How Can Consumers Support Their Local Economy?

Those of us in the micro business sector know how important it is for communities and individuals to support their local shops, restaurants, and other businesses. After all, it’s our bread and butter. But – how do we make the case to someone who isn’t as plugged in to the issues surrounding small businesses and the economy? And more importantly, what can they do to act in support of their local economies? 

One of the main ways to support small businesses in our communities is to shop there. Here are a few reasons why:

It is better for the local economy. Small business owners tend to spend the money they earn within the community where they operate. Whether it’s buying supplies for their business or doing their own personal shopping, chances are the money you spend at your local eatery or beauty salon will benefit you or someone you know. A paper by Civic Economics found that for every $100 you spend at a local business, $68 stays in your community, while only $43 will stay if you shop at a chain store. A 2013 study conducted by Anil Rupasingha of the Federal Reserve Bank of Atlanta concluded that counties with a larger share of local small businesses have lower poverty rates, faster employment growth, and stronger per capita income growth

It makes your taxes work more efficiently. Your sales taxes will stay local, which benefits schools, police and fire departments, and other crucial services. An analysis by the Government Finance Review discovered that a community earns $287 in property taxes per acre from a mid-rise business district, compared to only $7 from big-box retail stores. On top of that, your taxes are spent more efficiently, since small businesses require fewer public services and are less of a burden on local infrastructure in comparison to large department stores. 

It helps create better jobs. As their businesses grow, local entrepreneurs hire more people to meet the demand. More often than not, these jobs are given to local residents, allowing them to work near their homes and avoid long commutes to urban areas. Aside from the higher quality of life that working close to home affords, small businesses often offer higher salaries than large retailers, who are infamous for skimping on workers’ wages. And despite common perception, small business owners are better job creators. The Institute for Local Self-Reliance found that local retailers employ 47 people for every $10 million in revenue, while online giant Amazon employs only 19 people per $10 million in revenue.

It keeps the community safe and thriving. When you spend your time and money in your own neighborhood, you get to know the people around you. A tight-knit community of people who look out for each other is better equipped to make choices that benefit everyone. Your property values will go up, as lively shopping areas are considered a real-estate advantage. Local business owners also tend to give back to their communities in ways that large companies do not. 2013 CAMEO Faces of Entrepreneurship winners Jorge and Oscar Flores, owners of Don Polvoron Bakery, offer confectionery internships to local students and donate bread to their neighborhood churches. Every community has a similar story to tell about their local business owners.

It is better for your health and the environment. When you walk to the coffee shop instead of driving, you are saving energy and reducing your carbon footprint. A 2005 study found that people in neighborhoods with the most local businesses logged 26 percent fewer automobile miles than those in communities with few local stores. They were also more likely to use public transport to go to work. And a paper by the Cambridge Journal of Regions, Economy, and Society discovered that residents in areas with a greater concentration of local businesses have better health outcomes than those with fewer small businesses.

But – aside from shopping local – what are other ways individuals can support the small businesses in their community?

Learning about their local businesses. Shopping at local stores is all well and good in theory, but what if there is a product you need that you’re not sure you can find in your neighborhood? For many people in that situation, it’s usually easier and more convenient to buy it online or at one of the big-box retail stores where they know they are guaranteed to find what they’re looking for. That’s why it’s important to know what businesses exist in your area – so that you know what’s available to you and you can recommend them to your friends and neighbors. To learn about your local businesses, you can start by checking with your local chamber of commerce. Many of them publish lists, maps, or even shopping guides of the businesses in their town. And if you have some time to spare, you can walk around your neighborhood’s shopping area and make a list of the stores and restaurants there. This will save you time and effort next time you go shopping.

Eating locally. Not every neighborhood has all the products and services the average person may need. But when it comes to food, your local community may have more diverse options than you think. And we’re not just talking about restaurants or cafes. Instead of shopping at a large retail store, you can try your local farmer’s market. Not only is the food you find there usually fresher and higher quality, but it is also more sustainable since it doesn’t have to be shipped long distances. Small-scale growers are also more adaptable and can easily adopt green farming practices, For example, 81% of farmer’s market sellers use soil health practices such as making their own compost or growing cover crops.  

Using local banks. This may not be top of mind for most people, but it’s a crucial step in keeping money within local communities. Small financial institutions such as local banks and credit unions make a lot of their money from loans to people and small businesses in their neighborhoods – over 60% of loans to small businesses come from small or mid-sized credit unions and banks. These institutions have a vested interest in seeing a community thrive, so it becomes a virtuous circle.

Donating to small business development in their communities. A lot of local businesses can’t get by without external support – whether it’s in the form of training, loans, or other help. Many communities have created economic development organizations with the purpose of supporting these businesses and entrepreneurs and help their local economies thrive. You can show your support by donating to these organizations or directly to CAMEO.

What are other ways you support the businesses in your community?