Small businesses are the economic engine of many countries. In Canada, they’ve accounted for 85.3% of all new jobs over 14 years and constitute 90% of all employment. Similarly, in the US, microbusinesses (those with nine or fewer employees) account for 75.3% of all people employed in the private sector.
While large companies get the lion’s share of the press, these smaller businesses, both established and startups, keep things moving. But it’s not only their impact on employment that makes a difference.
With a more significant commitment to sustainability and social responsibility, small businesses contribute to local communities disproportionately compared to other companies.
Why Small Businesses Support Their Communities
The reason small businesses impact their community is simple…they live there. It’s easier for a large corporation with deep pockets to pick and choose where to locate or whether to stay. Small businesses are often founded by people who already live there and have no desire to leave. They called the community home long before the company started and planned to stay regardless.
Because of this, their risk is more significant. If a larger company encounters resistance or fails to foster community awareness, the risk to their business is much less as their goods are sold across the globe. But that risk is magnified with small companies whose continued success depends on local purchasing power.
Small businesses make a greater effort to become deeply involved in their community because it makes sense. For every $100 spent by consumers frequenting a small business, as much as $68 will remain in the local economy.
5 Ways Small Businesses Impact Their Communities
Here are five of the ways small businesses impact their local communities:
As mentioned above, small businesses create most local jobs. Many areas surrounding large enterprises are cost-prohibitive to live in for non-white collar workers. Local jobs provide shorter commutes and higher job satisfaction as work/life balance can be easier to achieve.
An Expanded Tax Base
Local businesses pay local taxes. These taxes provide schools, roads, community programs, and park revenue. These businesses also tend to conduct B2B transactions locally, expanding the tax base further.
Local businesses tend to operate in pre-existing companies. Because they must find something close, they may occupy eclectic space or space that would otherwise sit idle. They also tend to conduct B2B transactions locally, which reduces their carbon footprint compared to large enterprises that bring in bulk goods over the roads using FTL trucking over long distances.
Local businesses may also participate in initiatives to increase sustainability out of a desire to keep the area where they operate aesthetically pleasing to customers and the community.
A Higher Degree of Innovation
Necessity often begets innovation. Because local competition is often greater than larger entities, small businesses innovate to stand out and get noticed. This increased visibility can bring notoriety to a community, or it may be something that brings in customers from outside the community, magnifying its ability to generate tax revenue and create employment.
They Encourage Entrepreneurship
Local businesses with founders who endured hardship to find success can inspire others. This success especially benefits underserved communities where motivation and inspiration may otherwise be absent. Small community lending recognizes this, and many areas have favorable business loans for new entrepreneurs.
Dive Into Your Community with the Help of HBEC
Entrepreneurship is challenging regardless of where it occurs. The Henry Bernick Entrepreneurship Centre (HBEC) at Georgian College understands that new businesses need help finding their footing in business and building inroads into their community.
With entrepreneurship training, contacts, access to funding, and mentorship, we can help you build a business that will thrive in the community where you operate. Contact us to learn more about how we can help.