Local businesses play their part in building an economic foundation
Anna Lappe once stated, “Every time you spend money, you are casting a vote for the kind of world you want.” This statement resonates particularly in smaller communities, where each dollar spent locally carries outsized impact on the economic landscape. While much emphasis is placed on consumer responsibility to shop local, we must equally address the responsibilities of local businesses in fostering a truly-local community DNA.
Recent consumer feedback highlights an important disconnect: some shoppers struggle to patronize local establishments when those businesses don’t align with community expectations and needs. This observation prompts deeper consideration of the reciprocal relationship between local businesses and the communities they serve.
The financial case for local spending is compelling. Consider the multiplier effect in quantitative terms: In a community of 10,000 residents, if each person redirected just $25 of monthly spending from non-local to local businesses, that creates $250,000 in monthly local commerce or $3 million annually. Economic studies from the American Independent Business Alliance show that local businesses recirculate 48% of their revenue back into the local economy, compared to just 14% for chain retailers. Using these figures, the $3 million generates between $9-21 million in total economic impact when considering the 3-7X multiplier effect.
Research from the Institute for Local Self-Reliance demonstrates communities with vibrant independent business districts have experienced 58% more job growth than ones dominated by national chains. Studies show local businesses generate 70% more economic activity per square foot than big boxes, according to Civic Economics.
To earn community support and develop a robust local economy, businesses must embrace several core
principles:
Local businesses hold a distinct advantage over chains in their ability to provide personalized service and unique experiences. While hard to match national chains’ prices which benefit from economies of scale, saving 15-20%, they can compete through relationship-building and exceptional service. The 2024 National Customer Service Survey found that 78% of consumers are willing to pay up to 16% more for products when accompanied by excellent service.
Operating a business requires active engagement during all hours of operation. Successful local business owners treat their enterprises as full-time commitments, not hobbies. During slower periods, effective owners invest time in strategic activities like updating digital presence (websites, social media, etc.), customer outreach and relationship management, market research and trend analysis, staff development and training, and inventory optimization.
The Small Business Administration reports that businesses investing at least 5 hours weekly in strategic planning show 30% higher survival rates after five years. Consumer behavior research indicates that 70% of retail purchases occur after 5:00 PM and on weekends. Local businesses closing early surrender these prime shopping hours to chains and online retailers that operate extended hours. A community-wide approach to business hours creates more vibrant shopping preventing revenue leakage.
Businesses that actively participate in community initiatives see 40% higher customer loyalty rates. This involvement signals investment in the community’s well-being beyond profit-seeking.
Successful local businesses stay attuned to changing consumer preferences. The pandemic accelerated digital transformation, with 67% of consumers now expecting hybrid shopping options. Local businesses offering convenient purchasing methods like online ordering, curbside pickup, and local delivery have experienced 23% higher revenue growth than those that don’t.
The link between local business success and community economic resilience is well-established. Communities with higher percentages of independent businesses weathered the 2008 recession with unemployment rates 2-3 percentage points lower than communities dominated by national chains. Similarly, during the pandemic, communities with strong “buy local” programs saw 25% fewer permanent business closures.
When we support locally-owned businesses, we’re investing in economic self-determination. Every dollar spent locally represents a tangible investment in entrepreneurship, job creation, and community sustainability. Local businesses typically donate 350% more per employee to local nonprofits compared to large businesses, creating a virtuous cycle of community reinvestment.
The future of our small and medium-sized communities depends heavily on locally-owned business success. By creating a symbiotic relationship between local businesses and community members—each serving the other’s needs—we build economic resilience that can withstand uncertain economic conditions. This partnership builds true community self-reliance and sustainability that transcends economic cycles.
John Newby is a nationally recognized Publisher, Community, Chamber, Business & Alternative Media consultant & speaker. His “Building Main Street, not Wall Street” column runs in 60+ communities nationwide. As the founder of Truly-Local, he helps communities, businesses, and local media build synergies to become more vibrant. He can be reached at: John@Truly-Local.org