need support.

© 2007 LM3 Online

Supplier survey - Contact suppliers

LM3 Online then generates a template survey request email that you can revise, preview, and then send off to your suppliers. You can also create a PDF version to send by post if you wish.

© 2007 LM3 Online

Supplier survey - Supplier email

The supplier receives the email with a unique username and password, which s/he uses to log in and complete and spending survey.

© 2007 LM3 Online

Supplier survey - Supplier response

The supplier sees the map and postcodes you have selected and completes the survey. You can use surveys of varying complexity (from one box to longer form).

© 2007 LM3 Online

LM3 Results

The LM3 Results screen enables you to keep track of your LM3 Online evaluation. You can see the overall figures for your spending and your suppliers’ re-spending. You can also compare how local versus non-local suppliers spend their turnover. The yellow box breaks down how each £1 you spend impacts the local economy.

© 2007 LM3 Online

LM3 Results - ‘What if’ scenarios

The pink ‘What if’ box enables you to model future scenarios. For instance, you can see how shifting 10% of your spending from non-local to local suppliers can impact on the local economy.

© 2007 LM3 Online

LM3 Results - Survey Summary

The Survey Summary screen enables you to gauge who has responded and what their responses were. You can also make direct contact with suppliers about their responses.

© 2007 LM3 Online

Get started!

You can use LM3 Online as many times as you want, from one project to hundreds. You can also use LM3 Online for benchmarking progress of completed projects and/or as a project management tool for live projects.

Now that you know how LM3 Online works, contact us to get started!

LM3 OnlineEmail: [email protected]: 07753 408 692 (Justin Sacks)

07811 160 822 (Adam Wilkinson)