What is a local economy? Anywhere you and your neighbors go to spend money is part of the local economy. Boom. You just boosted your local economy.
Your life is way too busy to think about the local economy right this minute. You are grabbing an order of fish and chips from the food truck outside the office because there are only 18 free minutes between your 11:00am staff meeting and your next Zoom call.
Boom. You just boosted your local economy.
So, let’s zoom out — if you don’t mind a little more zoom — and take a glance at what makes your local economy boogie.
What makes up a local economy?
Asking, "What is a local economy?" is like asking, "What is all this stuff around me?". Every home and business and government entity and non-profit organization around you that exchanges money has an economic impact on one another. You might clump that together to include your entire town or county, if you live in a rural community, or it might be the entire tax region that includes your suburban location outside a bigger city. It could even be a handful of blocks in the center of a metropolis.
But that's just a geographic perspective. Let's zoom in a bit (yes, we know) and consider the dollars and cents flowing through that map. Your community includes entrepreneurs and local business owners who depend upon each other to operate. Your local community obviously needs workers — like the kind who only have time for a quick lunch on the go. (By the way, did you get the tartar sauce and malt vinegar to go with that?)
Speaking of lunch, your local economy needs food resources: Everything from grocery stores, to the farmers market, to that food truck, to your favorite place for date night.
Anywhere you and your fellow community members go to spend money is part of the local economy.
What does a good local economy look like?
While the fish and chips are delish, you probably wouldn't want them for every meal every day. You know what they say about variety. In fact, what makes a strong local economy is the spice of life. An array of businesses absolutely makes the local economy buzz.
Consumer demand in a community of several thousand local residents likely requires more than just one local restaurant. That variety should support the area, but not so many local food options that they flood the community. Like that order of chips, you probably don't want so little ketchup that it doesn't cover the entire order or so much that you wind up throwing away a lot of excess.
Locally owned businesses, whether restaurants or laundromats or plumbing supply stores, set up shop to support the geographic and economic community. A strong local economy relies on all the resources to keep the economic activity interactive, interdependent, and flowing throughout the region.
If the community lacked a place to service automobiles and all the local residents had to leave town to get their cars repaired, their tires replaced, or their oil changed, it would likely have a negative local economic impact. Local small businesses provide goods and services, and workers facilitate those products and activities. Then the residents turn around and spend their earnings consuming those goods and utilizing those services, generating positive economic activity.
Ultimately, a strong local economy creates a sustainable environment where local shops, local banks and credit unions, local restaurants, and local businesses all rely on one another. That's how everyone thrives.
How can small businesses stimulate the local economy?
Small local businesses obviously fulfill the needs of consumers and other local business owners within the community, but they also lead community development. As local businesses make money, they generate employment opportunities and contribute to the economic strength of the community.
How's your lunch on the fly? If the food truck wasn't close by, you might have had to go without a mid-day meal. Imagine if there wasn't a local bank or credit union in your community. The local business owners might deposit their earnings in a large megabank on the other side of the county. Those profits would then be spent in other towns and other communities, maybe even in other states, and your community would have to go without economic resources that would contribute to its economic development.
Economic growth happens when the wealth of a community stays within the community, moves through the community, and funds the local economic development of the community. Whether it’s the grocery store that provides the fresh fish, the repairman who services the engine on the food truck, or the financial institution that provides the loan to expand to a second food truck (how does a burrito-mobile sound?), every part of the local supply chain helps entrepreneurs stimulate the local economy.
What is your part to play in your local economy?
The answer here is easy: shop local, eat local, bank local, volunteer local, and support local businesses. Help your community leaders get the word out about important events in the community. Make choices that positively impact local small businesses. And yes, spend your money in your community — and if that means you might have to buy lunch at the Korean taco food truck that’s rolling through next week, do it with gusto and enjoy it.