Why are locals turning away from the small business establishments throughout our communities?
Daily, especially here in Tallahassee, another homegrown, locally established company seems to close. One day it's there, the next a for sale/for rent sign adorns the window of a vacant building. Often times, these are businesses I've frequented and thoroughly enjoyed. Then I ask myself, did I do enough to support it? Did I tell my friends, check-in on social media, leave them a positive Facebook, Google, or Yelp review? As a small business owner myself, I can say yes, I try to do this often and frequently.
While it's true, many small businesses or businesses, in general, may fail due to poor location, lack of experience, poor management, personal use of funds, or over-investing in fixed assets, a large number fail because the community doesn't rally behind them. When a local business is unable to gain community support, it becomes the victim of vanishing capital and mounting bills with no way to make the payments. In other words, it runs out of money to conduct the day to day operations.
Even with a solid business plan, several thousands of dollars in capital, and a strong management team, these funds will quickly dissipate if people don't buy your product. With so much competition, especially competition of big box stores, franchises, and online companies, how do you get your product to the locals? The short answer is word-of-mouth, social media/online marketing, and relying on the local chamber of commerce.
Here are a few stats that you may find interesting from 2018.
As of 2018, there are 30.2 million small businesses in the United States. This accounts for 99.9% of United States businesses.
Lack of capital is the top challenge for 33% of small business owners. 15% of small business owners say marketing and advertising is a challenge, while 13% find time-management difficulties.
About 1 in 12 businesses will close every year. Many companies close for personal reasons. The top reasons being low sales, the owner retiring or selling the business, or the owner is wanting to start a new business.
50% of small businesses will close within 5 years. Approximately one-third will survive 10 years or more.
50% of U.S. businesses are home-based. More specifically, 60.1% of all firms without paid employees are home-based.
86.3% of small business owners say they take a salary less than 100,000 a year. Most small business owners are earning a salary, but they're paying themselves less than six figures. However, 30.07% of small business owners don't take a salary at all.
The average CEO makes $160,077 per year. Small business owners are paying themselves less than what an average CEO would earn.
More than 70% of small business owners rank their happiness a 5 or higher on a scale of 1-10. How happy are small business owners? Business owners seem more satisfied and content with what they're doing. At least 53% ranked their happiness level at a nine or above (with 10 being the happiest). About 37% rated their happiness at 10.
In 2015, there were about 414,000 startups firms that were less than 1-year-old and 396,000 business closures. The Small Business Administration (SBA) also reports that 1 in 12 businesses close each year.
From 2000 to 2017, small businesses created 8.4 million net new jobs. During this period, 57.9 million people are employed by small businesses. This is a 1.1 million increase from 2016. This currently makes up 47.8% of U.S. employees small companies accounted for a significant 65.9% of net new job creation in the U.S.
So, this leads us back to the question, why and how can you support local businesses. Let's start with the why.
Support your local economy. Investing locally keeps money in your community. According to American Express, approximately 2/3 of every dollar spent at a local business stays in the community.
Create local jobs. Small businesses are still the heart of the American economy. To state simply, supporting local businesses means supporting jobs in your community.
You get a unique shopping experience. You can't get a unique experience shopping online or go to one of the big box stores where customer service is non-existent.
Small businesses unite the community. Maybe it's the diner you visited with your family each Sunday while growing up, or the landscape company that gave you your first job, these businesses play an essential role in your life. Sometimes, a small business can tie a community together, form the character of the neighborhood, or offer a place to congregate and spend time together.
Patronizing a local business is acknowledging the challenge the owner(s) has taken upon themselves. It's an act of respect. Plus, you are showing you choose them over the larger competitor.
Most often, the local business has a superior product because they have chosen to be product-oriented over efficiency, profit margins, and expansion.
Lastly, a small business is often a life-long goal or dream. The product sold may be the creation, brainchild, or vision come to fruition for a local resident. Support that dream when you can.
Finally, how can you offer your support? It's actually pretty simple.
Shop at small businesses
Participate in Small Business Saturday
Skip Black Friday
Choose small businesses during the holidays
Word of mouth. Talk it up when you can. If you had a great experience, tell your friends. If something didn't go well, don't blast the business online, meet, and discuss it with the owner.
Partner with another small business and form partnerships and free advertising for others.
Host an event for small business owners where they can network for free.
Organize a community event and don't charge small business owners a fee to participate.
Partner with community organizations
Use small businesses for last-minute shopping
Encourage family and friends to shop at small businesses
Share small business content on social media. When you see something, please share it.
Leave positive reviews of small businesses online. Those Google and Facebook reviews matter more than you know.
Show your appreciation.
Digest, S. M. E. (2019, July 29). Why Small Businesses SHUT Down in No Time. Retrieved January 26, 2020, from https://smedigest.com.ng/why-small-businesses-shut-down-in-no-time.html
Small Business Share. (n.d.). Retrieved January 26, 2020, from https://www.facebook.com/Small-Business-Share-2412205515512769/