As communities continue to navigate the challenges of the modern economy, a key strategy for survival is investing in small businesses. Small businesses are the backbone of local communities, providing employment opportunities, spurring innovation and fostering community engagement. Several studies show that investing in small businesses strengthens the local economy and improves the overall well-being of the community.
Small businesses are significant employers in local communities. According to the Small Business Administration, small businesses created nearly two-thirds of new net jobs in the United States in the twenty years between 2000 and 2019. Small businesses are often the largest source of employment in many local or rural communities, especially where many large businesses may be absent. Supporting small businesses means investing in residents’ livelihoods and helping to reduce unemployment, which can have a positive knock-on effect on the whole community.
Another key is that small businesses play a critical role in driving innovation and economic growth. Research shows that small companies are more likely to introduce new products, services and technologies than larger companies. This innovation contributes to economic growth by creating new markets, stimulating increased consumer demand and driving competition. Small businesses also foster creativity and entrepreneurship, which are essential for a thriving and dynamic local economy.
Furthermore, small businesses contribute to a community’s unique character and identity. Local small businesses often reflect the culture, history and values of the community they operate in. They provide a sense of place and act as gathering places for community members, fostering social connections and community engagement. Studies have shown that communities with a greater density of small businesses have higher levels of social capital, including trust, civic engagement and social cohesion. Small businesses are economic engines and pillars of society’s pride and resilience.
Supporting small businesses also has a positive impact on the environment. Studies have shown that small businesses tend to have smaller carbon footprints than larger businesses. Small businesses are more likely to operate locally, which reduces transport-related emissions. They are often more focused on sustainable practices, such as using local materials, reducing waste and promoting energy efficiency. By supporting small businesses, local communities can contribute to environmentally responsible practices and promote sustainability, leading to a healthier and more vibrant local environment.
Investing in small businesses can also help address issues of economic inequality. Small businesses provide opportunities for underrepresented groups, such as women, minorities, immigrants and veterans, to start and grow their businesses, thereby creating a more equitable economy. Studies have shown that diverse businesses are more likely to hire employees from diverse backgrounds, leading to greater economic empowerment for marginalized communities. By supporting small businesses owned by underrepresented groups, communities can promote greater equity and greater inclusion and create a more just society.
Community support for small businesses has a positive impact on public finances. Small businesses contribute to the local tax base through property, sales and payroll taxes, which help fund local public services such as schools, roads and public safety. Studies have shown that when communities invest in small businesses, they can generate increased tax revenue that supports additional community services and infrastructure. Small businesses are not only recipients of community support, but also contribute to the economic health of the community.
Communities must rely on small businesses for their survival and well-being. Small businesses are significant employers, drivers of innovation, contributors to community identity, champions of sustainability and contributors to public finances. Studies have consistently shown that investing in small businesses leads to positive outcomes for local economies and communities. By supporting small businesses, communities can create a more resilient, inclusive and prosperous future for all. It’s time to recognize the invaluable role that small businesses play in our communities and make a conscious effort to support these local businesses now and in the future.
John Newby is a nationally recognized columnist, speaker and publisher. He consults with chambers, local communities, companies and the media. His column “Building Main Street, not Wall Street” appears in more than 60 newspapers and media outlets. As founder of Truly-Local, he helps chambers, communities, media and businesses create synergies that build vibrant communities. He can be found at [email protected]
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