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Small Business, Big Impact

20 February 2023

The importance of locally owned businesses for community growth and sustainability cannot be overstated. As Albert Einstein once said, "The world as we have created it is a process of our thinking. It cannot be changed without changing our thinking." To ensure a prosperous future for their communities, leaders must prioritize the growth of local businesses, shifting their focus to hidden expenses and stresses that have long-term effects on the community.

 

There are several considerations that should be at the forefront of every community conversation regarding growth, strategy, and the future. The first consideration is the financial impact of various types of retail establishments on the community. A study a few years ago by Tischler & Associates revealed that specialty retail establishments consisting of locally owned small and medium-sized businesses generate a net yearly return of $326 per 1,000 square feet of store space. In contrast, big-box stores and fast-food outlets not only generate lower tax revenues but also have higher infrastructure and maintenance costs, costing taxpayers $468 and $5,168 per 1,000 square feet, respectively.

 

The second consideration is the charitable giving by businesses. The research conducted by Oregon State University for the Small Business Administration found that small and mid-sized businesses with fewer than 100 employees give an average of $789 per employee in cash and in-kind donations to the community. On the other hand, larger businesses with over 500 employees give only $334 per employee on average, which is nearly 60% less than the amount given by smaller and mid-sized businesses.

 

The third consideration is the relationship between locally owned businesses and the economic growth of the community. A study by Pennsylvania State University showed that counties with a greater number of smaller and mid-sized locally owned businesses had a greater per capita income growth. In contrast, counties with a higher proportion of large absentee-owned businesses, such as big-box stores and non-locally owned chains, had lower incomes. This finding is not surprising since big-box stores and chains usually provide wages at the lower end of the income spectrum.

 

Lastly, there is evidence to suggest that locally owned businesses have a positive impact on the health and well-being of the community. Researchers in the Cambridge Journal of Regions, Economy and Society found that counties with a greater proportion of small and mid-sized businesses had lower rates of mortality, obesity, and diabetes. Furthermore, Walter Goldschmidt's study on small agricultural communities in California showed that communities with small and mid-sized owner-operated farms had a more vibrant, diverse economy and a higher quality of life.

 

Considering these findings, it is crucial for smaller and mid-sized communities to prioritize the growth of their local business base. To thrive in a way that benefits future businesses and generations, half of economic development dollars should be directed towards locally owned businesses. Communities and their media companies need to educate the entire community on the advantages of a truly local small business DNA. As the internet continues to drain communities of their much-needed tax dollars, it is increasingly important to create a solid business base to sustain the community.

 

In conclusion, as Albert Einstein once said and we shared at the beginning of this column, "The world as we have created it is a process of our thinking. It cannot be changed without changing our thinking." The community's future depends on its ability to change its thinking and shift its focus to the growth of locally owned businesses. The financial, social, and health benefits of local businesses are clear, and communities must prioritize their growth to ensure a prosperous future for generations to come.

 

John Newby, from SW Missouri, is a nationally recognized Columnist, Speaker, & Publisher. He consults with Community, Business & Media. His “Building Main Street, not Wall Street,” column is read by 60+ communities around the country. As founder of Truly-Local, he assists communities, media and business leaders in building synergies that create vibrant communities. He can be reached at: John@Truly-Local.org.