Home-Growing Economic Development Opportunities

Why looking inside is often a better strategy to growing a local economy

In the pursuit of economic development, communities often find themselves at a crossroads, debating whether to attract new businesses or focus on nurturing existing ones. While attracting new businesses can seem appealing, a more sustainable and community-centric approach often lies in the retention and expansion of local businesses. Nearly every economic development professional understands that most jobs in a community is created by existing businesses that already exist in the town, not by attracting new businesses into the community.

Healthy communities work on creating economic opportunities on both tracks, both by engaging in robust attraction activities, but also by working to create a strong economic enviornment in which local businesses (including the retail and service sectors) can not only survive, but thrive. But, what are some of the benefits in supporting and investing in our local economic drivers?

• Preservation of Local Identity and Culture

Local businesses are the heart and soul of a community. They reflect the unique identity, culture, and history of a place. When these local businesses thrive, they help maintain the authenticity and character of a community, making it more attractive to both residents and visitors. In contrast, attracting new businesses may risk diluting or erasing the distinctive local flavor.

• Strengthening the Local Economy

Local businesses contribute significantly to a community's economic health. They tend to recirculate a substantial portion of their revenue within the local economy, creating a multiplier effect. Dollars spent at local businesses often support other local enterprises, driving economic growth and creating a robust economic ecosystem. When communities prioritize the retention and expansion of local businesses, they can harness the power of this economic multiplier effect to benefit residents and the local economy.

• Job Creation and Employment Stability

Local businesses are critical drivers of job creation within a community. They are more likely to hire from the local workforce and have a vested interest in the well-being of their employees. Expanding local businesses can lead to the creation of stable, well-paying jobs that help reduce unemployment rates and enhance economic security for residents.

• Building Stronger Communities

Local businesses are deeply embedded in their communities, often supporting local charities, schools, and community events. They actively engage with their customer base and contribute to a sense of belonging and pride among residents. Their commitment to community involvement fosters a strong sense of community cohesion and shared responsibility.

• Environmental Sustainability

Promoting local businesses can have a positive impact on environmental sustainability. Local businesses often have shorter supply chains, which can reduce the carbon emissions associated with long-distance transportation. Additionally, local businesses tend to be more invested in maintaining the environmental well-being of their communities.

• Risk Mitigation

Attracting new businesses carries inherent risks, including uncertainty about their long-term success and commitment to the community. In contrast, local businesses typically have a proven track record and a deep understanding of local market dynamics. Relying on local businesses can mitigate the risk of economic instability and ensure a more predictable economic landscape.

• Innovation and Entrepreneurship

Local businesses can serve as incubators for innovation and entrepreneurship within a community. They provide a fertile ground for aspiring entrepreneurs to gain experience, learn from local success stories, and eventually start their ventures. This entrepreneurial spirit, when nurtured, can lead to the emergence of a dynamic local business ecosystem.

• Long-term Economic Resilience

Communities that prioritize the retention and expansion of local businesses are more likely to exhibit long-term economic resilience. They are less susceptible to economic shocks, such as recessions or shifts in industry trends, as they have a diversified local economy. This diversity can help them weather economic challenges more effectively.

• Supporting Minority and Disadvantaged Business Owners

Local businesses often include a diverse range of owners, including minorities and disadvantaged individuals. Prioritizing local businesses can create economic opportunities for marginalized communities and foster greater economic inclusivity.

• Maximizing Existing Resources

Retaining and expanding local businesses allows communities to make the most of their existing resources, including infrastructure, workforce, and talent. Attracting new businesses may require significant investments in infrastructure and incentives, while existing resources can be leveraged more efficiently.

In the quest for economic development, retaining and expanding local businesses should not be overlooked. This approach offers numerous advantages, including the preservation of local identity and culture, economic strengthening, job creation, community building, environmental sustainability, risk mitigation, support for innovation and entrepreneurship, long-term economic resilience, inclusivity, and efficient resource utilization.

While attracting new businesses can bring immediate attention and investment, it can often come at the cost of sacrificing a community's unique character and relying on external entities with uncertain long-term commitments. Local businesses, on the other hand, are the backbone of a community, deeply rooted in its history and values. By nurturing them, communities can build a more sustainable and prosperous future while safeguarding their identity and culture. Ultimately, the retention and expansion of local businesses lay the foundation for a resilient, inclusive, and thriving community.