We often romanticize the idea of local businesses – and rightfully so. Unlike their big box counterparts, these small businesses truly are the heart and soul of our cities and towns, embodying and exuding their community spirit. When you think about your favorite places to shop and dine in your neighborhood, I’m sure a number of local businesses come to mind. In addition to their familiarity and charm, local businesses help strengthen local economies. In fact, money spent locally has even more impact than you may have realized.
Local businesses spend money locally
Multiple studies have shown that local businesses return more of the dollars they earn to the local economy compared to national chain retailers. In one study of several Salt Lake City businesses, local retailers spent 52% of their revenue–and local restaurants spent 79%–on local labor, supplies procured locally, and services from local providers. And those local businesses in turn spend more of their money locally.
Small businesses support more jobs
Larger businesses generally employ fewer workers; one study showed that places that added a Walmart had a net loss of 1.4 jobs for every new retail job they created, after local businesses downsize or close. Another study showed that in times of high unemployment, small businesses retain and create more jobs than larger businesses.
Small businesses pay more equitably
Large businesses typically have a larger gap between the highest paid employees and the lowest, contributing to society-wide income inequality. An analysis of data from several countries showed a strong relationship between business size growing and income inequality getting worse.
local businesses enhance Civic & social well being
Local businesses have strong community ties. Two thirds of small businesses reported donating to local charities in a 2022 survey–with firms owned by women donating at a higher rate than those owned by men.
And the impact of local businesses extends to how people in their communities fare. Communities with more small businesses have a range of social strengths, including lower rates of crime and better public health. In addition, they tend to have higher voting rates and better participation in community organizations and reform efforts.
How you can support local businesses
What can you do to support local businesses? The obvious answer is to do more of your spending at local businesses, from bike shops to art supply stores to independent restaurants (including ordering delivery directly from restaurants). But encouraging more systemic change can also level the playing field for small, independent, local businesses.
In a 2022 independent business survey by the Institute for Local Self Reliance, businesses identified policy actions that could help them be more resilient and successful. Among the priorities:
- Stop offering tax breaks to big businesses. Subsidies and tax breaks lower costs for big businesses and make it harder for localities to pay for the services local residents need. These incentives lead to long-term challenges for communities.
- Support enforcement of antitrust laws. The consolidation of businesses makes it harder for smaller businesses to compete.
For all these reasons, Two Octobers is thrilled to count local businesses amongst our clients, helping them continue as important members of each of their communities. And as a small business with plenty of local Denver ties ourselves, we’re proud to be contributing to our community alongside them—through company-sponsored volunteer days, apprenticeship advocacy, and pro bono work. Giving back is a key part of Two Octobers being qualified as a B Corp marketing agency.