We are asked to “Shop Small”, but do we do enough to keep our vibrant business community intact? Can you imagine having no local hardware store, no local bookstore? We could then have dozens, if not hundreds of empty storefronts and lose thousands of jobs. The effect trickles down.
Local businesses are the lifeblood of community support; they provide jobs, resources, support and services, as well as a hub for community growth. Small businesses contribute financially through local taxes, including those on real estate, sales and their businesses. These funds are necessary to ensure that our schools, libraries, parks and streets are able to provide for the community. When you shop at big national stores, our community loses these contributions.
Let’s say I earn $1,000 and I choose to spend all that money in our local stores, and then those stores spend the money locally. If we can make that $1,000 recycle through the community five times, the $1,000 I originally spent now has the same effect as adding $5,000 to our community. This is the “local premium” or the “local multiplier effect.”
Our local hardware stores, local food co-ops and farms, restaurants, bookstores and flower and gift shops, just to name a few, spend the money they earn on local wages and local rents. They purchase more locally-sourced goods and maintain and upgrade their properties. The vendors that make those locally-sourced goods also pay local wages and rents, upgrade their properties and so on. You can see how the effect can easily multiply with a few, small, conscious decisions.
But if I earn $1,000 and spend it all at a big box store or large online retailer, only a small amount of the money may stay in our community. In this scenario, the community loses thousands of dollars in trade for a small gain. The circulation of funds within a local community benefits everyone, while spending at national chains benefits only a few.
If you calculate the percentage of your budget that is spent locally, what grade would you receive? Is your percentage more or less than others in the community? Are you a “Super Supporter”? Let’s talk about it!
Christine Koch is a Weavers Way member and a consulting accountant for several companies in Philadelphia.