In praise of small, local businesses

With the ascendency of Small Business Saturday, consumers are urged to shop at small, local businesses—and in particular on the Saturday after Black Friday. With both Black Friday and Small Business Saturday coming up, we thought a reminder of the benefits of shopping at local venues vs. national chains and internet stores would be in order.

What are the benefits of shopping at local, independent businesses? According to the American Independent Business Alliance (AMIBA), there are many. AMIBA says, “The casual encounters you enjoy at neighborhood–scale businesses and the public spaces around them build relationships and community cohesiveness.” Also, shopping local strengthens the local economy. According to AMIBA, a dollar spent at a local business returns three times as much to the local economy as a dollar spent at a chain or big-box store. And if the dollar is spent at an online mega-store like Amazon, only a penny comes back to the community—and that’s only if the package is delivered by a local driver.

That data point comes mostly from information developed by an organization called Civic Economics. In 2002, a book store, Book People, and music store, Waterloo, in an Austin, TX neighborhood were facing the prospect of a Border’s bookstore opening near their shops, with $3 million in subsidies provided by the city. The owners of Book People and Waterloo were asked by Civic Economics to fill out a work sheet, “detailing how money moves through their businesses with a particular emphasis on how much of it re-circulates in the Austin economy in the form of profit to local owners, wages paid to local employees, the procurement of goods and services from other local firms and charitable giving.” They compared that to public information available on Borders stores and found, “At both Waterloo and Book People, $45 out of every $100 spent in the store remained in the Austin economy. At a typical Borders store, that figure was just $13; the rest disappearing from the local economy entirely at the end of the business.” Ultimately, the City of Austin dropped the Borders project.

In another study, the partners at Civic Economics, Matt Cunningham and Dan Houston, looked specifically at booksellers in San Francisco and compared the performance of independent stores to bookstore chains and internet booksellers. They determined that the independent shops create 2.14 jobs for every $1 million in revenue, while the figure for chain stores was 1.27 jobs, and the figure for internet plus chain stores was .39 jobs.

Independently owned businesses also help to give communities their unique character, and according to multiple surveys conducted by Consumer Reports, shoppers consistently rank independently owned stores over chains when shopping for items such as electronics, pharmaceuticals and appliances. Owners of local independent businesses are typically more heavily invested in local issues than the people who run chains.

We could list the names of the owners of dozens of local businesses such as car dealerships, grocery stores, hardware stores and many others because we have seen them out in the community. Off the top of our heads, we don’t know the name of the person or people who own the McDonalds franchises in Honesdale, Liberty, or Monticello. Local food is probably the segment of the buy-local movement that has the most followers.

Again, local food offers may benefits. It’s often free of pesticides, because local growers often use natural pest repellants to protect the products they grow. Because local food is not shipped long distances and distribution requires less fossil fuel, it is friendlier to the environment. The food is also usually fresher and healthier than food that has been transported across the country or from overseas.

So as we move into the holiday season, remember to check out local businesses, farmers and restaurants. Keep the economy of your friends and neighbors healthy by shopping local.


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