I was having a discussion with a friend of mine the other day about the differences between utilizing local businesses vs national businesses. In growing up in the Punk and Hardcore movements the concepts of spending locally and DIY are one of the more positive civic minded concepts that the movement embodies.
I was realized that this was something that we had both understood as truth but couldn't express in meaningful statistics what that meant to a community. So I set out to do some research on the subject and create this blog entry to maybe help inform others on the subject.
At the bottom of this blog entry are some of the resources I found while digging for this information. I suggest if you want to be more informed still to check out the civic economics link as a starting point. There is a wealth of information out there and this is simply a starting point.
The general consensus from all of the sources I read was that when buying locally more of your dollar ends up back in the community.
In a pure dollar statistic one of the reports showed that for every $100 spent at a local book store in Austin Texas $45 ended up back in the local economy. The same $100 spent at Boarders, a national chain, only resulted in $13 ending up back in the community.
Another example from showed that for every $100 spent on Market Street in New Orleans $32 of it ended up back in the local economy if spent at a local business where the same $100 resulted in only $16 returning to the local economy when received by a national chain.
By this point you’re wondering why I am throwing all of these statistics at you. You’re probably asking yourself why it matters where the dollars end up. Beyond that some of you might of already thought to yourself that you would love to support local businesses, but you cannot afford to because the prices are higher and most of them aren't as convenient to do business with.
So lets start at the first point, Why does it matter where the dollar ends up, or more importantly its no longer my dollar who cares who gets it, I don't get to keep it.
Local businesses have an impact on keeping money locally partially through employment. This means the people who see the return of this money first hand are the local people in your community are the people employed by these businesses. These people are not nameless faceless people located somewhere else around the country and world, these are the people in our community, our families, our neighbors, our friends.
The newrules.org website linked below speaks heavily to the impact of Walmart on local economies. It shows that for every 1 person employed by Walmart's hyper efficient business model 1.5 persons would have been employed in local businesses.
It shows us in many of these reports that the people employed by local businesses earn more than those employed by the national chain typically. So by buy utilizing local businesses you are helping employee people in your community, making sure the people in your community are compensated better than their counter parts. This is a major concern in todays world where people who are employed fulltime in many large organization can’t afford to live, house themselves, feed themselves, let alone be able to have things like health insurance in the case something goes wrong.
Now lets talk about the convenience of doing business. Yes there is a trade off in doing business with local businesses; this is part of why large box vendors have become the go to point for most people. Sometimes they don't carry exactly what you want, sometimes they aren't located in the most convenient places for you, and sometimes it might take longer for you to get things from them.
One major point to be made here is that big box retailers and national chains don't need your business as an individual. Losing one customer wont even create a noticeable blip on their bottom line, it would take 100's or even thousands of customers in any given market to change their spending habits for them to see a difference that effected them in that single location.
With a local business you will have the owners ear and you as a customer will mean something more to them. This means that if they don't carry something you would purchase from them, you can make a suggestion and chances are they will listen. If you don’t like how they do business, chances are they will listen to you if you suggest a change.
An example of this I recently purchased a house in Saint Paul, MN. There is a gas station extremely close to me, a small local station and doesn't carry a lot of things I would normally want to purchase from a gas station. When I first moved into the house they typically kept at most one four pack of sugar free Redbull, and a couple of 8.4 oz cans in stock. When I moved in I was drinking a considerable amount of sugar free Redbull, in my first two weeks in my house I ran them out of stock three times. I introduced myself to the owner letting him know I was the reason they kept running out and suggested that they start carrying a better variety of sugar free Redbull, they now have 4 packs, 8.4 oz cans, 12 oz cans, and 16 oz cans on the shelf and keep plenty of it in stock.
Now an example of a national retail chains not giving the same level of service and consideration. I frequently stop at a Holiday station store in Burnsville, MN. It’s right on the way to this office I work out of frequently. I have grown fond of Cliff Builder Bars (Another great civic minded business by the way), this Holiday Station only stocks the chocolate and peanut butter ones. The store manager works every day and one morning I asked him if he would consider stocking some of the other flavors. He told me I am the only person who buys the ones he has now and that he can't afford the shelf space to keep them for me.
As for sometimes less than convenient locations, local businesses tend to be what our communities were built off of; the locations at one point in time were convenient. That information aside you are probably wondering what the direct impact to you and your community might be.
The first thing being that local businesses put more money back into the local economy through utilizing vendors that are local more often than national chains. This tends to reduce freight and transportation, which lowers the environmental impact through pollution. These businesses are also often located in areas that are more densely developed, meaning that where you sometimes would need to go to multiple local businesses instead of one large retail business you are frequently going to be close to all of those local businesses.
So now about higher prices; yes these business often times need to have higher prices to be able to stay in business. They do lower a volume, which means they don't have the purchasing power with their vendors, so they have to pay more for the products. They pay their employees more, so that means they need a bit higher margin to stay in business. What you get for this is improved service; a voice that matters plus you get to see an improved local economy.
Obviously everything we do has an impact that reaches beyond the first level of impact. For starters if you improve peoples income, you improve peoples ability to provide for them selves. This means people have the ability to provide themselves with housing, feed themselves and be part of the local economy. This also means a reduced reliance on social programs reducing the local need to taxes to support these programs.
Some of the other tangible benefits are reduced emissions because of local source utilization vs national suppliers. I could spout a bunch of statistics at you that you and I don't fully understand, but the reality is less pollution means a cleaner world, and a cleaner world means we as humanity will be able to sustain longer.
There is the fact that local owners spend more money locally. If you are lining the pockets of some nameless owner that lives on the other side of the country, the chances of those business owners spending their dollars earned from you in your community in your community are far lower than if those owners are local.
Something things that is a direct benefit to the community is we don't see businesses exporting jobs, larger companies tend to keep their higher level jobs centralized while utilizing the local population for jobs they consider easily replaceable. It’s just a fact of doing what is considered good business. This means that the chance for locals in the community to advance and get better jobs that pay more are extremely limited. These jobs don't exist in the local economy. By supporting local business you are supporting the opportunity for yourself and others in the community to earn better jobs with more responsibility and a higher earning potential.
So to wrap up and summarize some of they key points. In supporting local businesses you are supporting your community and buy doing that you help increase wages earned for people, increase the number of jobs and the quality of those jobs. You are indirectly increasing property values, and helping with the distribution of wealth by keeping money out of the already rich peoples pockets by expressing your preference through your spending habits.
Ways to help support and grow the utilization of local businesses in your community is to find businesses that you like doing business with and tell the people in your circles about these businesses.
If you know someone who likes to eat at a restaurant like Applebees, introduce them to a place that serves similar food at a similar price.
If you know someone who is working on a home improvement project, lead him or her to a hardware store that carries the stuff they need.
If you know someone who wants to buy a new guitar or bike, help him or her find a place locally that supplies what he or she wants. Chances are you might even be able to help them find a local manufacturer that makes unique items that will mean more to them and the community.
The best thing you can do is take a few minuets to help educate the people around you about this subject. Help them learn why spending a few extra min on google and google maps in a day to find local businesses will improve their community and hopefully improve the things going on around them.
In doing this you will improve the local community and provide a more level playing field for business and individuals alike in this unbalanced economy. This does not mean you need to spend every dollar locally to make an impact, just spending 10% locally makes a significant difference.