Home 6 Benefits of Small Businesses in a Community

6 Benefits of Small Businesses in a Community

In a world where corporate giants are constantly taking over, small businesses are a breath of fresh air. Small businesses add personality and charm to a community and give it character and vitality. Moreover, community involvement is at its finest through interaction among neighborhoods or helping out friends or total strangers alike. 

Small businesses have a significant impact on their local economies and the quality of life. Taking the small businesses out of the scene outrightly, the area loses everything that makes it unique and charming. They act as a driving force behind the joy and satisfaction of the locals. Saying that small businesses are the backbone of their local communities would not be wrong.

By the end of 2021, the number of small businesses has reached 32.5 million, making up 99.9% of the total business sector in the U.S. Small businesses are more than just an economic activity; they shape and impact the community in every sphere. This article will talk about how small businesses change the community outlook.

1. Revenue Generation and Currency Circulation in Local Community. 

Almost 44% of the entire U.S. economy is generated through small businesses. In 2014, the most recent year for which small business GDP data is available, the Nominal small business GDP was measured at $5.9 trillion. As most small businesses tend to operate locally, the revenue generated by these businesses remains in the community. 

Owners of small businesses tend to shop locally and prefer local vendors for raw materials and other stuff required for their business. They outsource services to other local businesses. For instance, local business owners would register their business locally. If they need landscaping services and anterior designing to set up a fast-food restaurant, they will get these services locally and pick a small company instead of going with a large firm. From logo to branding, uniform to tools, furniture to kitchen items, they will get everything from the areas nearby their businesses.

As small business owners eat at local restaurants, do groceries, and purchase items for day-to-day use from local retailers, it sustains other local businesses. From every $100 spent on the local small business, approximately $68 remains in the local community. The capital they generate from their businesses returns to the communities they belong to. Hence, most of the money they spend will end up circulating back into the local community. This will sustain local businesses, and encourage economic growth.

Not only do native customers patronize a local business, but certain businesses such as the hospitality industry, restaurants, local arts and crafts, etc., also attract national and international tourists and travelers. Hence more economy pours into the local community. 

2. Create Local Jobs

In addition to promoting local economic stability, small businesses also ensure that people do not have to travel too far for work. So, more people can stay in their community. According to the U.S. Census Bureau, the average one-way travel time to workspace in the United States was 27.6 minutes in 2019. Around 17% of U.S. workers have to travel to work between 30 and 59 minutes (one way), while 4% are forced to commute from 60 to119 minutes (one-way).

In the absence of local opportunities, people have to seek jobs elsewhere. Areas near high-tech firms and large corporations are expensive to live in. So, people have to travel a long distance from their homes to their workplaces. Spending most of their time traveling and working cause them to sacrifice their social life.

If these people do not have to travel far to their workplace, they can contribute to the long-term growth of their community. Despite the pandemic, from 2019 to 2021, there was a net increase of 466,607 jobs from small businesses. In addition to less traveling, local jobs increase local interaction and job satisfaction. A study reported that 56% of small business employees have higher commitment scores than large corporations, whereas only 38.7% of workers had similar scores.

3. Shaping Community Identity

Small businesses play a vital role in preserving and reflecting the town’s important history, culture, and preferences. Being a substantial presence within the local community for very long, small businesses can shape the people’s character as well. While walking down a small town, city street, or local neighborhood, you find plenty of local shops alongside one another from restaurants, coffee shops, art & crafts, boutiques, etc., giving a unique flavor that is distinct to the community. 

Local business owners know their customers directly. In small towns, it is not uncommon to see the owner of a diner greeting and conversing with the clients in a friendly tone. You see customers and owners discussing routine matters at a flower shop, people chit-chatting at grocery stores, etc. Such interactions build connections and relationships among the local population. Small businesses love to empower their youth and pass their skills to the younger generation. Moreover, these small businesses directly influence tourism in the area and act as ambassadors conveying the values and traditions of locals.

Small businesses support their local communities by donating, volunteering, and participating in local community events. On the other hand, the locals prefer locally owned businesses and help them get a sustainable income. During the hard times of the pandemic, when many small businesses were being shut down, the community tried hard to help the small businesses to hold on

Moreover, large organizations and corporations impact social stratification to a large extent. In such entities, there are people who are part of the management structure and those who aren’t. This line can lead to little or no social interaction between the two. On the other hand, all small businesses consider themselves part of the community and play their roles without any class label.

4. Innovate and Diverse the Local Marketplace

The small-business landscape is competitive, so it is vital for entrepreneurs to be innovative and different. Small Businesses can not just come down to price or quality as large organizations do; offering the same product in different qualities and price ranges. If your business model is not original enough, someone else will take advantage of that gap in the market.

For instance, you may stand out from other locally-owned restaurants by offering signature dishes unique among competitors’ menus. You can innovatively present your menu, follow a theme for your restaurant, elevate a local recipe into a restaurant’s quality dish, etc. This helps set your company apart while bringing the attention of both new customers looking for something special at local places as well as tourists who seek the specialties of the natives. 

Hence such local businesses appeal to the tourist by offering something that can not be found somewhere else. It will give your community a more distinct personality and open doors for more economic well-being. Moreover, a diverse marketplace ensures well-served and satisfied customers. Small businesses offer more personalized services, products, and customer care leading to happy customers and thriving businesses.

5. Changing Sustainability Dynamics by Participating in Local Decision Making

Small businesses shape the sustainability dynamics of the local community by participating in formal political processes and social movements. They can construct and contest discourses and have the ability to navigate urban decision-making processes. Not only do they tend to align business operations with political identities and beliefs, but they also have a socio-environmental impact on locals. 

Who would have thought that small businesses are more trustworthy than elected officials? Well, a study from Gallup shows that people trust small businesses more than they trust the president and congress, the church, banks, police, newspapers, public schools, and television news. Hence small businesses can influence voters as customers trust them. Just hanging a pastor supporting a particular candidate for election at your storefront can start making the mind of your customers in that candidate’s favor. 

Having that authority among locals, the small businesses influence the local decision making and convey the community concerns to the local chamber of commerce, and county management, or support a candidate at the elections that can act for the community interests.

6. Contributing to Local Infrastructure Development by Increasing Local Tax Base

Local businesses are an integral part of the local economy. An increase in the local economy through small businesses can boost tax income (including income tax, property tax, sales tax, employment tax, etc.) for local governments. So, if the people purchase local services and goods, it will boost the sales of small business owners, and they have to pay more taxes.

This tax money helps strengthen your city’s revenue for projects like roads, hospitals, green spaces, and schools. So, by increasing the local tax base, small businesses help develop the infrastructure of their locality.

Improved infrastructure, in turn, helps businesses grow more. Smooth and traffic-free roads help in the transportation of goods. Moreover, customers have easy accessibility, and employees have less commuting for work, etc.

Are You Helping Your Local Business?

Small businesses are the lifeblood of their communities. These small, locally-owned shops provide a sense of community and civic pride to residents. Moreover, they also have an incredible socio-economic impact on the local economy. Supporting small businesses by shopping and purchasing local goods gives a satisfying shopping experience and helps your community grow together.

Image Credit: Ketut Subiyanto; Pexels; Thank you!

About ReadWrite’s Editorial Process

The ReadWrite Editorial policy involves closely monitoring the tech industry for major developments, new product launches, AI breakthroughs, video game releases and other newsworthy events. Editors assign relevant stories to staff writers or freelance contributors with expertise in each particular topic area. Before publication, articles go through a rigorous round of editing for accuracy, clarity, and to ensure adherence to ReadWrite's style guidelines.

Aisha Noreen

Hi, I'm Aisha Noreen. As an owner of a small business, I went through multiple challenges which I overcame by experimenting with different ideas. I love sharing those ideas with others who are looking for solutions to problems concerning business registration, marketing, personal asset protection, and business operation in a compliant manner at MoneyAisle.com. Outside the work, people know me as a movie buff and my recommended films make the day of my friends.

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