By: Corey Evans, Marketing Strategist
At Stingray Advisory Group, we are always looking to both work with and support fellow locally-owned businesses. Not only is it rewarding to connect with other community members, but it also helps a much bigger cause. Keeping money within the community allows for the community to grow and prosper and is one of the biggest benefits of shopping locally. This happens due to the multiplier effect.
The multiplier effect refers to the proportional amount of increase in final income that results from an injection of spending. Locally-owned businesses can recirculate a great percentage of revenue within the community as opposed to franchises/satellite companies. There are three elements that result in the multiplier effect.
The direct impact is spending done by a business within the local economy which allows it to operate. This includes everything from maintaining inventory to paying employees. Simply put, local business success creates more jobs. If individuals can work closer to home, they can also save on travel expenses incurred from commuting. This can lower overall vehicle emissions, improving air quality within a community. When employees are taking their lunch breaks, having the opportunity to eat close to their place of employment helps local businesses. This also keeps money within the community allowing it to prosper.
The indirect impact is spending done by a business with other local businesses. Local business owners tend to band together and support the community by encouraging spending to stay within their establishments. Some businesses partner with other businesses offering discounts for spending within the community, deals, and even referrals. Not only does this keep the money within the community, but this allows businesses to build meaningful personal relationships with their customers. Customers feel better cared for when they’re able to go to one specialist that can immediately direct them to another specialist for a needed product/service. This mindset increases goodwill between business owners for an overall positive experience. The success of one locally-owned business could potentially mean success for other locally owned businesses.
Local business owners are more cognizant of how their decisions impact their neighborhood and its inhabitants. These owners become more involved in the community – joining membership organizations, sponsoring or hosting local events (charitable, tournaments, sporting events, etc.), and more. They may also get involved with local universities and small entrepreneurial centers, providing guidance and innovative expertise to the next generation of entrepreneurs.
The induced impact is spending that happens as employees, business owners, and others spend their income in the local economy. This creates a sense of community identity. Cities become known for attractive elements that are unique to that city, like how Grand Rapids is known for our beer and furniture and has been aptly nicknamed “Beer City” and “Furniture City”. Vibrant small business communities create this identity and lead to local economic advantages. This identity brings in tourists from all over, further increasing revenue for local businesses. There is only one Las Vegas and one New York City for reasons like this.
Most consumers would rather go to specialists than generalists when purchasing goods and services. Locally owned businesses know the area/community and know what their customers want. Most local owners started their business to correct a problem they noticed would benefit consumers of that specific area.
Communities benefit greatly when consumers support and spend at local-owned businesses. We, at Stingray Advisory Group, are passionate about community involvement. We love visiting fellow Local First member coffee shops for meetings, utilizing members for our business needs, and collaborating with members to support our clients. If you haven’t taken the time to look at the Local First Member Directory lately, this would be a great time to revisit it. The next time you’re deciding where to stop for lunch, pick up a gift, or enlist help for your business, challenge yourself to support a fellow local business in the process!
We want to hear from you – let us know which local businesses you’re supporting!
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Stingray Advisory Group LLC is based in Grand Rapids, Michigan and is a proud member of Local First and the West Michigan Hispanic Chamber of Commerce. We help businesses grow. By creating customized solutions, we empower businesses and entrepreneurs with the tools to further their development. To learn more or schedule a consultation, visit email email@example.com. Follow us today on Facebook, Twitter, and Instagram for more helpful tips!