When we talk about the best ways of growing an economy to benefit a local population, it’s pivotal that the money flowing through stays localized. However, in today’s era of e-commerce retailers and large corporations, the average consumer is spending more time and money towards businesses that end up hurting local economies. At Baker Paper & Supply, we stand behind the evidence that supports how purchasing local is vital for the success of communities on a local level. This article will take a look at “The Multiplier Effect” of buying local, as reported by the American Independent Business Alliance (AMIBA).

The Multiplier Effect & Buying Local

AMIBA completed a study which concluded that there are three elements to the multiplier that help revenue remain within a local economy, ultimately creating more jobs.

Direct Impact

Businesses that spend money at other local businesses to help with their operating costs have a direct impact on the economy. This includes things such as purchasing equipment, items for inventory, utility payments, and paying employees.

Indirect Impact

The indirect impact occurs when the money spent by one local business at another local business eventually finds its way back to the original business. Essentially, when one local business puts money towards another local business, that money should ultimately recycle back through to the original business as revenue.

Induced Impact

The induced impact of keeping money local allows consumers to spend money at local businesses with the income they’ve earned at their jobs.

It’s important to take away from this is that both local businesses and local consumers play large roles in cultivating money on a local level. Depending on the industry of the business, there could be more weight on either the local consumers or businesses to keep the revenue local.

How National Franchises Can Negatively Impact Locals

City planners and consumers are easily excited to learn that a national chain brand is interested in bringing their stores or services to their area. When franchises offer to bring storefronts to a city, there needs to be serious consideration of how they will affect the local economy. Studies have shown that, in most cases, there is a negative impact on a local level that comes along with large brands bringing business to town. This is the case for both businesses and consumers.

The Average Return From A Purchase

Civic Economies completed a private study which examined how money was re-circulated into a local economy when a consumer purchased from a local business compared to a national franchise. The study found that on average, 48% of the money spent on a service or good from a local independent business was circulated back into the local economy. The same results showed that a purchase from a chain brand only returned roughly 14% of the money back into the local economy. What is even more alarming is that purchasing goods or services over the internet averages a return of only 1% of the purchase into the local economy. This puts a lot of pressure on the average consumer to understand the importance of purchasing local. The more money that leaves a local economy, the less options that will be available for consumers to choose from.

Baker Paper & Supply Supports Linn County

As Cedar Rapids, Marion, & the entirety of Linn County continues to grow, we’ve made it a focal point at Baker Paper & Supply to provide local businesses with the restaurant supplies, hotel supplies, janitorial products, and packaging services needed to keep revenue local. If you are interested in learning more about the products and services that we offer, contact us today!