Money Spent in Local Businesses Works For You

Every dollar spent in a locally owned store generates up to four times more money for the local economy compared to when spent nationally.
By Amanda Converse | December 12, 2010

Where people choose to spend their money during one of the busiest shopping seasons of the year, the time between Thanksgiving and Christmas, has increasingly become a local and national focus. 

The 3/50 Project is a national movement asking consumers to commit to picking three locally owned businesses and spending $50 in each once a month. It, along with American Express, organized and promoted Small Business Saturdays during the holiday season, encouraging people to shop at locally owned businesses. 

Jen Villa, owner of the Little Beach Gallery in Hyannis, participated in Small Business Saturday and said she is "pleasantly surprised by the movement trending locally and nationally. [It] is evolving from buzzword to something people are feeling strongly about."

Many people believe patronizing small and locally owned businesses is key to creating a healthy community and economy. Small business organizations and town of Barnstable business owners agree.

According to some small business advocacy groups such as the Business Alliance for Local Living Economies, when people spend money in a locally owned store, compared to a nationally owned store, it generates up to four times more money for the local economy.

The 3/50 Project states, "for every $100 spent locally, $68 returns to the community through taxes, payroll and other expenditures. If you spend that in a national chain, only $43 stays here. Spend it online and nothing comes home."

Why? Local businesses tend to employ local residents, use other locally owned businesses for business and professional services, such as printing, graphic design and advertising-putting money back into the local community.

Local businesses also tend to have a natural interest in their community's long-term health and therefore make significant investments in the community.

"Locally owned businesses invest and spend their dollars locally," Steve Dager of Bradford's Ace Hardware in Hyannis said. "Due to the fact our loyal customers support us, we in turn can support other local businesses and charities. In most years we give to well over 100 local charities and charitable organizations right here on Cape Cod."

Dager also said, "I do not think many folks understand the direct impact spending locally has upon the local economy. There is a real disconnect there somehow." 

Cape Cod Beer owner Beth Marcus agrees with Dager, "people are unaware of what happens to the money when they spend it...for the longest time, cheap has been better," she said. But, she is hopes as a society we are starting to change that attitude.

Last year, Cape Cod Beer began stocking locally made products in its retail store and currently spend 76 cents on every dollar on goods made locally on Cape Cod. She feels it is her purpose to support local businesses and to promote the idea of purchasing goods made on the Cape.

Aimee Guthinger, owner of Bedroom I's in Osterville, believes for her business to be successful, all other local businesses need to be successful as well. "It's a reciprocal relationship that is not new, but has the ability to touch every single person in the community," Guthinger said.

Barnstable business owners know the importance of the community in keeping the local economy afloat.

"I think of my customers as friends," West Barnstable's Yummy Goods owner Melissa Averinos said. She relies on friends to patronize not only her shop, but other locally owned restaurants, boutiques and markets.

"It's not enough for people just to like and frequent the local shops, they have to actively go out of their way to support them and promote them or we will disappear," Averinos said.