Here are some of the many benefits of spending your dollars locally!
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STRONGER COMMUNITY
Put your money where your heart is.
Supporting local businesses is good for the community.
Communities with a larger share of local businesses have stronger economic and social relationships, higher levels of civic engagement, and better success solving problems.
Here are some specific examples of the benefits to the community of supporting locally owned businesses:
- They help foster community cohesion and well-being. The social fabric of a community is tightly coupled with the health of its independent businesses. Research has shown that communities with a larger share of local businesses have more social capital, stronger social ties, higher levels of civic engagement, and better success solving problems.
- They help to support a sense of identity and belonging for residents, linking neighbors in a web of economic and social relationships.
- They build strong communities by sustaining unique and vibrant town centers, and by contributing to local causes.
- Local ownership ensures that important decisions are made locally by people who live in the community and who will feel the impacts of those decisions.
- A 2011 study from the Cambridge Journal of Regions, Economy, and Society, for example, found that areas with a greater concentration of small businesses, all else being equal, have improved public health outcomes than those with fewer small businesses.[5] The authors speculate that local ownership of business enhances a community’s capacity to solve problems. Other research has found the presence of independent retailers helps communities retain their residents, especially those with college degrees.[6] Taken together, these studies show that cultivating a vibrant independent business sector not only strengthens the economy; doing so can advance social goals as well.
NURTURE DIVERSITY
Our strength is in our diversity.
Diversity is linked to economic prosperity.
Communities with a larger share of locally owned businesses tend to be more diverse and equitable. They're also linked to higher incomes and less inequality.
- Diverse communities are more resilient to economic shocks, have larger numbers of innovative businesses, have more inclusive workplaces, and have more vibrant cultures.
- Enacting policies that strengthen small businesses and expand opportunities for local entrepreneurs is one of the most effective ways of reducing inequality and expanding the middle class.
- A 2013 study by the Federal Reserve Bank of Atlanta found that counties with larger shares of local small businesses outperformed their peers on three critical economic indicators: they had stronger per capita income growth, faster employment growth, and lower poverty rates.[1]
- A 2017 study by the World Bank found that areas with more small and mid-size businesses had lower levels of income inequality. [2]
JOB CREATION
Neighbors supporting neighbors.
Locally owned businesses and entrepreneurship are essential to economic vitality - generating more jobs, lifting wages, and making for a more stable community.
Benefits of entrepreneurship and locally owned businesses:
- They create jobs. Regions with a higher share of locally owned businesses create more jobs.
- They boost wages. Locally owned businesses, in some sectors, provide better wages and benefits than online mega retailers and non-local chains do.
- Entrepreneurship fuels America’s economic innovation and prosperity, and serves as a key means for families to move out of low-wage jobs and into the middle class.
- A marketplace of tens of thousands of small businesses is the best way to ensure innovation and low prices over the long-term.
- A multitude of small businesses, each meeting community needs in retail, services, food production, and other sectors and not based on a national sales plan, but on their own interests and the needs of their local customers, guarantees a much broader range of choices relevant to the local community.
- A 2013 study by the Kauffman Foundation found that regions with higher rates of entrepreneurship and new business creation than the national average had higher rates of job growth and wage growth.
DITCH THE MEGA RETAILERS
Buy good things from REAL people.
Compared to online mega-retailers and non-local chains, locally owned businesses reinvest a much larger share of their revenue back into the local economy, enriching the whole community.
- Locally owned businesses in dense, mixed-use commercial districts generate more tax revenue for cities than sprawling shopping centers, while also costing less in public services.
- Locally owned businesses make more efficient use of infrastructure. Local businesses are often located in smaller, more compact buildings, which means that they use less land and fewer resources than large, sprawling shopping malls.
- An analysis from the Government Finance Review, drawing on data from a sample of 30 cities in 10 states, found that a community earns about $7 in property taxes per acre on the average big-box retail store, compared to $287 per acre on a mixed-use, mid-rise business district.[4] The compact nature of these districts also means they make more efficient use of public infrastructure and services.
VOTE WITH YOUR DOLLARS
Put your money to work locally.
Community banks and credit unions are a vital part of our economy and our communities.
Locally based financial institutions put your money to work growing the local economy, and back businesses that share a commitment to our community.
Here are some of the benefits of banking locally:
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Better customer service: They have a personal touch that you won't find at a big bank. They know their customers and they're invested in helping them succeed.
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Lower fees: They typically have lower fees than big banks. This can save you money on your checking account, savings account, and loans.
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More loans for local small businesses: Unlike larger banks that may take deposits in one state and lend in others, community banks and credit unions channel their loans to the neighborhoods where their depositors live and work, which helps local businesses and communities thrive. Community bank officers know their customers and may consider family history and discretionary spending in making loans. They can keep their decision making local, and they understand the importance of small businesses to the local economy. Local reinvestment helps small businesses grow and helps families finance major purchases and build financial security.
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More community involvement: They are more likely to be involved in their communities than big banks. They donate to local charities and sponsor local events. Community Engagement and Accessibility: Community bank officers are typically deeply involved in their local communities.
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79 percent of independent businesses that used community banks report they were satisfied with their overall experience, compared with 67 percent for large banks and just 49 percent for online lenders. [9]
BETTER FOR THE PLANET
It’s not just a trend, it’s a sustainable solution.
Communities with a larger share of local businesses help to sustain downtown and neighborhood commercial districts, reducing pollution and improving environmental sustainability.
When we support local businesses, we are helping to create a cleaner, healthier planet for ourselves and future generations.
Locally owned businesses support environmental sustainability in a number of ways:
- Independent businesses help to sustain vibrant, walkable, compact downtown and neighborhood commercial districts, curbing sprawl and automobile use, habitat loss, and air and water pollution, enabling residents to fulfill more of their daily needs close to home.
- Locally owned stores are more likely to support local farmers and producers, which reduces food miles and transportation emissions.
- Several studies have found that people who live near small stores walk more for errands and, when they do drive, their trips are shorter. A study of 3,200 households in King County, WA, found that residents of neighborhoods with the most local businesses logged 26 percent fewer automobile miles than people living in areas with few neighborhood stores, and they were significantly more likely to take public transit to work. [7]
Find more details about the studies mentioned here, and others, by going to the Institute for Local Self-Reliance’s resource page — Key Studies: Why Local Matters. Additional resources about the importance of independent businesses to the local economy can be found on their Why Local page.
Notes
[1] “Locally Owned: Do Local Business Ownership and Size Matter for Local Economic Well-being?” Anil Rupasingha, Federal Reserve Bank of Atlanta. 2013.
[2] “Wage Inequality and Firm Growth,” Holger M. Mueller et al., LIS Working Paper, 2015.
[3] “The Importance of Young Firms for Economic Growth,” Jason Wiens & Chris Jackson, Entrepreneurship Policy Digest, Kauffman Foundation, 2015.
[4] “Thinking Differently About Development.” Joe Minicozzi, Government Finance Review, 2013.
[5] “The Health and Wealth of US Counties: How the Small Business Environment Impacts Alternative Measures of Development,” Troy C. Blanchard, et al., Cambridge Journal of Regions, Economy, and Society, 2011.
[6] “Socially Responsible Processes of Small Family Business Owners: Exploratory Evidence from the National Family Business Survey,” Margaret A. Fitzgerald, et al., Journal of Small Business Management, 2010.
[7] “A Study of Land Use, Transportation, Air Quality, and Health in King County, WA,” Lawrence Frank and Company, The Neighborhood Quality of Life Study, Center for Clean Air Policy, GeoStats, & McCann Consulting, 2005; “Neighborhood stores: An overlooked strategy for fighting global warming” Stacy Mitchell, Grist, 2009.
[8] icba.com
[9] Federal Reserve’s Small Business Credit Survey: Report on Employer Firms
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