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Community development is a complex process that requires a multifaceted approach. By applying Abraham Maslow's Hierarchy of Needs to community growth and focusing on local economic development, we can create a framework for sustainable progress. This article will explore how communities can achieve "self-actualization" through strategic planning and investment in local businesses.

Maslow's Hierarchy of Needs, first proposed in 1943, outlines five levels of human needs: physiological, safety, love/belonging, esteem, and self-actualization. When applied to community development, we can draw parallels:  Physiological needs might equal basic infrastructure, Safety needs might equate to police, fire departments, affordable housing, Love/belonging can equal community centers, parks, social services, Esteem might equal quality education, cultural institutions, local businesses, Self-actualization equals a thriving economy, innovation hubs and quality of life

Just like each of us might fall into this Hierarchy of Needs, research shows that communities progressing through these stages experience have improved outcomes. A 2019 study by the Urban Institute found that cities investing in basic infrastructure and safety saw a 12% reduction in crime rates and a 15% increase in property values over five years.

Local businesses play a crucial role in community development. According to the American Independent Business Alliance, locally-owned businesses recirculate 48% of their revenue back into the local economy, compared to just 14% for chain stores. This "multiplier effect" has significant implications, small businesses create 1.5 million jobs annually.  Communities with diverse local businesses recover faster from economic downturns.  72% of consumers say local businesses contribute to a unique community character.

A 2018 study by Civic Economics found that for every $100 spent at a local business, $68 remains in the local economy, compared to just $43 for chain stores. This translates to a 3-7x higher economic impact for local spending.  $1 million spent at local businesses generates $680,000 in local economic activity.  $1 million spent at chain stores generates only $430,000 in local economic activity.  The difference of $250,000 per $1 million spent represents potential job creation or growth, infrastructure improvements, and further community investments.

Many small towns face economic challenges due to retail consolidation, 9,300 retail stores closed in 2019.  Online sales increased from 5.1% of total retail sales in 2007 to 16.1% in 2020 and are growing 1-2% each year.  Population declines of 80% of rural counties lost population between 2010-2020. These trends actually reversed during the COVID-19 pandemic due to the problems in the cities, and e-commerce sales grew by 44% in 2020.

To achieve community self-actualization, local leaders should consider establishing small business incubators which has a 66% success rate vs. 20% for non-incubated businesses. Provide microloans which creates 2.4 jobs per loan on average.  Promote "buy local" initiatives or implement local currency programs (Bristol Pound increased local spending by 13%). Organize local business alliances such as Chambers and Main Streets which members report 7.4% revenue growth vs. 4.2% for non-members.  Partner with local colleges which can increase per capita income by 10% according to the Federal Reserve Bank of Boston.

A great example might be Asheville, NC as they exemplify successful community development through local focus. Their "Go Local" campaign increased local business revenue by 25% over 3 years.  They created 1,500 new jobs in locally-owned businesses between 2015-2019.  They achieved 17% population growth from 2010-2020, outpacing state average.  They were named "#1 Small City for Business and Careers" by Forbes in 2020.

By applying Maslow's Hierarchy to community development and prioritizing local economic growth, cities can create a sustainable path to self-actualization. The data clearly shows that investing in local businesses and quality of life initiatives yields significant economic and social returns. As communities face increasing challenges from e-commerce and retail consolidation, focusing on hyper-local economic development is not just beneficial—it's essential for long-term survival and prosperity.

John Newby is a nationally recognized Columnist, Speaker, & Publisher. He consults with Chambers, Communities, Business & Media. His “Building Main Street, not Wall Street,” column appears in 60+ newspapers and media outlets. As founder of Truly-Local, he assists chambers, communities, media, and businesses in creating synergies that build vibrant communities. He can be reached at: John@Truly-Local.org.