Millennial Money: Shopping small makes a big impact

I get it. It’s easy to shop on Amazon. Running low on toilet paper? Need lightbulbs? Want a bath caddy on a whim? With two clicks and even less thought, the item you need/want/desire is at your doorstep, often in 48 hours or less.

Shopping locally requires more thought. Supporting small businesses is an intentional act — one that the mom and pop shops in your neighborhood desperately need you to make.

Tens of thousands of small businesses closed over the past year, many of them permanently. Each closure leaves a void that goes deeper than an empty storefront. The community loses dollars, jobs and resources that now-shuttered business would have circulated back into the local economy.

SMALL BUSINESSES REINVEST

According to the U.S. Small Business Administration, when you spend $100 at a small business, $48 stays in the community. Spend the same $100 at a big-box store or national retailer and only $14 stays.

Why? Because local businesses rely on other local businesses.

Kela Nabors is the founder and CEO of Organically Bath & Beauty, an organic vegan skincare line and shop in San Antonio . She uses a local firm for marketing and financial services whenever she can. The cards she puts in each gift set come from another local business: Belle & Union.

“We keep it local as much as possible,” says Nabors, who also partners with and supports a local food bank and frequents other small businesses for her personal shopping.

If her business went under, which it nearly did last year, the loss would ripple through the community. But Nabor’s customers came through, buying products and promoting her store.

“Some people were buying something every day to send to people they knew,” Nabors says. “It really helped create new relationships with people outside of our core (customer) base.”

TURNING THE LIGHTS ON

Local support is the only thing keeping the lights on for many businesses. In some cases, it’s turning the lights back on.

Some small businesses that had to close earlier in the pandemic have been able to reopen, in large part because of customer support, according to a January 2021 report from Facebook and the Small Business Roundtable , a coalition of organizations that advocate for businesses and entrepreneurs.

According to the report, 25% of small businesses were closed in December 2020, an improvement from 31% in April 2020. Among those that closed and later reopened, 31% say customer support is the reason they were able to do so . Businesses also cited social distancing measures (40%) and loosened restrictions (30%) as factors that allowed them to reopen.

Nabors had to close her storefront early in the pandemic when sales plummeted from around $15,000 per month to just $500 in March.

“I thought, ‘We can’t make rent like this.’ So we moved everything back into our home,” Nabors says.

Customers kept reaching out, asking Nabors to add products to her website and encouraging her to do more outreach on social media. Her online sales grew from around 10 per month to 50 to 100 per day. She reopened her storefront in May and is now looking to expand.

“We were able to actually thrive and grow during the pandemic,” she says.

LOCAL SHOPS HIRE LOCALLY

Businesses need to staff up as they reopen and gradually bring operations back to pre-pandemic levels. That hiring is going to happen locally, says Tom Sullivan, vice president of small-business policy at the U.S. Chamber of Commerce.

“Small businesses have a unique advantage when it comes to hiring: a network of community that is different than Indeed or LinkedIn,” Sullivan says. “We’re going to see more of an emphasis on local hiring than we have ever seen before.”

Nabors is already looking to hire. Her business went from three employees pre-pandemic (two of whom have since relocated) to one employee and a handful of family members in the early months of the pandemic. Now, she has five employees, is shopping for warehouse space and plans to hire 22 new employees.

A RISING TIDE

There’s a saying: a rising tide lifts all boats. It means everyone benefits from a good economy. This happens on a micro level, too.

When a town or neighborhood has a healthy small-business district, property values rise and housing demand increases, says Matt Wagner, chief program officer at the National Main Street Center Inc., a nonprofit organization that works to revitalize historic commercial districts.

Other small-business owners notice, too.

“You get a bandwagon effect, with more entrepreneurs wanting to enter the market,” Wagner says. “A lot of it has to do with having small businesses there, whether it’s a brewery, coffee shop or grocery store. It becomes a neighborhood.”

Small-business districts become a point of pride, a place to show off to friends and family when they visit.

“It’s become an amenity in some ways. It’s like having a robust school system or parks and trails system,” Wagner says. “People may have taken it for granted before, but we see now that it could be gone and that does a lot to your personal quality of life.”

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This column was provided to The Associated Press by the personal finance website NerdWallet. Kelsey Sheehy is a writer at NerdWallet. Email: ksheehy@nerdwallet.com. Twitter: @kelseylsheehy.

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