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Buy Local Drives Buoy Small Business Owners

By CityTownInfo.com Staff
August 3, 2009

With consumer spending in a funk over the past three quarters, small businesses are finding a payoff in banding together. "Buy Local" campaigns, many launched pre-recession amid concern over carbon footprints and heightened interest in homegrown foods, are becoming a tool for entrepreneurial survival in communities across the country.

Take Springfield, Ill., which declared one week in July "Independents Week," an observance launched in 2004 by the American Independent Business Alliance (AMIBA). The state capital's Mayor Tim Davlin marked the occasion at a local eatery known for its oversize pancakes, Charlie Parker's Diner, reports the Illinois Times. "It's unbelievable that when you spend $100 in a restaurant, how much comes back to the community," Davlin was quoted as saying. "Forty-five dollars if it's local, thirteen dollars if it's a national chain."

That 45/13 formula is credited to Dan Houston, an Austin, Tex. economic development consultant, reports BusinessWeek.com. He also concluded in 2008 that a 10 percent rise in spending at local businesses in Grand Rapids, MI, could generate 1,600 jobs paying some $53 million.

Besides the Springfield drive, "Buy Local" campaigns have been reported in communities as far-flung as Bellingham, WA and Beaudoinham, ME. They are emerging as a survival strategy against the backdrop of a spike in business failures across the country. The American Bankruptcy Institute flagged the 14,319 bankruptcies in the first quarter of 2009 as a 15-year high.

In Springfield, entrepreneurs have formed the Capital Area Independent Business Alliance, one of scores of such organizations nationwide. Tony Leone, owner of Pasfield House, a local bed and breakfast, is sold on the idea of CAIBA and its new thrust for buying local. "I understand Economics 101, about spending a dollar locally, and how it replicates itself," he told the Illinois Times. "It's going to keep people employed, give opportunities to other people, generate more local tax dollars."

Just how much difference can patronizing local enterprise make? Its champions cite results from last winter's holiday shopping season, reports CNNMoney. Purchases at independent retailers fell 5.5 percent from 2008, according to a Institute for Local Self-Reliance survey of 1,100 retailers nationwide. However, in communities with a "Buy Local" drive, entrepreneurs reported an average sales drop of only 3 percent.

Even such modest success seems to be breeding imitation. Local business advocate Stacy Mitchell warns in BestofNewOrleans.com that some large companies may be using "localwashing" as window-dressing. Mitchell, author of Big-Box Swindle: The True Cost of Mega-Retailers and the Fight for America's Independent Businesses, points to "local" advertising and labeling campaigns by such corporate giants as the CVS pharmacy chain and the Wal-Mart superstores.

For his part, Mike Murphy, owner of Charlie Parker's and a member of the steering committee for CAIBA, makes a distinction in dollars and cents. "We just made our first television commercial, and I used a local production company," Murphy told the Illinois Times. "When the national guys do their commercials, no local person benefits from the production of them."

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