The Buck Stays Here: Building a Local Economy Builds Community

If there is anything good that can come of this recession, and that’s a big “if,” it might be that most of us seem to be much more aware of where we spend our money.

We’re looking for deals, and we’re looking for value—especially now. It makes some sense that we might look to Wal-Mart or some other discount stores. It certainly seems that the discount stores have low-low prices; they might even seem to be our recessionary salvation.

But in times like these, when we really consider where we spend our money, let’s consider spending our money at locally-owned stores, including local groceries. What happens when we do is extraordinary.

When you shop at locally-owned stores for your food, clothes, and other needs, you help support your local economy. Really.

Sure, we hear that a lot—but what does it mean? The business research firm Civic Economics conducted a recent study in Grand Rapids, MI, which puts some actual numbers to this idea. Grand Rapids is a good case study for us in Montana, having similar demographics and being just under twice the population of Billings.

Among the study’s findings:

• Local businesses buy more goods and services from other local businesses and employ more people locally. Every $1 million spent at local stores, for example, creates $321,000 in additional economic activity in the area, including $119,000 in wages paid to local employees. That same $1 million spent at chain stores generates only $188,000 in local economic activity, including $71,000 in local wages.

That bears repeating—when we shop at locally-owned stores, a lot more money stays in the community.

• If we change just 10 percent of our spending from chains to local businesses, we would have huge effects; they did it in Grand Rapids. Redirecting 10 percent of their total spending from chains to locally owned businesses results in $140 million in new economic activity for the region, including 1,600 new jobs and $53 million in additional payroll.

Another way to think about this: Grow Montana in Missoula has found that if each household in Montana spent just $10 a week on Montana-grown food products, we would re-direct $186 million dollars each year to local farmers and ranchers.

The astounding thing is that this revenue return happens after redirecting one of every $10. Imagine what would happen if we redirected every dollar!

• Local restaurants count, too; for example, more than 56% of their revenue goes directly back to the local economy in the form of wages, goods and services purchased locally, profits and donations. Chain restaurants return only 37%.

• $1 million spent at chain restaurants produces about $600,000 in additional local economic activity and supports 10 jobs. Spending $1 million at local restaurants, meanwhile, generates over $900,000 in added local economic activity and supports 15 jobs.

Every dollar makes a difference; in fact, every dollar spent locally makes a huge difference. Spend 10% of your shopping dollars at locally-owned stores, and you’ll have a huge impact. Local stores keep money here—chain stores send it away. Simple as that.

The communities that have tried this have found big results. Grand Rapids found that the best thing that can be done with available space and property in town is to make sure that local businesses set up shop.

Economically, starting a small, locally-owned business is the best thing that can happen for commercial space.

Even though it may seem like we are saving money when we go to chain stores, imagine what we save when we go to local stores. We save our community; we save our neighbors and friends; we save ourselves.

We can save our place, which is about the best thing we can do. And, all it takes is deciding we want to spend our money in ways that do that.

The next time you go out to eat at a restaurant, or go to the grocery, consider that where you decide to go will affect where you live.

The full studies of Grand Rapids are available at Local Works: Examining the Impact of Local Business on the West Michigan Economy by Civic Economics, Sept. 2008.