How Supporting Small Business Can Save the Economy
These are uncertain times, filled with worry and uncertainty. One of the largest concerns is preserving a healthy economy in a time where it is dangerous to interact face to face, a necessity for many businesses. The answer lies in supporting small businesses both locally and online. There are more than 27 million small business in the U.S. and altogether they generate almost 50% of our GDP. Beyond making up such a large portion of the economy, small businesses have a unique impact on their community.
Evidence has shown over and over again that money spent at local and small businesses is more likely to stay in the community. One study in Salt Lake city found that 52% of money spent at local retailers was returned to the local community, as compared to 14% of their chain counterparts. Restaurants returned even more revenue to the community, at 79% revenue recirculated vs. 30% at national chains. When we spend money at local businesses, it stays local.
Not only does the money remain local, but economic impact is larger when spent at small businesses than large chains. According to data analysis in Portland, Maine of 28 local business and corporate filings for a national chain, every $100 spent at local business yields an additional $58 in local economic impact. In contrast, $100 spent at a large chain store in the same city only contributed an additional $33 to the local economy. In other words, the economy grows more when money is spent at local businesses than when it is spent at a large chain store.
Even a small change yields a large impact. A study in Grand Rapids, Michigan showed that if residents redirected 10% of their total spending from large chains to local small business, it would create 1600 new jobs, $53 million in additional payroll, and $140 million in new local economic activity.
In addition to a higher economic impact, small businesses also create more and higher quality jobs, and retain them at higher rates than large corporations. The U.S. Small Business Administration reports that half of all adults in the U.S. are either self employed or work for a small business. More than that, small businesses have generated 64% of new jobs over the past 15 years. Because many of these businesses are local, the jobs created are almost exclusively local as well.
Small business success has a more abstract effect as well. Thriving entrepreneurs and small businesses drive innovation. Companies like Apple, Amazon, and Google started as small businesses and have changed the way we live our lives today. Small businesses have born novelties such as safety razors, overnight delivery, and the defibrillator. The nature of a small business necessitates ingenuity and encourages enterprise.
Investing in small business not only benefits the economy, but it means the world to a real person who has put their blood, sweat, and tears into their passion. Choosing to shop at, eat at, or hire a local small business supports your community, grows jobs, and inspires people. Please consider supporting your local small businesses, especially during these troubling times. If you have a favorite small business (or one of your own) please feel free to comment below introducing yourself!