Did you know more than half of Americans either own or work for a small business, according to the Small Business Administration (SBA)? Since 2000, small businesses (now 30 million strong) have created 66% of all net new jobs in the U.S. Clearly, small businesses have an outsized impact on the nation as a whole. But how do small businesses impact their local communities? In honor of National Small Business Week (May 5-11, 2019), let me count the ways.
1. Small businesses employ local workers. Independent businesses create jobs and hire people who live in their communities. Those small business employees then spend their paychecks in the community, resulting in other local businesses needing to hire more workers to keep up with the increased demand. All this stimulates the local economy. For each dollar spent in a local store as much as $3.50 recirculates into the local economy, according to the American Independent Business Alliance (AMIBA). A small business in an economically-challenged community may provide employment for people who otherwise wouldn’t be able to find work because they can’t afford cars or transportation to jobs outside the area.
2. Local small businesses generate tax revenues. Sales tax, property tax and other taxes paid by small businesses help finance improvements in the community. The more small businesses there are in a city or town, the more money is available for public works projects such as road repairs, new parks, public schools, police and fire departments andmore.
3. Small business owners give back to the community. Whether by joining local organizations (like the Rotary club or chamber of commerce), sponsoring Little League teams, chairing civic committees, or hosting fundraisers for schools and charities, small business owners and their employees often are at the forefront of community engagement and involvement. Their efforts help create a better, more tight-knit community for all residents.
4. Small businesses hire other small businesses. Because of their small size, independent businesses tend to use local suppliers and services. For example, a local retailer might hire a local sign-maker, electrician and contractor to build out or repair their store. Small retailers are more likely than chain stores to sell locally-produced goods, according to AMIBA.Local businesses also use independent professionals such as accountants, lawyers, insurance agents and advertising agencies, putting more money back into the community.
5. Small business success has a snowball effect. When a region has a growing community of small businesses, more entrepreneurs are attracted to the area. As more businesses then open up, the community becomes more desirable and attracts more residents, drawn by both the thriving business activity and the increased job opportunities. Property values rise, and everyone benefits.
6. Small businesses sometimes become big corporations. Those small businesses that grow to become big ones have an even bigger effect on their communities. For example, major employers like Microsoft, Nike, FedEx and Amazon all started out as small businesses. By staying put as they grew and expanding in their home cities, they now provide jobs for thousands of people and have turned their communities into major business hubs.
How does your small business benefit your local community? What more can you do to make it even better? Let us know in our discussion forum.
About Rieva Lesonsky
Rieva Lesonsky is CEO and Co-founder of GrowBiz Media, a custom content and media company focusing on small business and entrepreneurship, and the blog SmallBizDaily.com. A nationally known speaker and authority on entrepreneurship, Rieva has been covering America’s entrepreneurs for more than 30 years. Before co-founding GrowBiz Media, Lesonsky was the long-time Editorial Director of Entrepreneur Magazine. Lesonsky has appeared on hundreds of radio shows and numerous local and national television programs, including the Today Show, Good Morning America, CNN, The Martha Stewart Show and Oprah.
Lesonsky regularly writes about small business for numerous websites and for corporations targeting entrepreneurs. Many organizations have recognized Lesonsky for her tireless devotion to helping entrepreneurs. She served on the Small Business Administration’s National Advisory Council for six years, was honored by the SBA as a Small Business Media Advocate and a Woman in Business Advocate, and received the prestigious Lou Campanelli award from SCORE. She is a long-time member of the Business Journalists Hall of Fame.
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