At some point in time, you’ve likely seen a statistic or statement by a politician or economist stating the importance of small business to local communities.

While small businesses generate new jobs and employ more than half of the working class in the United States, they’re also beneficial to the local community. Here are 10 ways that small businesses make a profound local impact:

1. Community Identity

Take a stroll down Main Street and you’ll likely notice that your community has its own unique character and charm. From the mom-and-pop shop, the local CPA and dog grooming business, to an antiques emporium, coffee shop, yoga studio and beyond, small businesses contribute to a community’s identity. Many municipalities and tourism boards have prioritized preserving the community’s unique character – transforming that character into an advantage.

2. Local Involvement

Small business owners are an integral part of the communities in which they live and work. Thus, they tend to be cognizant of how their decisions may impact their neighbors. In addition, local small business owners tend to be involved in the community. For instance, they may sponsor local Little League teams, donate to the city’s homeless shelter, or participate in community charity events.

3. Community Health

In addition to contributing to the local community’s unique identity and being involved locally, small business owners help to build a sense of community. Their businesses tend to be people businesses. Small business owners tend to build relationships with their customers, knowing many of them by name. Many small business owners band together, forming casual or formal relationships, such as a merchant’s association. As foot traffic to one business increases, other nearby businesses may benefit through increased exposure or referrals.

4. Pedestrian and Environmental Attributes

Pedestrian-friendly town centers have their own unique vibe — and potential environmental benefits. For example, small businesses clustered near residential areas may reduce automobile use, resulting in better air quality and less urban sprawl.

5. Increasing the Tax Base

When local residents shop at small businesses within their communities, their tax dollars stay within the local economy, helping to improve their community as a result. Likewise, local small businesses tend to buy locally as well, pumping more of their profits back into the community than their chain store counterparts.

6. Local Jobs

Small businesses are job creators, and most of those jobs are local jobs. Rather than having to commute to another city, employees work closer to home. Not only does this reduce traffic congestion, supporting local businesses also supports your fellow community members who work at them.

a small business benefiting the local community

7. Entrepreneurship

Small businesses are the product of the business owner’s entrepreneurial spirit. By starting a small business, the business owner is taking charge of his or her future. Entrepreneurship fuels America’s economic innovation and prosperity and serves as a key means for families to move out of low-wage jobs and into the middle class.

8. Innovation and Competition

Small businesses, like any business, need to stand out from the crowd in order to survive. They must serve a legitimate need in the community and do it better than their competitors. Having multiple small businesses all striving to be unique, innovative, and better can result in a healthy marketplace and well-served consumers.

9. Less Infrastructure and Low Maintenance

Compared to shopping malls and chain stores, local shops tend to require fewer public services and less infrastructure. While a new music store owner may require a business license and occupancy permit, the process of opening a shop is much less demanding on the city planning department than building a new department store would be.

10. Diverse, Locally Made Products and Services

One-of-a-kind and locally made products can attract customers to community, bolstering tourism and contributing to the local flavor of the community. Locally made goods are also attractive to local residents who want to minimize their carbon footprints, support local businesses, and keep their tax dollars close to home.

coffee beans roasting in a coffee roaster

importance of small business to local communities These are just a few of the ways that small businesses are important to local communities. So next time you’re considering heading to a large chain store, don’t forget the importance of shopping small and helping local businesses take back main street!

About the Author

Paul Nugent is a small business advocate, and Head of Marketing at ShopKeep point of sale’s UK headquarters. Paul uses his background in the startup space, along with his POS system expertise, to allow small business owners to make informed decisions within their specific budgets.