Local Businesses Stimulate the Local Economy
Local businesses directly affect the local economy, whether that be providing local jobs, buying local products, or donating to local charities. These actions help maintain resource autonomy and attract young professionals that help keep neighborhoods thriving.
When you buy from companies whose owners are from and operating in the local community often they hire a local workforce as well. Small businesses account for 99.7% of all firms with employees and 41.4% of the private-sector payroll in the US. On top of this, small businesses created 61.8% of new jobs from 1993 to 2016 (SBA 2017). Instead of buying from stores that import their goods or outsource their work, you can create an opportunity to employ someone from your local community. If these local jobs didn’t exist, job seekers would have to commute to work increasing traffic, carbon emissions, and wasted time.
Keep Money in the Neighborhood
Local companies on top of paying local salaries, often get supplies locally and donate to local charities. This multiplies the effect of every dollar you spend, passing on the benefits to other local companies. One study from Maine found for each $100 spent by a consumer at a local business, $58 stayed in the city. This contrasts to chain retailers who only spend $33 of that $100 locally (Martin and Patel 2011). On top of that, local businesses contribute more towards local charities than large chain stores. In 2002, the Institute for Local Self-Reliance discovered that local businesses donate $4,000 of every million in sales whereas Walmart only donated $1,000. This also helps the government in the form of taxes. Each time the money passes hands that transaction is taxed leading to a higher local GDP. Another study from Iowa suggested that an input of $20 million spent by consumers at local farmer markets in 2004 had an economic impact of $31.5 million on the Iowa economy that year (Otto & Varner 2005). Although consumer spending stays the same, by keeping the money in the local area you generate more money for your government which can then go on to support public service projects such as roads, education, libraries, and more.
Large businesses strive to cut costs, seeking the cheapest goods and services regardless of the country of origin. Over time, this creates a dependence on foreign imports and damages the local economy. As more players follow this model, national economies become interwoven and remain at the mercy of foreign governments’ actions. D’Amour found that if Thailand decided to stop selling its rice internationally 136 million people would be affected across the globe. Likewise, if the states were to stop its corn exports, 21 million people would be at risk of hunger (2016). Buying local promotes sovereignty. It gives control back to the local people over the food systems and manufacturing chains that affect them.
Promote Competition and Innovation
The nature of a local business limits its ability to dominate one market completely. In 2017 Statista found that 1 out of every 4 dollars spent on groceries was spent at Walmart. Instead of one large box store monopolizing the market, this niche could be replaced by numerous local businesses. According to the European Commission more competition means lower prices, better quality products, and more options for consumers to find what they need. Competition can lead to more innovation too. As competition grows, small businesses must diversify their selection to secure their edge of the market. Breitzman and Thomas in 2011 published their findings that amongst high patenting firms, small businesses produced 16 times more patents per employee compared to large firms. Michigan State University states that this is a positive feedback loop, as having innovative local businesses attracts young professionals, who in turn may create their own local businesses increasing competition further (2010). By shopping local, you can keep prices economical, buy quality products, and promote community growth.