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Op/ed: Your holiday gift to your community should be supporting local businesses

By   /   Friday, December 6th, 2013  /   Comments Off

Studies show that in cities where small businesses account for a relatively large share of the economy, communities thrive because citizens are more connected to each other, more engaged and more likely to work together to solve problems.

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By Marsha Bailey

Marsha Bailey

Marsha Bailey

As a single mother with two young daughters and no financial support, Michelle Hirrel needed more income and flexibility to care for her family. In 2005, she enrolled in Women’s Economic Ventures’ 14-week Self-Employment Training Course to grow her startup floral business. Armed with her freshly-pressed business plan, she approached two banks for a business loan, but was declined by both.

WEV extended a $50,000 loan to Hirrel to provide working capital that allowed her to purchase a delivery van for her Ventura business, Shell’s Petals Florist. She continues to receive individual support and training from WEV’s Thrive in Five program. After paying off her first loan, Hirrel received a second loan from WEV to hire additional employees, invest in energy-efficient equipment and purchase a larger, customized delivery van.

Micro businesses such as Hirrel’s need three basic things to start, grow and thrive: Connections to customers, small amounts of capital, and business coaching and training.

During the holidays, you can support and strengthen small businesses in two ways: You can shop at local small businesses, and you can contribute to WEV and other microfinance organizations in the region that provide training and loans. Your donations will support a strong and diversified infrastructure for more locally-owned small businesses that will be the backbone for the new, do-it-yourself economy.

According to the California Association of Mirco-Enterprise Opportunity, the statewide network of entrepreneurial training programs, its member organizations serve about 21,000 very small businesses that support or create 36,000 jobs in California.

Entrepreneurs create their own jobs by starting their own businesses. They are also helping to create more stable and successful local economies. Hirrel and the other 3.3 million micro-business owners in California make up 88 percent of the state’s companies. Micro-businesses created 720,000 jobs statewide between 2003 and 2010, while big businesses lost 180,000 jobs. Self-employment is a labor market trend, growing by about 1 million a year, and, according to the 2013 State of Independence Report, will make up 50 percent of the work force by 2023.

The evidence for the importance of local businesses is mounting.

Researcher Anil Rupasingha of the Federal Reserve Bank of Atlanta found that “local entrepreneurship matters for local economic performance and smaller local businesses are more important than larger local businesses for local economic performance.”

Civic Economics has studied the costs and benefits to cities, both large and small, of locally-owned businesses versus larger chain stores. They found that, overall, local businesses generate more money for a community than chain stores, as the profits generated by these businesses stays within the community instead of draining away to a far-off corporate headquarters.

An annual survey by the Institute for Local Self-Reliance found that “Buy Local First” campaigns do boost revenue at independent businesses. Other studies show that in cities where small businesses account for a relatively large share of the economy, communities thrive because citizens are more connected to each other, more engaged and more likely to work together to solve problems.

As small businesses grow, local economies improve. That in turn helps to support schools, city services and sustainable communities. Every holiday dollar you spend in your community helps to create local jobs, which in turn supports another local business and then another. A dollar spent at a small business circulates in a regional economy two to three times more than a dollar spent at a national chain. And remember, a dollar spent online doesn’t help out your local economy at all.

This holiday season, go local.

• Marsha Bailey is founder and CEO of Women’s Economic Ventures, which has offices in Santa Barbara and Ventura counties and provides self-employment training, technical assistance and microloans, primarily to low-income women.

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