As we mentioned last week, the month of January is our back-to-basics month. This week we will revisit some facts, figures and logic of being truly local.
Elon Musk recently said, "Failure is an option here. If things are not failing, you are not innovating enough."
This is true in many things we do, transforming a community mindset being among them. We will always stress the need for your community to rapidly create a truly-local community mentality. Being truly local isn't just a nice thing to do, it is critical for the survival of your community. Some of the information used in this week's column you may have seen before, but reinforcing it helps to drive home the importance of growing that truly local DNA. Here are but a few of the many reasons your community must adopt a hyper-local mentality.
Numerous studies show dollars spent with locally-owned businesses will in turn recirculate throughout your community between three and seven times. Compare this to those same dollars spent with national chains which will circulate only once. Using 10 percent sales tax as an example, $5,000,000 spent with national chains in your community will return $500,000 in local sales tax with $4,500,000 lost forever. This same five million spent with locally-owned businesses will bring the same $500,000 in tax receipts, however, it turns that five million into $15-30 million floating through the community. What would an extra $15-30 million mean for your local business base and jobs?
Additional studies show owners of locally-owned businesses support local causes, organizations and charities by approximately a three-to-one margin over businesses with outside ownership. The foundations of local communities are built through active participation, volunteerism, non-profit organizations and civic groups. These are necessary and vital components to thriving communities.
Owners and managers of locally-owned businesses are four times more likely to be involved in leadership, politics, chambers, main street and economic development organizations within their communities than owners and managers of out-of-town-owned businesses.
Another interesting study indicated a community's poverty rate is directly linked to the percentage of prosperous locally-owned-and-operated businesses. The more local innovation, creativity and entrepreneurs there are, coupled with the active support of such by the various community's government entities, the greater expectation for an increase in the average household income. Bottom line, the greater percentage of your retail dollars spent with out-of-town business owners within a smaller or midsized community, the higher the poverty rate will be. Grow local!
Where a community invests its tax dollars is vital. There is no better investment in your community than revitalizing a community's downtown. Tax dollars and private investment into your downtown will bring an average of approximately 30 percent higher return than an investment in other parts of the city. Communities neglecting to restore their downtown district to greatness damages the entire community. There is no greater return on investment than restoring the heart and soul to your community through downtown revitalization.
Want to grow the real estate values in and around your downtowns? It has been shown that, by returning the vibrancy, heart and soul of your community to the downtown, you can expect to see an increase in surrounding real estate values as well. Not only does this create renewed pride in the community; it grows the real estate ad valorem tax base, which benefits the school as well as the entire community. I should point out, improvements anywhere in your community benefit the community, but the greatest return is in your central or downtown area.
Out-of-town owned businesses aren't bad; this isn't the case at all. The devil is always in the details or, in this case, the devil is in the balance. Cities finding ways to balance the growth of national chains in the community with the growth and support of their truly-local business base will find an economic balance leading to greater prosperity.
True balance is achieved by understanding. Communities must understand and realize national chains are only a fraction of the foundation from which to build. There is nothing more powerful than a "truly-local community" knowing what it takes to succeed and bringing true vibrancy to your community.
In addition to balance, it is also about building and creating uniqueness, something that only a truly-local concentration provides. Uniqueness is vital in the emerging economics of your community.
John A. Newby, of Pineville, Mo., is the author of "Building Main Street, Not Wall Street," a weekly column appearing in several communities. He is CEO of Truly-Local, LLC and is dedicated to assisting communities to create excitement, energy and combining synergies with their local media to become more vibrant and competitive. His email is [email protected] Opinions expressed are those of the author.