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How Shopping at Small Local Businesses Keeps Money in Your Community

How Shopping at Small Local Businesses Keeps Money in Your Community

How Shopping at Small Local Businesses Keeps Money in Your CommunityA sense of community is important whether you live in a sprawling city like Chicago, or you're a resident of a humble, rural town. We often hear the phrase "buy local" and how it's important to choose small, local businesses that help support communities and enhance local character.

However, how many of us actually buy local whenever we can? Shopping at huge online retailers and buying things at large "big box" stores may help keep costs down a little, but are we benefiting in the long run when shopping with huge corporations takes money out of the local economy and sends it overseas or into the stock options of Wall Street investors?

National Chains Displace Local Businesses and Their Jobs

According to the American Independent Business Alliance (AMIBA), disappearing local small and local businesses can have a significant and negative impact on a community.

"Local officials often fall for the seductions and political appeal of national chains and may even use public funds or tax rebates to lure them. They’re baited with promises of jobs and tax revenue, but they often fail to consider the greater losses that occur when the local business base is undermined."

One of the primary arguments large corporations give local towns as to why their business would be "good for the community" is the increase of revenue that the business would bring, as well as new jobs. However, there is a significant tradeoff for this benefit because of the loss of local jobs.

Myths of the Benefits of National Chains

With promises of additional tax revenue, more jobs, and more money for the community, big companies often convince local governments that their presence will bring huge benefits to the community in the form of jobs and money. 

However, these benefits aren't benefits at all. They're tradeoffs that eventually result in quite the opposite of what the national chains promise. Here are a few of the benefits that big chains promise, but which actually harm small communities.

1. Tax revenue will increase. A small town won't see a huge increase in tax revenue with the arrival of a big chain because people won't suddenly buy more because the large store is in town. Although a brief increase in sales tax might occur, the long-term impact is a loss of competing businesses and a net zero increase in actual tax funds for the city.

2. The community will see more jobs created. Large companies provide huge discounts that make small businesses unable to compete. The national chain will create jobs initially, but those gains will be lost when the small businesses competing against the national chain will close their doors due to an inability to compete with discount pricing strategies.

3. More money will stay in the community. A large business will make more money than a small business, but they won't keep the money in the community. The profits won't go into the local infrastructure and community services. The company will take its profits and store them in off-shore tax shelters or give them as stock payouts to their shareholders.

4. More development means more prosperity. Incredibly, the expansion brought by huge chains actually means more costs for the city in the form of safety and services. Tax needs by the city will actually increase when a large chain comes to town, and there won't be any additional revenue to cover the increase in needed services.

How Can Shopping at Local Businesses Improve my Community?

Today, buying local is a conscious decision that many of us must make because of the influx of national chains, big-box stores, and multinational corporations that sit on corners all around small-town America.

There are some important reasons why supporting local businesses is a must whether you're a small business owner yourself, or you're just seeking to support your local community. Here are just a few of the benefits of shopping at local businesses.

Reduce strain on the environment.

A multinational corporation may boat, truck, and fly products to locations all over the world for sale. Transportation represents a huge strain on the environment. When you support a local business, your purchase might not require that the products you buy travel 7,000 miles before they reach you.

Keep your community unique.

In virtually every small town, there are many small businesses that have been around "forever" and that give the community its local flavor. For every McDonald's, Wal-Mart, and Kroger store that moves into the community, there is a loss of specialness in the town that results when unique small businesses must close their doors.

According to Sustainable Connections:

"Where we shop, where we eat and have fun — all of it makes our community home. Our one-of-a-kind businesses are an integral part of the distinctive character of this place. Our tourism businesses also benefit."

Enjoy better customer service.

How many times have you read a story about a large, multinational chain who treats its customers as if they're forgettable and replaceable? Virtually every week there's a new story about how the customer service department for some huge company ranks as the worst in the world.

A local business can't afford to annoy, insult, or irritate its customers, because those customers are neighbors, friends, and community members. Shop locally, and you'll make new friends, support your neighbors' businesses, and strengthen the reputation of local businesses.

Ensure diversity and personal choice in purchasing.

Millions of people around the world buy iPhones because Apple tells them that they need an iPhone. How many consumers actually make their own decisions about purchases without the undue influence of a major corporation? 

You can help increase the diversity of your community and the products your local businesses sell by considering their products instead of the products a huge corporation tells you that you "have" to buy. 

Local businesses are there for you when you need them. They're not there to convince you to buy something you don't need.

How Can My Local Business Support the Community?

If you're the owner of a small business, you're already contributing to your community. Many of your purchases and business deals probably use local contractors and workers, so you're supporting other small businesses each time you call a plumber to fix the employee bathroom, or you get the exterior of your business painted.

Additionally, you may have the opportunity to join an Independent Business Alliance, which is a coalition of locally-owned independent businesses, community groups, and citizens. A great example is the Humboldt County Independent Business Alliance. 

Of their organization, HumIBA shares:

"Independent Business Alliances are a proven tool for protecting unique community character, ensuring continued opportunities for entrepreneurs, building local economic strength, and preventing the displacement of locally-owned businesses by chains."

There are a few characteristics that typically define a local independent business. Those characteristics include:

  1. The business has just a few retail outlets and a small geographic range.
  2. The local owners are the business's decision makers.
  3. At least 50% of the business is locally owned.
  4. Ownership is private, worker, cooperative, or community oriented.

You can read more about independent business alliances on the AMIBA official website, as well as find an organization that's close to your business.

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