Spending Local, United We Stand, Divided We Fall!
Mickey Drexler recently said, “People like consistency. Whether it’s a store or a restaurant, they want to come in and see what you are famous for”. Another quote by Howard Schultz, “You walk into a retail store, whatever it is, and if there’s a sense of entertainment and excitement and electricity, you wanna be there”. In discussing the critical nature of keeping our dollars local, local businesses must also do their part and provide products, services, and experiences worth our dollars.
While we write about ways for businesses to provide a better customer experience in the coming weeks, this column will stress the need for your community to rapidly create a truly local community mentality or DNA. Being truly-local isn’t just a nice thing to do, it is critical for the survival of your community. In the end, it comes down to facts, figures, and logic. Many of the numbers and comments you see here, you may have seen in this column over the years. At the risk of repeating myself, I bring them up again to drive home the importance of growing your truly local DNA. Here are some common reasons for your community to adopt a hyper local mentality.
Numerous studies show dollars spent with locally owned businesses recirculate throughout your community between 3-7X. This is compared to those same dollars being spent with national chains, which circulate just once. Using a 10% sales tax as an example, one million dollars spent with out-of-town chains will return $100,000 in sales tax to your community versus $300,000-$700,000 when being spent with locally owned businesses that re-spend or compound those dollars. Those differences equate to real jobs for real communities.
Did you know owners of locally owned and operated businesses support local causes, organizations, and charities by a 3-1 margin over businesses with outside ownership? The foundations of many communities are built through active volunteerism, non-profit organizations, and civic groups. This is a vital component to thriving communities.
Did you know owners of locally owned and operated businesses are 4X more likely to be involved in leadership, politics, Chambers, Main Street and Economic Development organizations in their communities than owners of out-of-town owned businesses?
Did you know recent studies show a community’s poverty rate is directly linked to the percentage of prosperous locally owned businesses? The more local innovation, creativity, and entrepreneurs there are, coupled with active support of such by the various community’s government entities, the greater expectation for an increase in the average household income. The greater percentage of your retail dollars spent with out-of-town business owners within a smaller or mid-sized community, the higher the poverty rate.
Did you know that the greatest ROI on community revitalization is the community’s downtown district? Tax dollars as well as private investment in your downtown bring an average of 30% higher return than investment in other parts of the city. Communities neglecting to restore their downtown district risk damage to the entire community. There is no greater ROI than restoring the heart and soul to your community through downtown revitalization.
Want to grow the real estate values in and around your downtowns? It has been shown that by returning the vibrancy, heart, and soul of your community to the downtown, you can also expect to see an increase in surrounding real estate values as well. This creates renewed pride in the community, grows the real estate ad valorem tax base, which benefits the school and the entire community. I will say, improvements anywhere in your community benefit the community, but the greatest return is in your downtown area.
Having out-of-town owned businesses aren’t bad, that isn’t the case at all. The question is one of balance. Cities finding ways to balance the growth of chain within the community ALONG with the growth and support of the truly local business segment will find an economic balance that leads to great prosperity.
True balance is achieved by understanding. Communities must understand and realize that chains are only a fraction of the foundation from which to build. There is nothing more powerful than a truly local community knowing what it takes to succeed and bring true vibrancy to your community. In addition to balance, it is also about building and creating uniqueness in your community, something that only a truly local concentration can create. Be unique as it is the uniqueness that will be vital in the new and emerging economics of your community.
John Newby is a nationally recognized Columnist, Publisher, Community, Business, Media, Strategic Consultant & Speaker. His “Building Main Street, not Wall Street,” column is enjoyed by 60+ communities around the country. As founder of Truly-Local, he assists community and business leaders in building synergies that create vibrant communities. He can be reached at: info@Truly-Localllc.com.