It’s often been said that small businesses are the backbone of the nation’s economy, the engine that drives our country’s prosperity. While certainly true, such a macro-level perspective can be limiting to understanding the depth of small business contributions, not acknowledging what they individually accomplish at the most grassroots level of our society.


The magic begins in the local communities where small businesses operate, as they take on a crucial role as the foundation for their local economies. Much more so than at the national level, small businesses make up the vast bulk of a community’s GDP, therefore becoming vital to that community’s overall economic activity.


While it’s certainly important to acknowledge the economic contribution that a small business makes to its community, it should be noted that this relationship isn’t a one-way street. Community and business thrive off of each other in a mutually beneficial, symbiotic relationship. As much as a small business can do for its community economically and socially, it wouldn’t be able to do so if it didn’t have the support and backing of the people it serves.


It’s crucial that a business considers two aspects of its relationship with the local community in every decision it makes: How what it’s doing can help the community, and how that can benefit the business and its bottom line.


How Small Businesses Impact Their Communities


Create local jobs. Hiring local help has a great benefit to the local economy: creating more disposable income within the community, which can then be spent on local businesses, creating a chain reaction of local prosperity.


Local involvement. Small businesses typically thank their communities by giving back to local schools, charities, youth sports teams and other organizations.


Foster community identity. The overall makeup of the many distinct personalities of local businesses reflects their locality, creating a unique image for their community. This uniqueness is important, as it gives tourists from outside the community a reason to come to that particular area and spend money.


Benefit other businesses. As a business draws in customers to an area, neighboring businesses typically benefit, as these customers are also likely to check out and shop at other businesses while they’re there. Small businesses keep people in town, helping the community as a whole.


How Good Community Relations Help Your Bottom Line


Create exposure. Getting involved in the local community puts your name and your brand out there. Small businesses typically can’t spend big money on advertising and marketing expenses, so getting involved is a relatively inexpensive way to let people know who you are, especially if you’re newly established.


Build loyal customer base. According to a study by Cone Communications and Echo Research, 82 percent of U.S. consumers consider corporate social responsibility when deciding where to shop. Businesses that show their communities that they care and are committed to helping improve the local area create emotional loyalties with residents.


Chain reaction growth. As mentioned before, a chain reaction of growth happens when a business and its community are both prospering. When a local business gives back to the members of its community, it’s financially empowering those people to spend more, and in turn, benefiting local businesses. You’re investing in future sales, leading to revenue growth.


What You Can Do in Your Community


Sponsoring local events, hosting fundraisers, donating to charities and funding local projects (like building a new park, for example), are all great ways to get involved. Hire local help, and be sure to use local vendors for your business whenever you can. Keeping money in the circulation of the local economy will financially benefit everyone involved. Always keep your community in mind when making any business decision. Whether direct or indirect, you want the effects of your decisions to be positive in the local area. Without the support of small businesses, a community can’t thrive; without the support of its community, a small business has no shot.


photo credit: Resilient cities seminar Rio via photopin (license)