by Quint Studer
Repost from Strongtowns.org 

It’s an exciting time for small and midsize towns and cities. All across America, community leaders are on fire to find solutions for the challenges the past couple of decades have brought. They’re seeking new ways to spark growth, to keep young people from moving away, and to revitalize half-vacant downtowns.

 Non-retail businesses such as a law office can also be an important part of a small business community. Photo credit: Daniel Herriges One of the best and most powerful approaches is to deliberately nurture and grow their small business communities.

Non-retail businesses such as a law office can also be an important part of a small business community. Photo credit: Daniel Herriges

Small businesses can be underappreciated and under-supported, and that’s a shame. After all, when a downtown is filled with cool coffee shops, locally owned restaurants, microbreweries, and quirky boutiques—together with plenty of strong non-retail players like architects, ad agencies, and attorneys—that downtown is often the heart and soul of a vibrant community.

A strong small business presence—especially one that thrives in the context of a busy, livable, walkable downtown—is what gives a community its character. It creates that sense of “place” that attracts tourists, young people and empty nesters (increasing numbers of both groups want to live downtown), a talented workforce, and yes, bigger businesses and other investors who drive further growth.

I can’t say enough about how crucial small business is to economic health—and now more than ever before. Over the past few decades, most communities have had their “pillars” pulled out from under them. Big institutions like banks, hospitals, and newspapers used to be locally owned. Their owners lived and worked in the same place. Their children went to the local schools. As a consequence, their leaders were deeply invested in the community and worked hard to keep it vibrant.

But over the years, large corporations have bought up many of these pillar institutions and consolidated them. It’s now common for the owners of these organizations to live elsewhere, often in bigger cities where corporate headquarters are located. Smaller communities no longer have the benefit of business leaders with a deep personal connection to the place.

This is a natural part of change. And all change brings opportunities along with losses.

One big opportunity has landed at the feet of small business owners. They have a chance to step into the vacuum that was created when the old pillars fell. Not only can they keep their communities strong, they can help shape those communities’ futures. When small business owners work toward the goal of creating vibrant places, they benefit by increasing their communities’ overall economic health.

Let’s take a quick look at why small businesses are so important to communities.

  • Their owners have a vested interest in the community’s doing well. There is a symbiotic relationship between residents and small business owners. They really need each other. Small business owners have an active and personal interest in the well-being of the community. They live there. Their kids go to school there. They care about what happens.
  • Small businesses provide tremendous tax revenue. I’ve learned so much from Joe Minicozzi, principal of Urban3, on this subject. He is an urban planner, economist, and consultant who is known for his expertise on the economic impact of downtown mixed-use development. Minicozzi spoke in June 2018 at CivicCon in Pensacola on how this type of investment creates the most value.

Here is what a recent Forbes article had to say about Minicozzi and Urban 3’s approach:

One of the key components of his research has been to break down the economic impact of land on a per acre basis, allowing him to make apples-to-apples comparisons between, for example, a six-story, mixed-use building (a combination of residential and commercial uses) and a single massive retail store, in the same way you might use miles-per-gallon to evaluate the fuel efficiency of a car.

Take the city of Asheville, North Carolina, where Minicozzi is based, as an example. The city, which has a population of about 83,000, realizes an astounding 1,000 percent greater return on downtown mixed-use development projects on a per acre basis compared to when ground is broken near the city limits for a sprawling retail center.

Put a different way: a typical mixed-use acre of downtown Asheville yields $150,000 more in annual tax revenue to the local government than an acre of strip malls or big-box stores.

Strong Towns has hosted many podcasts and interviews with Joe Minicozzi, so please click here to learn more.

 Small business districts lend character to a community and keep profits recirculating in the local economy. Photo credit: Johnny Sanphillippo

  • They provide jobs. According to the U.S. Small Business Administration’s August 2017 Small Business Quarterly Bulletin, small businesses have created two out of every three net new jobs since 2014. And they’re meaningful jobs, too. We tend to feel better about our work when we have close connections with our bosses and coworkers and can play an integral role in a company’s future, both of which are more likely in a small business.
  • They keep money in the community. When citizens buy from a small business, their money goes to pay for a local employee, who goes on to spend his or her money locally too. It’s a chain reaction that serves the entire community. [Here is some research supporting the “multiplier effect” of spending at local businesses.]
  • They support local charities. Sometimes small business owners are philanthropists who financially support nonprofits that directly benefit local citizens. Other times they’re caring citizens who coach Little League teams or encourage employees to volunteer at the animal shelter. Either way, the owners of local businesses are more likely to be invested in the community and motivated to give their time and resources to make it better.
  • They reflect and amplify the culture of the community. Locally owned restaurants are a perfect example. They don’t have to buy food from a preset menu and prepare it in a standardized way. They’re free to feature regional dishes and source foods locally. Their independence lets them quickly respond to the changing needs of their neighborhoods. This all contributes to a strong sense of place.
  • Small business owners are smart, entrepreneurial, influential people who can help you solve problems and drive change. Often, these are the people Jim Clifton, author of The Coming Jobs War, calls “tribal leaders.” They may not have formal positions in government, but they are seen as people who can get things done. They may already sit on boards and give their time, energy, and money to civic and nonprofit organizations. When seeking to revitalize a community, you’d do well to make them part of the team.

Small business districts lend character to a community and keep profits recirculating in the local economy. Photo credit: Johnny Sanphillippo

It’s easy to see the potential that lies within a galvanized and successful small business community. That’s why these businesses need our support. They need local government, community developers, and citizens to join hands and lift them up. And business owners themselves need to work together to find ways to help new entrepreneurs succeed.

Funding startups to get them off the ground is a great start, but it’s not enough. We need them not just to survive, but to succeed long term. I’ve given you the why. To learn more about the how, I invite you to read my earlier Strong Towns article “10 Things Small Businesses Need to Thrive.”

Remember, thriving small businesses create thriving communities. When they succeed, there are more high-paying jobs. Citizens, in turn, can afford to shop locally. Neighborhoods and schools get better. Quality of life improves across the board. That attracts more people to move into the community… and more small businesses to invest in it. It’s a virtuous cycle.

Here’s the bottom line: When small business wins, communities win. When communities win, America wins. Let’s all win together.

(Top photo credit: Andrew Price)

 

About the Author:
Quint Studer is a Strong Towns member, a resident of Pensacola, Florida, and the author of Building a Vibrant Community: How Citizen-Powered Change Is Reshaping AmericaToday he is sharing a guest article on the benefits of a thriving small business community.