Small Business Saturday 2014

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Wednesday,
November#shopsmall
26, 2014
#ShopSmall
ore than two thousand communities are committing to

rally their neighborhoods to celebrate Small Business
Saturday this holiday season.
Now in its fifth year,

Small Business Saturday
(November 29th), held every year on the Saturday
following Thanksgiving,
was created by American
Express in 2010 to support the small businesses
that create jobs and boost
the economy. Since its
inception, Small Business
Saturday has served as
the ceremonial kickoff to
the busy holiday shopping
season for independentlyowned businesses.
Just as important, it has
driven high visibility and
appreciation for the unique
role that small businesses
play in local communities.
In 2013, consumers who
were aware of Small Business Saturday reported
spending $5.7 billion with
independent merchants
on the day, an increase of
Neighborhood Champions from every state, and

the District of Columbia,
Neighborhood
have signed up to celebrate
Champions, Business
Organizations Help
in 2014. As part of the
Spread the Word
program, businesses have
access to a number of reThe Neighborhood
sources to help make their
Champion program was
created to help inspire
communities to participate events a success, including
in the day and support lo- event guides and marketcal Small Business Satur- ing materials to promote
day celebrations through- their involvement. They
also will receive Shop
out the country. To become part of the program, Small branded merchanprospective Neighborhood dise like buttons, balloons
Champions, were required and tote bags to decorate
their stores and offer to
to share their plans to
shoppers.
bring together at least 10
To help facilitate and ambusinesses in their complify local Small Business
munity to recognize the
Saturday events, American
day and commit to serve
as ambassadors, encourag- Express has also partnered
with numerous business
ing friends and family to
organizations including
shop small.
To date, more than 2,000 the Association of Cham3.6% from the previous
year.*
Shoppers out on Laurens Street on Black Friday 2013.
ber of Commerce Executives, the American Independent Business Alliance

(AMIBA), the International Downtown Association, the Latino Coalition,
the National Main Street
Center, the U.S. Black
Chambers, Inc., the U.S.
Chamber of Commerce
and Women Impacting
Public Policy (WIPP).
This year, weve expanded the Neighborhood
Champion program to in-
clude even more partners

to help spread the message
of shopping small and supporting local businesses,
said Lisette Bernstein,
Vice President of Small
Business Saturday at
American Express. Were
thrilled to see communities in all 50 states and
Washington D.C. embrace
and anticipate this year
will be the biggest yet for
small businesses.
2 | Wednesday, November 26, 2014
Holiday Shopping Goes Local and Independent

Recent surveys of consumer attitudes and sales suggest a comeback by independents
By Jeff Milchen,
revised November 19, 2014
amiba.net
For many years now, corporate chains and online
giants have garnered an
ever-greater share of our
spending at the holidays
and year-round. This trend
has contributed not only to
more of our retail economy
consolidating into fewer
hands, but our communities
struggling as local stores are
displaced, along with other
businesses that depend on
them.
But some evidence suggests healthy winds of
change in the winter air. In
a 2013 survey for Deluxe
Corporation, 35 percent of
respondents said they preferred to do their in-person
holiday shopping at small
businesses up from 27 percent in 2012.
This reinforces a survey
earlier this year by the Institute for Local Self-Reliance,
which found 62 percent of
independent business owners felt more people recognized the benefits of buying
locally than the previous
year.
More importantly, it
showed concrete results in
shifting consumer spending.
Independent businesses in
communities with grassroots business alliances
trumpeting those benefits of
buying locally reported an
average revenue increase of
7.0% over the previous year,
compared to 2.3% among independents in other communities. More than 100 such
local business alliances have
formed in the past decade.
Combined with the recent
rise of nationwide campaigns like Small Business
Saturday and Shift Your
Shopping, awareness about
the many benefits of choosing local and independent is
accelerating.
While some of those benefits appear altruistic, the

Localization Movement is
gaining momentum largely
because citizens are recognizing our long-term selfinterest involves building
more self-reliant and vibrant
communities from within.
And those who choose to
shift more of their shopping
locally often report pleasant
surprises from their choice.
Equally important, recognition that cheapness does
not equal value is on the
rise. Admittedly, the big
box stores and online giants
usually can win a battle for
customers based on cheapness alone (though perceived
differences in price far exceed reality). But that cheap
table, bicycle or coffee
maker quickly ceases to be
a bargain when it breaks
down prematurely or that
ski jacket rips upon it first
branch-scrape.
As craftsmanship has
devolved from an everyday value to rarity, weve
learned low prices at the
expense of reliability and
durability are no bargain at
all.
Of course, none of this
means we need to swear off
shopping online or making
an occasional chain store
visit. But we should look for
ways to integrate widelyheld values into our purchasing decisions. Shifting
even one more shopping trip
to independent communitybased businesses this season would create dramatic,
positive changes in our local

economies and induce many
new jobs nationwide.
This is partly because your
local businesses help employ many more people than
youll see on the sales floor.
Theyre more likely to bank
and source locally, while
employing local outside
providers like accountants,
graphic designers, signmakers, webmasters, suppliers and many other highskilled positions. When
sales shift from locals to
chains, some of these local
jobs also disappear.
Since a new chain store
or restaurant typically is a
clone of other units, it eliminates the need for most local
planning and typically uses
a minimum of local goods
and services. Thats simply
good, efficient business for
them, but not so the host
community.
Similarly, local non-profit
organizations depend largely
on the contributions of local
businesses who, in turn, depend on our patronage. If we
value local business support
for our kids sports teams
or our favorite charities, we
must recognize they literally
cant do it without us.
Those factors, added to
local owners re-spending
much of their profit within
the community, equal a big
economic impact. On average, more than three times
as much of each dollar spent
at local independent store
recirculates in your local
economy compared to a
dollar spent at chain-owned
businesses. With restaurants, independents re-spend
about twice as much locally
as chains do. Capitalizing on
this local multiplier effect
is key to creating jobs and
wealth in your own community.
The long-term relationships fostered by local
business also cement com-
mitment to civic institutions

like schools, churches, and
fraternal leagues that aid not
just economic prosperity,
but community cohesion and
trust.
So do yourself -- and your
community -- a favor this
year by shifting a bit more
spending to your local merchants, service providers,
artisans and others. Along
with helping your neighbors
and community, you may
just find going local turns
holiday shopping into a far
more relaxing and enjoyable
experience: one that rewards
both you and your community.
Jeff Milchen co-directs
the American Independent
Business Alliance (AMIBA)
and authored Building Buy
Local Campaigns that Shift
Culture and Spending.
2014 American Independent Business Alliance
Wednesday, November 26, 2014
|3
Top Reasons to Buy Local, Eat Local, Go Local

2014 American Independent
Business Alliance
By choosing local and

independent businesses
for your services, shopping, dining and other
needs, you not only get
real value and personal
service, youre helping:
BUILD COMMUNITY!
The casual encounters you

enjoy at neighborhood--scale
businesses and the public
spaces around them build
relationships and community
cohesiveness. (source 1, source
5) Theyre the ultimate social
networking sites!
STRENGTHEN YOUR
LOCAL ECONOMY!
sales dollar. The bottom line:

a greater percentage of local
independent businesses keeps
your taxes lower. (source 4)
ENHANCE CHOICES!
A wide variety of independent businesses, each serving

their customers tastes, creates
greater overall choice for all
of us.
CREATE JOBS AND

OPPORTUNITIES!
Not only do independent

businesses employ more
people directly per dollar of
revenue, they also are the
customers of local printers, accountants, wholesalers, farms,
attorneys, etc., expanding
opportunities for local entrepreneurs.
GIVE BACK TO YOUR

COMMUNITY!
Each dollar you spend at independent businesses returns

3 times more money (source
2) to your local economy than
one spent at a chain (hundreds
of times more than buying
from an online mega-retailer)
-- a benefit we all can bank on.
Small businesses donate

more than twice as much
per sales dollar to local nonprofits, events, and teams
compared to big businesses.
(source 5)
SHAPE OUR
CHARACTER!
INCREASE WEALTH OF
RESIDENTS!
Independent businesses help

give your community its distinct personality.
CREATE A HEALTHIER
ENVIRONMENT!
Independent, communityserving businesses are peoplesized. They typically consume

less land, carry more locallymade products, locate closer to
residents and create less traffic
and air pollution. (source 3)
More on this topic: Buying
Green Means Buying Local.
LOWER TAXES!
More efficient land use and

more central locations mean
local businesses put less demand on our roads, sewers,
and safety services. They also
generate more tax revenue per
The multiplier effect created

by spending locally generates
lasting impact on the prosperity of local organizations and
residents. (source 6)
ENHANCE LOCAL
DEMOCRACY!
Local ownership of business

means residents with roots in
the community are involved
in key development decisions
that shape our lives and local
environment.
ENHANCE HEALTH OF
RESIDENTS!
Research shows a strong correlation between the percentage of small locally-owned

firms and various indicators
of personal and community
health and vitality. (source 7)
Sources
1. Scale of Agriculture Production, Civic Engagement, and Community Welfare by T Lyson and R.
Torres, Oxford Journals, 2001.
The Configuration of Local
Economic Power and Civic Participation in the Global Economy
by T. Blanchard and T. Matthews,
Project Muse, 2006.
2. The Multiplier Effect of Local

Independent Business Ownership
provides an overview of the topic.
The consulting firm Civic Economics has executed multiplier studies
for many communities.
3. Neighborhood stores: An
overlooked strategy for fighting
global warming by Stacy Mitchell, Grist.
4. Fiscal Impact Analysis of Residential and Nonresidential Land
Use Prototypes (pdf) by Tischler
& Associates, July 2002. Key findings: Specialty retail -- primarily
small neighborhood-located business -- generate a net annual return
to municipalities of $326 per 1,000
square feet of store space. Business parks, offices, and hotels also
generated positive net revenue.
However, the infrastructure and
maintenance costs generated by big
box retail outweigh tax revenues,
resulting in a cost to taxpayers of
$468 per 1,000 square feet of floor
space each year. Fast-food outlets
were the most burdensome development, costing taxpayers $5,168
per 1,000 square feet.
5. In a study for the Small Business Administration, Business
Contributions to Community Service (1991), professor Patricia Frishkoff of Oregon State University
analyzed charitable giving by firm
size. She found companies with
fewer than 100 employees gave an
average of $789 per employee in
cash and in-kind donations, compared to $334 per employee at firms
with more than 500 employees.
6. In their 2011 study, Does Local
Firm Ownership Matter? (Economic Development Quarterly),
Stephan Goetz and David Fleming
of Pennsylvania State University
analyzed 2,953 counties of various
demographics and circumstances.
After controlling for unrelated factors, they found counties with more
small, locally-owned businesses
enjoyed greater per capita income
growth. Greater concentrations of
large absentee-owned businesses
were associated with lowered incomes.
7. T. C. Blanchard, C. Tolbert, C.
Mencken. The health and wealth
of US counties: how the small busi-
ness environment impacts alternative measures of development.

Cambridge Journal of Regions,
Economy and Society, 2011. Researchers studied 3,060 counties
and parishes in the U.S. and found
counties with a greater proportion
of small businesses had lower rates

of mortality, obesity and diabetes.
Goldschmidt, Walter R. (1947).
As You Sow: Three Studies
in the Social Consequences of
Agribusiness. This landmark
study compared two small nearby
agricultural communities in
California: one dominated by
large agribusiness corporations,
the other consisting of small
owner-operated farms. The latter
enjoyed a more vibrant, diverse
economy and higher quality of life.
CYAN-AOOO
MAGENTA-OAOO
YELLOW-OOAO
BLACK 012908
|5
Come & See...

Come & Shop!
|7
The Multiplier Effect of Local Independent Businesses

2014 American Independent
Business Alliance
Explaining the local economic multiplier effect or
local premium is a key
part of effective buy local
and public education campaigns. Typically, independent businesses recirculate
a much greater percentage
of revenue locally compared
to absentee-owned businesses (or locally-owned
franchises*). In other words,
going local creates more local wealth and jobs.
Total economic impact is
determined by measuring
three components -- the direct, indirect, and induced
impacts.
Direct impact is spending done by a business in the
local economy to operate the
business, including inventory, utilities, equipment and
pay to employees.
Indirect impact refers
to the conventional multiplier that happens as dollars
the local business spends
at other area businesses recirculate.
* Induced impact refers
to the additional consumer
spending that happens as
employees, business owners
and others spend their income in the local economy.
The private research firm
Civic Economics has executed the bulk of studies
attempting to quantify the

difference in local economic return between local
independents and chain
businesses. Their first such
study, for the City of Austin,
Texas showed an independent book (Book People)
and music seller (Waterloo
Records) returned more than
three times as much money
to the local economy as a
proposed Borders Books and
Music outlet would.*
Those results since have
been mirrored by subsequent studies (ten summarized here), each showing a
much greater local multiplier for spending at independent businesses than chains.
These studies measured the
direct and indirect impacts
to determine the base level
local economic activity of
a purchase made at a chain
and a local independent
business.
On average, 48
percent of each
purchase at local
independent
businesses was
recirculated locally,
compared to less
than 14 percent of
purchases at chain
stores. (See blue
graph.)
The Institute for Local

Self-Reliance conducted
perhaps the simplest study
of the local multiplier effect in several small Maine
communities in 2003. The
study examined how much
of a dollar spent at a local
independent store is re-spent
in the local area as payroll,
goods/services purchased
from area businesses, profits
spent locally by owners, and
as donations to area charities. The study found each
$100 spent at local independents generated $45 of secondary local spending, compared to $14 for a big-box
chain -- nearly identical to
later results across the many
Civic Economics studies.
Other studies by Civic
Economics in Grand Rapids, Michigan and Chicago
expanded exploration of the
indirect impacts by including more business types (see
discussion below) and added
induced impacts, so the results
are not directly comparable to
most other CE studies or the
ILSR Maine study.
Key Points
Civic Economics Andersonville neighborhood (Chicago)

study found a total impact
(direct, indirect and induced)
of $.68 for each dollar spent
at ten local independents,
compared to $.43 projected for
their chain competitors. How-
ever, the projection of indirect

and induced impacts does not
mean $.68 of each dollar spent
at a local independent stays
in the local economy, but
that $.68 of additional local
economic activity ultimately
is generated after additional
spending cycles. Citing the

higher numbers without explaining they include impacts
by entities other than the original business is simply wrong.
It also gives any opponent an
easy point to undermine the
credibility of your group.
Bear in mind the Andersonville study examines ten businesses in one neighborhood
of one large city. Businesses
in smaller cities and towns
typically have less ability to
source many goods and services locally.

To gain respect as an authoritative voice within your
community, we suggest you
guard your credibility by
checking your materials to
ensure they convey verifiable,
accurately-worded information. We urge you not to rely
on any secondary sources or
attributions. The New York
Times published a claim that
80% of money spent with
local independents was respent locally. Subsequently,
at least two other publications
then attributed the claim to
AMIBA, which is why were
now zealous about correcting misinformation when we
see it.
web creates almost no local

benefit--just a few minutes
work for a delivery person.
You also may add for your
outreach materials or interviews, That adds up to a
huge difference in creating
local jobs and local wealth.
Calculating the added local
wealth that would be generated by a 10% shift to local
independents is one tactic
successfully employed by
several communities.
Details on Study
Variants
Business Type
The size of the local premium varies depending on

In addition to being acthe type of business. This
curate, make sure your
is where the San Francisco
message is memorable. Sayand Grand Rapids studies
ing, Multiple studies show
get interesting, because they
locally-owned independent
gauge the local multiplier for
restaurants return twice as
different business categories.
much per dollar of revenue to Restaurants and service proour local economy than chain viders generate a large multirestaurants. And independent plier because they are laborretailers return more than
intensive and, therefore, more
three times as much money
of each dollar of revenue goes
per dollar of sales than chain to local payroll. Pharmacies,
competitors, is a far more
for example, generate a lower
memorable phrase than talk- multiplier because so much of
ing in terms of percentages or each sale goes to drug manucomparing $.68 to $.43. Its
facturers. Most retailers, unalso easily verifiable (include less they source an exceptionlinks to Civic Economics and ally high percentage of their
this page).
goods locally, also create a
Of course, you could add,
more modest multiplier than
and buying remotely on the restaurants.
Stickiness
This is not to say restaurants are better for economic

development than pharmacies. Pharmacies have sizable
revenue and professional job
opportunities, which are important to any local economy.
Its helpful to be aware of
these differences because the
mix of businesses involved in
a particular study will influence the results.
Land Use
In 2009, Stay Local!, an

AMIBA affiliate in New
Orleans, commissioned
Civic Economics to evaluate
economic return per square
foot of retail space used by
both local merchants and
Target Corporation. The local merchants studied generated twice as much sales
activity per square foot and
nearly quadrupled the local
economic return per square
foot compared to projections
for Target. See the resulting
report: Thinking Outside the
Box (pdf).
Quantifying Shifts in
Spending
To gauge the overall impact
on your local economy of
shifting 10% of purchasing
from non-local or absenteeowned to locally-owned
businesses, you would need
to know the local multiplier
for each category of spending and the percentage of
peoples spending in each

category. (i.e., 20% goes to
groceries and the grocery
multiplier is 0.15; 5% goes to
books and the local multiplier
is 0.32; etc.)
Presumably, this is how
Civic Economics arrived at
the Grand Rapids figures for
the impact of shifting 10% of
all retail sales. The average
local multiplier in that study
works out to 0.16 across all
retail categories.
Thanks to Civic Economics and Stacy Mitchell of
ILSR for assistance with this
content. ILSR summarizes
and links many relevant eco-
nomic impact studies. Note:

AMIBA does not conduct
these studies. Please contact
Civic Economics for information about commissioning
one for your community.
* The Austin Independent
Business Alliance (one of
AMIBAs first affiliates)
used the study results to
rally opposition against a
public subsidy planned by
the City to attract Borders.
They succeeded. Tellingly,
the corporation chose not to
compete on a level playing
field against two well-run independents -- Borders never
opened.
A Note on Franchises.
Despite claims by countless
franchisors (the companies
that sell to a person wishing
to operate a franchise -- the
franchisee), franchised businesses overall are no more
likely to succeed than independent businesses and typically deliver a worse return
on investment, as this article
explains). The local multiplier effect of most franchises
will fall between that of local independents and chain
competitors in their business
category.
save money
S
sTaTs
$326
peR 1,000
squaRe feeT
in Tax impacT
According to a 2002
study in Barnstable,
Mass., big-box retailers
can cost cities more in
services than they generate in revenue. But
specialty retail shops
the kind that make
up the Main Streettype business district in
many communities
generate significantly
more tax revenue than
they cost to service.
They produce a net
return of $326 per
year for every 1,000
square feet, the study
showed. The difference
comes from how much
more road wear and
public safety services
large businesses
require.
hopping locally, you tend to buy just what you need. This
helps cut down on the clutter and the wrapping once
you get home, but also lessens the impact on your wallet.
Keeping local owners in business also fosters a competitive

entrepreneurial landscape that will in the long run improve
quality while decreasing costs.
As local businesses grow, so grows their ability to create
more products and improve their service, all at a lower
expense to the consumer.
no GimmicKs
Local shops are focused less on the mega deals and buyone, get-one promotions that actually can cost you more in
the long run. But this doesnt mean they arent in the business
of giving deals.
Many local shops provide discounts to those who live
nearby, helping you save money instead of paying more in
tourist taxes that some out-of-town establishments may
charge.
Some local businesses boast price-matching programs, as
well. Ask your local owners if they are willing to match deals
you find at other businesses. Their answer may surprise you
and help you save money.
smaLL Business saTuRDaY
Spearheaded by American Express in 2010, Small Business

Saturday has rapidly entrenched itself into the holiday shopping tradition landscape.
The nationally recognized movement to celebrate and
shop small businesses was created as a counterpart to Black
Friday and Cyber Monday and has quickly gained progressive
traction.
Last year, more than 100 million shoppers supported the
initiative, which features discounts, giveaways and promotions from some participating establishments. This years
event is slated for Saturday, Nov. 30.
no pRessuRe
You arent likely to find quota-driven salespeople around

every corner at your local independent business.
Less dependent on the one-time sale, small business owners are more concerned about providing you with positive
shopping experiences because they depend on your repeat
business to keep their doors open.
And unlike Christmas shopping at crowded out-of-town
malls, you are more likely to receive one-on-one attention at
local shops. So fill out that customer feedback card and complete that online questionnaire. Your opinions can make a
long-term impact on local businesses.
FoToliA / AP
|9

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ore than two thousand communities are committing to

Now in its fifth year,

Neighborhood Champions from every state, and

Shoppers out on Laurens Street on Black Friday 2013.

ber of Commerce Executives, the American Independent Business Alliance

clude even more partners

2 | Wednesday, November 26, 2014

Holiday Shopping Goes Local and Independent

While some of those benefits appear altruistic, the

positive changes in our local

mitment to civic institutions

Wednesday, November 26, 2014

4 | Wednesday, November 26, 2014

Top Reasons to Buy Local, Eat Local, Go Local

By choosing local and

The casual encounters you

sales dollar. The bottom line:

A wide variety of independent businesses, each serving

CREATE JOBS AND

Not only do independent

GIVE BACK TO YOUR

Each dollar you spend at independent businesses returns

Small businesses donate

Independent businesses help

Independent, communityserving businesses are peoplesized. They typically consume

More efficient land use and

The multiplier effect created

Local ownership of business

Research shows a strong correlation between the percentage of small locally-owned

2. The Multiplier Effect of Local

ness environment impacts alternative measures of development.

of small businesses had lower rates

Wednesday, November 26, 2014

6 | Wednesday, November 26, 2014

Come & See...

Wednesday, November 26, 2014

The Multiplier Effect of Local Independent Businesses

attempting to quantify the

The Institute for Local

Civic Economics Andersonville neighborhood (Chicago)

ever, the projection of indirect

spending cycles. Citing the

8 | Wednesday, November 26, 2014

web creates almost no local

The size of the local premium varies depending on

This is not to say restaurants are better for economic

In 2009, Stay Local!, an

peoples spending in each

nomic impact studies. Note:

Wednesday, November 26, 2014

Keeping local owners in business also fosters a competitive

smaLL Business saTuRDaY

Spearheaded by American Express in 2010, Small Business

You arent likely to find quota-driven salespeople around

10 | Wednesday, November 26, 2014

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