We are well into the December holiday shopping season and it’s time to talk about supporting locally owned independent businesses – again. I know, I know . . . I’m a little late this year and probably should have mentioned this before the Small-Business-Saturday-after-Thanksgiving-shop-a-pallooza to remind you the importance of supporting local, but I keep hoping that the government entities and the Small Business Administration and American Express (the original mega-money sponsor behind the campaign) will tell you the stats and facts you need to know to truly make a difference.
These government agencies and American Express don’t tell you, though.
I scrolled through my Instagram and other social media time-wasting feeds this year on a lazy Thanksgiving holiday (addressing my own burn out with naps and books and rest) and saw post after post in support of shopping local, but no mention of the real statistics behind it.
So let’s talk about why local matters.
Yes, we have chains and franchises in our communities, but local sourcing, locally owned, locally operated businesses matter. There are proven economic benefits to supporting locally owned businesses, as studied by Civic Economics, and published by American Independent Business Alliance and Institute for Local Self Reliance, all trusted and longtime resources:
- On average, 48 percent of each purchase at local independent businesses was recirculated locally, compared to less than 14 percent of purchases at chain stores. Chain stores employ local people but their overhead expenses and vendors are typically out of state. Think: payroll, benefits providers, accounting services, corporate headquarters. Locally owned independent businesses are using local services for payroll, accounting and other services, circulating money right back in our community.
- Chain stores are typically paying the minimum wage and sometimes the living wage (if it is the legal wage in some cities and state), but locally owned businesses typically offer more than the living wage and offer better benefits and perks in order to compete with chains and corporations.
- Locally owned businesses contribute more money to our local tax base for needed services like libraries, first responders, emergency services, and contribute much more on average to local nonprofit organizations and civic groups/nonprofits in the form of volunteer time and donations. Think: donating items for auctions, discounts, donating a portion of profits from dine-around events, serving on boards of nonprofit organizations, and volunteer hours for community events.
- Restaurants and service providers generate a large multiplier effect (the money that stays and circulates in the community) because they are labor-intensive and, therefore, more of each dollar of revenue goes to local payroll. Most retailers, unless they source an exceptionally high percentage of their goods locally, create a more modest multiplier than restaurants or service providing businesses.
- Locally owned independent restaurants return twice as much to our local economy than chain restaurants per dollar of revenue. Chain restaurants circulate about 34.5% in the local economy vs locally owned independent restaurants circulating about 65.4%.
- Chain restaurants might have lower prices, but they are often purchasing from large corporations in bulk and therefore getting bulk buying discounts that keep their prices down. Locally owned businesses can’t do that unless they are part of a buy club with other businesses (and this is very rare). Many years of working in the local food systems economy and learning from big food distributors like Sysco Foods opened my eyes to how they lock in their prices with restaurants by ensuring their customers are buying more than 80% of their goods directly from them. In turn, these larger distributors offer a “discount” for all that purchasing, effectively tying the hands of local businesses who need lower prices. I also learned that these food distributors often come with easy to prepare menus with ready-made ingredients that restaurants can just use as “plug and play” in their business model. Where’s the creativity in that?
- Locally owned businesses get to make sourcing decisions and support local farmers and food producers easily and with creativity. When it comes to the local food economy, a dollar spent at a local restaurant that sources a majority of its products locally is circulating up to 8 times back into the community. That’s a huge bang for your buck for a bacon cheese burger.
I’ve been an advocate and voice of locally owned independent businesses and strong local economies for twenty years now, and while I rely on studies and national advocacy groups for important statistics and data, there is no better resource than business owners themselves. Check out this Substack article I recently received to stop supporting Small Business Saturday. In it, the owner of a small retail shop explains why she no longer participates in or supports “Shop Small” campaigns with American Express. In fact, she has a bold and honest Substack here called “Storefront Revolt” sharing the very real truths and challenges of owning a small retail business.
Another of my favorite, and very active, local business advocates is Small Business Rising, a coalition of independent business organizations representing over 250,000 small businesses. They call on policymakers to:
- Stop monopolies from cornering the online market by breaking them up and regulating them.
- Block dominant corporations from engaging in abusive tactics by making our antitrust laws stronger and easier to enforce.
- Adopt clear or “bright-line” rules outlawing mega-mergers and setting a higher bar for allowing other mergers, including vertical acquisitions.
- Establish rules to create a level playing field, promote competition, and spur innovation.
This kind of advocacy and policy change work is vital to the success of our small businesses across the country. We all love to support small businesses with our shopping and buying habits but we need our local, regional, state, and federal government to not only support small businesses with resources, but to actually listen to them when they talk about the very real hardships of owning and running our beloved small businesses. Trust business owners to tell you exactly what it’s like, and then work on fixing things to make it easier.
