10 Ways Small Businesses Empower Their Communities

How small businesses empower their communities

Small businesses are big in America: According to 2023 Small Business Administration (SBA) data, over 33 million small businesses across the country employ 61.7 million people — 46.4 percent of all private sector employees. 

Here are 10 ways small businesses enrich their communities across the country.

1. Small businesses create jobs for local residents.

According to the SBA’s 2023 Small Business Economic Profile US, between March 2021 and March 2022, small businesses created a net 7 million new private-sector jobs. According to the U.S. Bureau of Labor Statistics, small businesses were responsible for 55 percent of the total net job creation in the U.S. from 2013 to 2023.

According to the National Community Reinvestment Coalition (NCRC), which supports entrepreneurial efforts in low- and moderate-income areas, small businesses promote economic self-sufficiency and help reduce poverty by providing jobs to workers in their communities. When small businesses thrive in these communities, the NCRC says, they create jobs that foster “neighborhood wealth and financial stability.”

2. Small business revenue stays in local communities.

Many small businesses reinvest revenues in their neighborhoods, significantly benefiting local communities. In contrast, big corporations don’t invest nearly as much money locally. Instead, they return money to shareholders or invest in other regions. 

Small businesses employ local residents, directly returning some of the money they generate to community members. Additionally, small businesses often support other local small businesses as customers or suppliers. For example, a chef at an area restaurant might stop by the neighborhood farmers market to purchase fresh, homegrown produce for weekly specials and menu dishes. 

3. Small businesses spark innovation.

In recent years, big companies nationwide have employed the idea of thinking like a startup to prioritize innovation and gain a competitive edge. Given the vast discrepancy in resources and capital between a large corporation and a small startup, this may seem like odd behavior. However, studies repeatedly show that small companies are more efficient innovators and more likely to develop new technology. In other words, small businesses punch way above their weight in research and development.

Vital innovations from small businesses can transform neighborhoods, towns and cities. For example, when the Wright brothers invented the first flying machine, they revolutionized transportation while putting their town on the map. Over 100 years later, the benefits of their invention are still enjoyed by the city of Dayton, Ohio (their hometown), and Kitty Hawk, North Carolina ― where the first flight took place.

4. Small businesses create opportunities for women, minorities and immigrants.

Today, more women, minorities and immigrants are pursuing their entrepreneurial dreams, understanding that starting a business may be the most pragmatic route to financial independence and prosperity. When entrepreneurship from these demographics increases, local neighborhoods feel significant positive impacts. 

According to the U.S. Senate Committee on Small Business & Entrepreneurship, minority-owned companies in the U.S. collectively amass nearly $700 billion in annual sales. When these business ventures succeed, their communities reap the rewards in the form of jobs, increased tax revenue, neighborhood leadership and more. [Related article: Successful Businesses You Didn’t Know Were Run by Women]

5. Small businesses increase the tax base.

Local businesses generate local taxes, including the property taxes they pay on buildings and the sales taxes they generate from selling goods and services. This tax revenue is reinvested into the community to improve roads, fund schools and keep parks in good repair. In contrast, taxes paid to e-commerce retailers or national companies typically don’t benefit local communities.

6. Small businesses become a part of a local community’s character.

One of the most charming aspects of small towns and cities is their unique small businesses that can’t be found anywhere else. Small businesses founded and owned by local residents tend to exude the character of their surroundings. They may reflect a regional flavor, share a coastal or mountain aesthetic or utilize local ingredients that can be harvested nearby. 

With time, these businesses often become cherished parts of their communities for residents and visitors alike. Some communities, such as Asheville, North Carolina, have laws prohibiting national chains from opening locations in their downtown areas to protect local businesses.

7. Small businesses contribute to the local tourism economy. 

Unique and interesting small businesses can attract tourists and seasonal visitors to an area. Tourists often value shops, restaurants, hotels and other businesses with a local flavor and prefer them to generic offerings they can find anywhere. Many communities often include photos and descriptions of their small businesses in their tourism marketing materials to attract visitors. 

8. Small businesses are more likely to contribute to local charities and initiatives.

Small businesses are often eager to participate in charitable marketing opportunities, such as sponsoring a local Little League team, contributing to a river cleanup project or volunteering for community fundraising efforts. Their sponsorships and contributions benefit the community while generating goodwill and boosting brand awareness. 

Local charitable ventures often struggle to attract attention and help from large corporations. They’re grateful for local businesses’ support and will actively promote these organizations and their offerings. 

9. Small businesses can help minimize carbon emissions and contribute to a community’s sustainability goals.

Small businesses often work within intrinsically sustainable business models that benefit the environment. For example, small companies typically source materials from nearby suppliers, not large vendors with national contracts, reducing transportation emissions from shipping. Additionally, restaurants that source food from local family farms can support agriculture practices more beneficial for animals and the environment than factory farms. They also utilize in-season produce instead of shipping products from thousands of miles away. 

10. Small businesses require less infrastructure investment.

Small businesses don’t need as much space as large corporations. They can often utilize vacancies in existing buildings. In contrast, large companies will likely build massive new facilities that require the community to pay for new roads, sewers, utility access and other infrastructure improvements. Additionally, a large corporation often must be lured to a community with expensive tax breaks or grants that small businesses don’t need or require.

Ways small businesses can work with local communities

Being a visible part of the neighborhood where your business is located creates closer bonds with community members who will be inclined to purchase your company’s goods and services. Here are some meaningful ways to get your business more involved with the local community.

1. Encourage employees to participate in charity work.

Giving team members paid time off to participate in local charitable efforts is a profound and impactful way to help your local community. Ask customers and employees which local charities they care about most and seek organizations whose aims match the values of your client base. Commit to supporting these charities regularly through volunteer work and financial contributions. 

Charity work also has business upsides: 

• Employees will appreciate the chance to give back to their community on company time.
• Locals will view your business as philanthropic. 
• You can generate favorable press coverage.