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The Local Multiplier Effect

Shop Local

According to the U.S. Small Business Administration, small businesses are the “lifeblood of the U.S. economy.” In fact, they create two-thirds of net new jobs. That’s huge. And now, more than ever, local businesses need us.

increase wealth

Civic Economics, a private research firm, has conducted many studies on the difference in local economic return between local businesses and chain stores. Their first study was conducted in Austin, Texas, and it showed that an independent bookseller and an independent music seller returned more than three times as much money to the local economy as a chain store. This is known as the local multiplier effect. Those results since have been corroborated by subsequent studies. In fact, they found that on average, 48 percent of each purchase at local independent businesses was recirculated locally, compared to less than 14 percent of purchases at chain stores.

build community

Small businesses are an important part of the local community. They help give the community its distinct personality. The little mom-and-pop shop, the local dog grooming business, the local coffee shop, martial arts school, and antique shops give the community its character and charm. What would things look like in the Tri-Cities if there were no local businesses, only big-box retail giants? And what if that were the case all over the United States? Things would get pretty boring pretty fast. In addition, independent business operators tend to be involved in the community. For example, they are often the ones sponsoring local Little League teams, participating in community charity events, and contributing to local nonprofits.

jobs and opportunity

And that’s not all. As the above flyer states, independent businesses employ more people per dollar of revenue and use a wide range of other goods and services which, in turn, expands opportunities for other local entrepreneurs. They also generate more tax revenue per sales dollar, which translates to lower taxes. Furthermore, independent businesses owners tend to buy locally as well. Thus, more of their profits make their way back into the community, stimulating economic development.

Add to that the higher customer satisfaction, and there’s just no downside to buying local.