When small town entrepreneurs prosper, they help their community prosper. It’s one of my core beliefs, and it’s supported by some scholarly research.
Charles M. Tolbert, Baylor University, looked at the effects of small business on their local community. His research shows that more locally-oriented business establishments are associated statistically with:
- higher average income levels
- less income inequality
- lower poverty levels
- lower unemployment
- less juvenile delinquency
- less crime
Tolbert said that business owners are a local independent middle class, vested in the locality, embedded in the community, and acting as stakeholders.
Tolbert, Troy Blancahrd and Carson Menken, Louisiana State University, are adding research on the number of small businesses per person and health. More small businesses are associated with:
- lower levels of obesity
- lower levels of diabetes
- lower rate of death
The number of larger businesses in a community was not associated with any change in health. They speculate that the entrepreneurial culture may be associated with better investment in health care facilities, recruitment of physicians, and a better social environment. Business owners may be more likely to back walkability improvements.
(Here’s just one of the news stories on this research.)
I think there’s a basic reason for this: the best solutions always come from within. When local entrepreneurs prosper, they have more resources to work on implementing those solutions.
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Becky started Small Biz Survival in 2006 to share rural business and community building stories and ideas with other small town business people. She and her husband have a small cattle ranch and are lifelong entrepreneurs. Becky is an international speaker on small business and rural topics.
This is some really interesting research – thanks for sharing. I think it comes down to the fact that small business owners are more interested in making their local area a better place than bigger companies are.
With the trends towards automation and improvements in technology, do you think the outcomes of the Baylor research will continue into the future? You and I discussed, it’s getting easier for people anywhere to have worldwide reach (look at some of the technological innovations coming out of Africa for examples), and, therefore, it’s getting easier, too, to find performers anywhere in the world. There are McDonald’s now, where you drive up, and your order is taken from a call center somewhere else. I agree that small businesses bring income into a community, but would argue that the local employment impact of small businesses will decrease over time.
Very interesting statistics, and they definitely make intuitive sense. Economic developers for local governments would do well to heed these to create appropriate incentives as well!
Very true. When small, local businesses finds success, the whole community thrives with them!
Peter, I have to agree. It also matters how local the business owners are.
Jason, I do think this continues even as technology improves. In fact, I think it becomes more important. Even if I (as a small business owner) prosper from my online connections, I will put my local focus where I live. But it’s a good question, and one worth pondering.
Francesca, I can’t say it’s always true, but it’s the best hope we have. And the best people tend to use their success to address the challenges in their own community.
Hey Becky — thanks for this article. I’m new to your blog, so I’m really glad to have found you.
I love the connections here. It makes sense that when more small businesses are thriving in a community, there’s more connection and interplay among their owners and a tertiary impact on the rest of the community. I like the piece about the “less juvenile delinquency,” — I can see how biz ideals would get passed down if there are appropriate models and mentors for kids to pattern their lives after as they grow up.
By the way…Becky, would you be interested in guest blogging on my site?
Thanks, Benjy. I’m glad you’ve connected with us. Feel free to send me some details via our contact form. I’ll be glad to take a look.
I would, having worked with small business owners, go so far to say that the quality of life (per capita) of a small business owner outpaces that of a traditional employee. Exhilaration, challenge, healthy stress, desire, etc…. All elements of being content.
I so, so, so agree with this. It is up to us as consumers to support small, local, independent businesses with our money rather than just shopping at large chains by default.
Adam, that’s an interesting perspective. We often hear about the stress of being a business owner, but this is probably the first time I’ve heard of health benefits.
Paul, it’s a habit, and like any other habit, it can be changed!
This is such a spot-on post, Paul. Thank you!! I’ll be pointing folks to this for just the right perspective!
So many factors come into what ultimately enables the little guys to make it locally … here in @Ashland, MA, we’re chipping away. We started with a local farmers market this summer, and it’s been successful beyond our wildest dreams. Part of the reason, we’re sure, is that there’s so much pent-up demand for Local, Sustainable, Handmade, Homegrown, and community-focused. It’s energized us to take more steps, more often, to drive more local and community-based focus.
I think it comes down to the fact that small business owners are more interested in making their local area a better place than bigger companies are.
Our tourism business in Charleville Australia depends entirely on travellers and people from other regions to join our tours and stay in our caravan parks for our income. All our supplies, tradies and consumables are sourced locally. I think this is the perfect scenario for a sustained small community of around 3,500. It’s all about money from outside coming in and being spread around the community. I’m not a fan of the FIFO (fly-in fly-out) business model that so many companies have adopted for their employees in Australia. Small business is the biggest employer in Australia!
Graham, you’re right that this makes your business an especially good contributor to local prosperity. That’s a traded business just as much as manufacturing.