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Why Buying Local Helps Your Local Economy

Why Buying Local Helps Your Local Economy

buying localIt's not uncommon to see signs asking customers to "buy local," but what does buying local really mean for the economy, and is it truly better than making purchases with non-local companies? While you might not be able to buy local products with every single purchase, the effort you make to shop with local, small businesses can have a dramatic impact on the health of your community and the success of local business owners.

Buying Local Means Money Stays in the Community

When you make a purchase with a local business that sources its services or products at the local level and is owned by local owners, something very different happens with your money than when you spend with international businesses or national chain stores. Multiple studies have shown that buying local keeps money in the community rather than allowing it to be sent away to a far-off destination where a company's stockholders and executives reside.

According to an article on buying local that was published by Time Magazine:

"…when you buy local more money stays in the community. The New Economics Foundation, an independent economic think tank based in London, compared what happens when people buy produce at a supermarket vs. a local farmer's market or community supported agriculture (CSA) program and found that twice the money stayed in the community when folks bought locally."

Interestingly, many local economies aren't in dire straits because of a lack of spending but are struggling because of large corporations taking money out of the local economy. While it may seem as though the lower prices offered at a large chain store help your own, personal budget, those purchases result in lower wages, reduced opportunities, and a tax-strapped local government where you live.

Buying Local Maintains Environmental Health

Take a look at a product you recently bought at a big box store or at a national chain. How many fossil fuels do you think it took to transport that product from its place of manufacture to your doorstep? 

Your product may have been crafted in Indonesia and required a trip across the Pacific Ocean to reach American shores. Then, it needed to travel on a tractor trailer or via train to your region only to require yet another trip on a local truck to reach the store.

Some of the problems created when you purchase non-local products include:

  • Greater urban sprawl due to distribution centers and greater transportation needs.
  • Increased pollution from the fossil fuels used to transport your goods.
  • Reduced economic health of local manufacturers.
  • More traffic congestion due to long distance travel and deliveries.

The American Independent Business Alliance shares why buying local is so valuable for the environment:

"Independent, community-serving businesses are people-sized. They typically consume less land, carry more locally-made products, locate closer to residents and create less traffic and air pollution."

Buying Local Means Community Decisions Stay Local

When Wal-Mart comes to town (Wal-Mart always seems to be the "bad guy" in these stories, but the blame isn't entirely unwarranted), there are promises of more jobs and growth to the local community. Unfortunately, the opposite is usually true, and the local economy loses jobs, becomes weaker, and sees its decision-making power evaporate in the face of strong corporate interests.

Business News Daily explains:

"The research, done by a Northwest community group, estimates that one Walmart store, which is set to open in a Washington neighborhood, will decrease the community's economic output over 20 years by an estimated $13 million. It also estimates the Walmart will cost the community an additional $14 million in lost wages over the next 20 years."

When a large corporation – or several of them – move into a town's Main Street and begin to eliminate local businesses with their low prices and flashy sales, the town suddenly sees its decisions on local matters being influenced by companies who have no personal residences in town or even in the region.

The Institute for Local Self-Reliance explains further:

"Finally, the shift from local to absentee-owned stores means that business decisions are no longer made locally by members of the community. Who decides whether to close a store in a distressed neighborhood, stock a controversial book, sell produce from local farms, pay a living wage, or contribute to a local charity? In the case of chain stores, these decisions occur in distant boardrooms, where the values of the local community carry little or no weight."

The headquarters of Wal-Mart is in Arkansas, but they'll have enough influence to direct local policies and government decisions in towns across the nation. Not only does Wal-Mart yank its profits out of the local economy, but it governs from afar after shoving local business owners to the side or forcing them out of business.

Buying Local Means More Profits to Charity and Local Causes

A large corporation may make a token donation to a local youth group, or they might build a community structure to show that they're interested in maintaining the local community. However, these gestures are usually a one-time occurrence and are designed to influence the local government regarding tax breaks and other financial incentives offered to big corporations.

The government actually offers small businesses some incentives to make charitable donations, and investigating what the Internal Revenue Service (IRS) allows businesses to take off taxes for charity is a valuable endeavor. According to the Small Business Administration (SBA), a healthy 75% of small business owners give some portion of their business profits to charity.

The SBA even shares that charitable contributions can help a small business build a solid reputation in the community:

"Although tax deductions and the rewarding benefit of helping those in need are often goals in charitable giving, you should also consider that such acts also open up an opportunity to showcase the good work you’re doing in the community to potential employees and customers."

Not only do charitable donations help you increase the reputation of your business in the local community, but your efforts impact real change that will be returned to you as a business owner through a stronger community and healthier economy.

Buying Local as a Business Owner is Essential, Too

Not only can you help your local economy by making local purchases with small businesses, but you can enjoy even more positive impact when you partner with other local businesses for the goods and services your business uses. For example, a restaurant owner might change his or her menu to reflect locally available produce and food.

Regarding local food purchases, Eco Watch reveals:

"An article in the Penn State News quotes Professor of Agricultural and Regional Economics Stephan Goetz, one of the study’s authors: “We found that for every one dollar increase in agricultural sales, personal income rose by 22 cents over the course of five years. Considering the relatively small size of just the farming sector within the national economy, with less than two percent of the workforce engaged in farming, it's impressive that these sales actually move income growth in this way."

You have opportunities for buying local whether you're a restaurant owner and need local produce or you're a small business owner in need of materials for your products. Even if you can't source everything you buy from local sellers, you should always be looking for ways to increase the number of local purchases you make.

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