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OPINION: Communities must invest in small business

by By John Newby Building Main Street, not Wall Street | May 4, 2023 at 4:00 a.m.

As local communities continue to navigate the challenges of the modern economy, one key strategy for survival is betting on small businesses. Small businesses are the backbone of local communities, providing employment opportunities, spurring innovation, and fostering community engagement. Multiple studies show that investing in small businesses strengthens the local economy and enhances the community's overall well-being.

Small businesses are significant employers in local communities. According to the Small Business Administration, small businesses created nearly two-thirds of net new 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, particularly where many large corporations may be absent. Supporting small businesses means investing in residents' livelihoods and helping reduce unemployment rates, which can have a positive ripple effect on the entire community.

Another key is that small businesses play a crucial role in driving innovation and economic growth. Research shows that small businesses are more likely to introduce new products, services, and technologies than larger corporations. This innovation contributes to economic growth by creating new markets, stimulating increased consumer demand, and driving competition. Small businesses also foster creativity and entrepreneurship, 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 in which they operate. They provide a sense of place and serve as gathering spots for community members, fostering social connections and community engagement. Studies have shown that communities with a higher 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 community 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 corporations. Small businesses are more likely to operate locally, reducing transportation-related emissions. They are often more focused on sustainable practices, such as using locally sourced materials, reducing waste, and promoting energy efficiency. By supporting small businesses, 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 to 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 increased equity and greater inclusion and create a more equitable-based community.

Community support of 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 government services, such as schools, roads, and public safety. Studies have shown that when communities invest in small businesses, they can generate increased tax revenues, supporting additional community services and infrastructure. Small businesses are not just recipients of community support but also contributors to the community's financial health.

Communities must bet 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 is time to recognize the invaluable role that small businesses play in our communities and make deliberate efforts to support those local businesses now and in the future.

John Newby is a nationally-recognized columnist, speaker, and publisher. He consults with chambers, communities, businesses, and media. His "Building Main Street, not Wall Street" column appears in 60-plus newspapers and media outlets. As founder of Truly-Local, he assists chambers, communities, media, and businesses in creating synergies that build vibrant communities. He can be reached at [email protected].

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