There’s something everyone can do to improve the Colorado Springs economy: Buy local.
Why? Buying local increases startup formations, improves diversity, creates jobs and has a stronger economic impact than buying from big-box stores. And spending more at those big-box stores can depress wages and add to income inequality.
Nationally, new businesses account for nearly all net new job creation, according to researchers. Young companies created an average of 1.5 million jobs a year for the past 30 years.
Supporting those new businesses — from startups like TechWears, Cerberus Brewing Co. or Loyal Coffee — means creating jobs in the local economy. The folks at Loyal get this, and have created a “disloyalty” card for patrons to shop at other local coffee shops and receive free coffee at Loyal.
Big-box chains are able to buy in bulk, price items lower and depend on volume to make up the difference. Small local stores can’t do that, but instead rely on quality and customer service to make the difference.
But the money the chain stores make tends to go to corporate headquarters — local stores keep money in the community, building new jobs and creating more wealth. Studies show that for every $1 million in sales, independent stores generate $450,000 in local economic activity. Chains: only $170,000.
And for restaurants, $1 million in sales equals $650,000 in local economic development. Chain restaurants: only $300,000. Just a 10 percent shift to local stores would produce thousands of new jobs throughout the state.
Research at the Federal Reserve Bank shows the positive relationship between local businesses and economic performance. Counties across the country with large numbers of local, small, independent businesses have stronger economies and greater per-capita income growth than those without.
Jan Erickson of Janska realizes the economic realities of small businesses — not only how beneficial they are to local communities, but how thin the margins can be. She created Colorado Made Matters to highlight and promote Colorado businesses during the holiday shopping season. Gov. John Hickenlooper is on board, as is Mayor John Suthers.
It’s an effort supported by the vast majority of Colorado businesses. According to the Small Business Administration, more than half of private-sector employees in the state work for a small business with fewer than 100 employees. Small firms make up 97 percent of the state’s privately owned companies and created more than 44,000 new jobs in 2012.
There’s another compelling reason to buy local in Colorado Springs. Statistics from Sustainable Connections show small business owners reinvest in their community through nonprofit donations. Charities receive 250 percent more support from smaller firms than from larger companies.
Other research shows people want to live in and invest in communities with their own unique identity, and small businesses are a vital part of that. Visitors come to Colorado Springs and buy clothes at Terra Verde. They go to the Pikes Peak Brewery or Red Leg Brewing, and try the chocolates at Cacao Chemistry on Tejon Street. They can find a Walmart, Dillard’s or McDonald’s at home. They visit Colorado Springs and want to experience the heart of the city through its small businesses.
This holiday season, don’t just shop where it’s easiest and convenient. Go out, experience a locally owned store, donate to a local charity and support business organizations like the Pikes Peak Small Business Development Center.
It not only benefits the owners and employees — it’s good for the entire community.