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4 Ways Small Businesses Empower Their Communities

Updated Feb 21, 2023

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There’s a reason people champion Small Business Saturday every year: Shoppers want to pour money into neighborhood businesses that boost the local economy. However, the impact of small businesses in the U.S. is more than economic. Find out how America’s small businesses give back to the communities they serve, and get ideas for how your company can partner with the local community.

How small businesses empower their communities

Small business is big in America: There are 32.5 million small businesses across the country, according to the Small Business Administration (SBA), and they employ 61.2 million people. That’s 46.8% of all U.S. workers. Here are four ways small businesses enrich communities across the country.

1. Small businesses create jobs for local residents.

From 1995 to 2020, small businesses created 64% of all new private-sector jobs, per the SBA. That’s 4.8 million more jobs than the biggest private-sector employers in the U.S. provided in that same time span.

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

FYIDid you know

The SBA and the U.S. Department of Agriculture provide government loans for entrepreneurs. Funding can get your startup off the ground or help expand your growing business.

2. Small business revenue stays in local communities.

Big corporations don’t invest nearly as much money in the communities they serve as local businesses do. Instead, they return it to shareholders or invest in other regions. Local communities benefit more when that money is reinvested in the neighborhood – precisely what many small businesses do.

By employing local residents, small businesses put the money they generate back into the pockets of community members. Additionally, small businesses often work with fellow neighborhood small businesses as suppliers. For example, a chef at an area restaurant might stop by the neighborhood farmers market each week to purchase fresh, homegrown produce for the restaurant’s weekly special. That, too, keeps money local.

3. Small businesses spark innovation.

In recent years, big companies around the country have been trying to make their teams operate more like startups in order to maintain a competitive edge. Given the huge discrepancy in resources and capital between a large corporation and a small startup, this may seem like odd behavior. But studies repeatedly show that small companies are much more efficient innovators and more likely to develop new technology. Small businesses punch way above their weight in research and development.

Important innovations that come from a small business can transform neighborhoods, towns and cities. For instance, when the Wright brothers invented the first flying machine, they not only revolutionized transportation but also put their town on the map. Over 100 years later, the benefits of their invention are still being enjoyed by the city of Dayton, Ohio, their hometown, as well as Kitty Hawk, North Carolina, where the first flight took place.

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

Economic data from recent years shows that women, minorities and immigrants are pursuing their dreams of building their own businesses. Many marginalized groups have realized that starting a business may be the most pragmatic route to financial independence and prosperity. And because entrepreneurship from these demographics has been high, the communities in which these entrepreneurs live have felt the positive impact. 

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]

Did You Know?Did you know

Some small business grants are geared toward minorities. There are also business grants for women entrepreneurs.

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 more apt to purchase your company’s goods and services. Here are some meaningful ways to get your business more involved with the local community.

Send staff to do charity work.

One impactful way to show your business’s commitment to the local community is by giving staffers paid time off to do charity work in the area. Ask customers and employees which local charities they care about the 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 upsides for your business: Employees will appreciate the chance to give back to their own community on company time, locals will view your business as philanthropic and you could even generate favorable press coverage. [Getting local publicity should be a key goal of your small business marketing plan.]

Offer a local sponsorship.

If giving staff paid leave to work for charities is too expensive or burdensome for your business’s operations, offer to sponsor a charity drive instead. Get your name and brand on the donation forms and publicity material for the event. For example, supporting the local high school’s soccer or baseball team by taking out a shirt sponsorship is a great way to reach families with children. You’ll be marketing your business and providing funds for community events at the same time.

Give presentations at schools.

Many young Americans dream of starting their own companies but don’t know where to start, and your knowledge is valuable. Get in touch with the business studies teachers at local schools, and offer to talk to students and answer their questions about opening and running a business. 

Presentations don’t have to be limited to your exact entrepreneurial footsteps. If you run a local restaurant, for example, show parents how to prepare healthy meals on a tight budget. If your business is known for upcycling, lead a workshop showing community members how to transform things they already own into useful new products. Sharing actionable information allows you to appear as a local expert while improving the lives of those around you.

Host internships for high school students.

Seek out local students for summer internships, after-school work and weekend help. Interns are typically eager to learn and prove themselves. By regularly employing student interns from the neighborhood, you’ll exhibit your commitment to supporting and developing the community’s next generation. You may also discover a future star or burgeoning leader. With the right mentorship, they won’t forget how you helped them and will be likely to follow your example of giving back.

Meredith Wood contributed to the writing and reporting in this article.

Mark Fairlie
Mark Fairlie
Senior Analyst & Expert on Business Ownership
Mark Fairlie has written extensively on business finance, business development, M&A, accounting, tax, cybersecurity, sales and marketing, SEO, investments, and more for clients across the world for the past five years. Prior to that, Mark owned one of the largest independent managed B2B email and telephone outsourcing companies in the UK prior to selling up in 2015.
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