When you own your business, normally it is difficult to separate business from personal. I was in a meeting with a CPA today who mentioned that even our personal vehicles could arguably be considered 80% business because most of their use goes to promoting the business – whether you’re headed to work or a cocktail party, who you are is inextricably tied to your ownership of your business. As business owners, our colleagues are our friends and our business purchasing decisions often arise through business relationships we’ve developed. I was surprised to note, though, how few of my personal purchasing decisions were made with this same thought process in mind. Many times, personal purchases are driven by convenience, without a thought to the source. How many convenience purchases could be made at locally driven businesses instead of national chains and what would the impact be?
Why buy locally? The impact of making purchases locally is more than just your money going into the pocket of a local business trying to pay their rent and employees. That dollar can circulate in the local economy up to 10 times, going into pockets of employees, vendors, and landlords of that company and others in the community. The more you spend with local business, the more of that dollar stays within the community. For example, there are studies that show a dollar spent with a chain restaurant results in as little as 30 cents staying in the community. That same dollar spent at a locally owned restaurant can result in as much as 88 cents staying local. A secondary result is that the taxes paid by local business and on personal earnings generally are reinvested locally by state and local governments, further amplifying the effect.
What you can do? Take an inventory of your purchasing habits and consider what could or should be spent with local businesses. It’s easier to purchase your child’s birthday cake from Safeway or Whole Foods but the local baker or cupcake shop will benefit much more from your business. The 3/50 Project, which has received quite a bit of press since its launch in April 2009, focuses consumers and business owners on a very reasonable goal of spending $50 per month total at three local businesses that they would hate to see disappear. If everyone in the community made this commitment, the impact would be immense.
The process doesn’t need to be as formal as The 3/50 Project, though. As local business owners, we know so many other business owners because we’re typically involved in the community. With a small amount of thought, almost every purchase can be shifted from national businesses to local ones. In my case, I considered the difference between purchasing groceries at Safeway versus using Amazon Fresh and buying Christmas presents from my clients or other retailers I know personally. Is this less convenient? Probably. But it will certainly help my clients, friends, and community; and more likely than not, it will help me, my business, and my family too.