Why are local businesses good for the community?

The value of local businesses is often underestimated. Local businesses have a huge impact not only on the economy but also on the economy of their communities.

Local businesses are just as unique and individual as their owners and cover a wide variety of industries. They also enable people in their communities to gain financial independence, create jobs, and promote innovation.

Reasons why local businesses are good for the community

Local businesses support community goals

Communities must thrive for local businesses to thrive and vice versa. Because of this interdependence, local entrepreneurs are likely to mobilize and get involved in community initiatives.

Local businesses often:

  • Sponsor local sports teams
  • Donate time and/or products to charity
  • Offer internships or apprenticeships for students in local schools and more

Entrepreneurs are very aware of the needs of their community as they invest directly in their strength and success. Local businesses often work together to fill in gaps and run community initiatives.

Local businesses recycle their income in the community

The American Independent Business Alliance points out that local businesses bring income to the community in different ways.

  • Direct Income – Money the company spends on running (taxes, licenses, inventory, utilities, salaries, etc.)
  • Indirect Income – Money that has been given to local governments and other local businesses and then used to support those businesses
  • Induced Income – The money consumers spend using their income in the local economy

The American Independent Business Alliance advises that money spent locally is 48% recycled in the community. In contrast, money spent on national channels is recycled in the community at a rate of 13%.

It shows that when you spend your money on a local business, you’re supporting the entire community.

Improving the community’s economic health

Local businesses tend to support other local businesses. Often, a local business will intentionally promote other local businesses to create a thriving local economy.

Shopping locally also means creating more jobs in the community. These local workers will spend their money in the city and support the business cycle.

Additionally, small business employees tend to be happier – 70% of small business employees said their satisfaction was on a scale of 1 to 10 or higher.

Increase the local tax base

Local businesses pay local taxes. When buyers spend their money locally, the taxes they pay benefit their communities and improve their own lives. For example, when shopping online, local tax revenue may not be sustained.

Small business owners also spend most of their money on site. The taxes they pay on the raw materials to make their products help boost the city’s economic health. As a small business owner, you can do your bit by supporting other small business owners.

State and local governments use these revenues to support:

  • Infrastructure
  • Housing
  • Education
  • Law enforcement and first responders

While the debate about how taxpayers’ money is spent will go on forever, one fact remains that without corporate tax revenues our government could not function.

Create local jobs

According to the United States Local Business Administration, small businesses have created two out of three new jobs since 2014. This is more than most people might think, but every local job created means more people can stay in their community.

An overwhelming majority of people are leaving small and medium-sized cities for better job opportunities. A city with a thriving small business environment encourages people to stay, which makes it economically feasible.

Local workers can also shop locally, maintaining cash flow across the city. Instead of going to a nearby city, people can work closer to home, improving the quality of life for many.

Many people shop and dine near where they work. For those who work in their town, this may mean shopping in local stores, having lunch after work, or having a drink in a local pub or restaurant, and buying clothes or leisure items in local stores. The money stays local and the community atmosphere is united.

Promote entrepreneurship

A community of successful local businesses inspires others to take this step and develop their passion. Starting a small business means that the owner takes responsibility for their future through innovation and prosperity.

Other like-minded people could follow suit and see the success of small businesses. In cities where corporate regulations and small business tax credits are good, it is easier for those with drive and persistence to succeed.

Small business development can also be part of a high school or community college curriculum. It can help students who wish to take their destiny into their own hands have the tools they need to be successful.

Community credit unions often offer favorable loan terms to small businesses starting in the community. It’s another local business and part of the local business cycle. For small business leaders in the community, encouraging entrepreneurship helps create a favorable climate for small businesses.

Community identity

Building and shaping the identity of a community can be one of the most important tasks of small businesses. Your involvement in the community can help reflect an important story that is vital to the city.

A strong presence in the local community can also shape the character of the population, directly affect tourism in the region, and create connections with people passing by.

Local business owners not only contribute to the unique identity of the local community and get involved locally, but they also help create a sense of belonging to the community.

Many small business owners form informal or formal relationships, for example with a business association or mentorship. These relationships leverage the participants’ expertise to help the business world growth over the long term.


As you can see, local businesses play an important role in their community. When you support your local business, you are supporting your community as a whole. You can be proud to know that you are part of an autonomous and dynamic ecosystem.

If you would like to become a Leolly Partner and have your businesses listed on the website, please apply here.

To support local businesses, visit leolly.com

Leave a Comment