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The Impact of Small Businesses on Local Communities

The Power of Small Businesses in Communities

How do small businesses benefit the community? They play a crucial role in shaping local economies and enhancing community well-being. Here’s a snapshot of their major impacts:

  • Job Creation: Small businesses provide local employment opportunities, reducing unemployment.
  • Tax Revenues: The revenue they generate boosts local tax collections, funding schools, police, and infrastructure.
  • Unique Products and Services: They introduce product diversity with unique and innovative offerings.
  • Community Identity: Small enterprises reflect and uphold the unique culture of their communities.
  • Environmental Sustainability: They often operate in existing buildings, reducing the need for new infrastructure and supporting local sourcing.

Small businesses aren’t just about financial transactions; they anchor the community, offer personalized customer service, and foster a sense of belonging. As Quint Studer put it, “When small businesses win, communities win.”

I’m Dalton Tigner. From over three decades of experience in the financial sector, I’ve seen how small businesses benefit the community economically and socially. My aim is to shed light on these benefits, helping both businesses and communities thrive.

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Economic Contributions of Small Businesses

Small businesses are the backbone of our local economies. They generate jobs, increase tax revenue, and stimulate economic growth. Let’s break down how small businesses benefit the community in these essential ways:

Job Creation

Small businesses are significant job creators. According to the U.S. Small Business Administration, they have generated two out of every three new jobs since 2014. This local employment reduces commuting times and helps lower the community’s unemployment rate.

For example, in Cumberland County, small businesses have thrived due to its strategic location. This has led to an increase in local job opportunities, making the community more self-sufficient.

Local Tax Revenue

When small businesses thrive, they contribute more in local taxes. This revenue supports essential community services like schools, police forces, and public amenities.

In Asheville, North Carolina, mixed-use downtown developments yield $150,000 more in annual tax revenue per acre compared to strip malls. This additional revenue funds community improvements and infrastructure projects, enhancing the quality of life for everyone.

Economic Growth

Small businesses stimulate local spending and reinvestment. When residents shop locally, their money circulates within the community, creating a multiplier effect. This continuous flow of money strengthens financial stability and encourages further economic growth.

For instance, small businesses in McHenry, Johnsburg, and Richmond contribute to a vibrant local economy by keeping money within the community. This reinvestment fosters financial stability and supports local suppliers, creating a robust economic ecosystem.

Small business economic impact - how do small business benefit the community

In summary, small businesses play a crucial role in job creation, local tax revenue, and economic growth. They help reduce unemployment, support community services, and stimulate local spending, making our communities more self-sufficient and financially stable.

Next, we’ll explore the social contributions of small businesses, including their impact on community identity, local events, and charitable contributions.

Social Contributions of Small Businesses

Small businesses don’t just boost the economy; they also enrich our communities in many ways. Let’s dive into how they shape our community identity, support local events, and contribute to charitable causes.

Community Identity

Small businesses give a community its unique character. Think about your favorite coffee shop or that quirky bookstore downtown. These places are not just stores; they are landmarks that reflect the local culture and vibe.

Take a walk through any small town, and you’ll see:

  • Unique products: Unlike big chains, small shops often carry one-of-a-kind items that you won’t find anywhere else.
  • Local culture: Small businesses often celebrate local traditions and customs, making them a hub for community pride.
  • Tourism: Visitors are drawn to the charm and uniqueness of small businesses, which boosts local tourism.

For example, in Cumberland County, the variety of small shops and eateries has made it a hotspot for tourists from nearby cities like Philadelphia and New York.

Local Events and Sponsorships

Small businesses are often at the heart of community events and sponsorships. They help make local festivals, sports teams, and charity events possible.

Here’s how they contribute:

  • Sponsorship: Local businesses often sponsor little league teams, school events, and community festivals. This not only supports the event but also promotes the business.
  • Local events: Many small businesses host or participate in local events, creating a vibrant community atmosphere. Think of farmers’ markets, holiday parades, and art fairs.
  • Community engagement: By participating in and supporting local events, small businesses foster a sense of community and belonging.

For instance, McHenry Savings Bank has a long history of sponsoring local events and supporting community initiatives, strengthening ties within the community.

Charitable Contributions

Small businesses are often deeply involved in charitable activities. Their contributions can range from monetary donations to volunteer work and in-kind donations.

Ways they give back include:

  • Donations: Small businesses often donate to local charities and causes. Even small amounts can make a big difference to local organizations.
  • Volunteer work: Owners and employees frequently volunteer their time to support local non-profits. This hands-on involvement is invaluable.
  • In-kind donations: Businesses may offer services or products to charities. For example, a local bakery might donate goods to a homeless shelter.

Quint Studer, a resident of Pensacola, Florida, emphasizes that small businesses have a vested interest in their communities. Their owners live and work locally, so they are deeply invested in the well-being of their neighbors.

In summary, small businesses play a pivotal role in shaping our community identity, supporting local events, and contributing to charitable causes. Their involvement goes beyond mere transactions, creating a richer, more connected community experience.

Next, we’ll explore the environmental benefits of small businesses, including their reduced infrastructure needs and commitment to local sourcing.

Environmental Benefits of Small Businesses

Reduced Infrastructure Needs

Small businesses often set up shop in pre-existing buildings. This means less city planning and fewer new constructions, which helps conserve green space. Unlike big corporations that might need new infrastructure, small businesses make use of what’s already there. This approach not only preserves the environment but also maintains the character of the community.

For example, in Asheville, North Carolina, mixed-use buildings in the downtown area yield $150,000 more in annual tax revenue per acre than sprawling retail centers. This shows that using existing infrastructure is not just environmentally friendly but also economically beneficial for local governments.

Local Sourcing

Small businesses tend to source their products locally, which significantly reduces their carbon footprint. When products travel shorter distances, there’s less pollution and resource depletion. Plus, local sourcing supports other small businesses in the area, creating a sustainable economic loop.

According to the U.S. Small Business Administration, small businesses are more likely to carry products from smaller manufacturers or local producers, both of which have a lower environmental impact compared to large-scale industrial production.

In Cumberland County, the rise of small businesses has led to a more diverse and sustainable marketplace. Local products are fresher, unique, and often produced with sustainable practices. This not only benefits the environment but also enhances customer satisfaction.

In conclusion, small businesses are not just the backbone of the local economy; they are also key players in environmental conservation. Their use of existing buildings and commitment to local sourcing make them sustainable choices for both the community and the planet.

How Do Small Businesses Benefit the Community?

Local Jobs

Small businesses are a vital source of local jobs. They provide employment opportunities that help reduce the need for long commutes. This is particularly important in smaller towns and rural areas where job options may be limited.

For example, in Cumberland County, small businesses have led to a noticeable decrease in the local unemployment rate. With more people working locally, the community becomes more self-sufficient and resilient.

Tax Base

Local businesses increase the tax base. The revenue they generate translates into local taxes that fund essential community services. This means better schools, improved roads, and more effective police and fire departments.

For instance, the property taxes paid by small businesses help maintain public amenities like parks and libraries. This reinvestment in the community creates a virtuous cycle of growth and improvement.

Community Involvement

Small businesses are often deeply involved in their communities. They sponsor local events, support charities, and encourage volunteerism among employees. This kind of involvement helps build a strong sense of community and belonging.

A local fitness center in Chisholm, MN, demonstrates this well. They sponsor local sports teams and organize community health events. This not only boosts their brand but also fosters a healthier, more engaged community.

By creating local jobs, contributing to the tax base, and actively participating in community life, small businesses play an irreplaceable role in the well-being and development of their local areas.

Next, let’s explore how small businesses drive innovation and entrepreneurship within their communities.

Innovation and Entrepreneurship


Small businesses are often the birthplace of innovation. Unlike larger corporations, they can pivot quickly and experiment with new ideas. For instance, the Wright brothers, who invented the first flying machine, were a small business. Their groundbreaking work revolutionized transportation and put their hometown of Dayton, Ohio, on the map.

Small companies also tend to be more efficient innovators. Studies show that they are more likely to develop new technology and unique products. This ability to innovate not only benefits the business itself but also transforms the local community by introducing new solutions and services.

Diverse Marketplace

A diverse marketplace is another significant advantage of small businesses. These companies often offer unique products that can’t be found in big-box stores. For example, a local bakery might use regional ingredients to create one-of-a-kind pastries, attracting both residents and tourists.

This product diversity leads to higher customer satisfaction. People appreciate having access to unique items and personalized services. Moreover, small businesses often source from local suppliers, further enriching the local economy and reducing the carbon footprint.


Entrepreneurship is the backbone of economic innovation. More women, minorities, and immigrants are pursuing their entrepreneurial dreams, contributing to a more diverse and inclusive marketplace. 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.

Successful small businesses create financial independence for their owners and provide community leadership. They often become role models and mentors, inspiring others to start their own ventures. This cycle of entrepreneurship fosters a robust, self-sufficient community.

In summary, small businesses drive innovation, create a diverse marketplace, and promote entrepreneurship. Their contributions are invaluable to the economic and social fabric of their communities.

Next, let’s delve into some frequently asked questions about how small businesses benefit the community.

Frequently Asked Questions about How Do Small Businesses Benefit the Community

How do small businesses help the community?

Donations: Small businesses are often deeply involved in their communities. According to Small Biz Trends, 52% of small businesses donate to charity. These donations support local causes, such as schools, shelters, and community projects.

Local Events: Small businesses frequently sponsor and host local events. This includes everything from street fairs and festivals to charity runs and art shows. These events not only bring people together but also create a vibrant community atmosphere.

Job Opportunities: Small businesses are significant job creators. In Canada, small businesses employed 8.4 million Canadians, accounting for 69.9% of the labor force. In the U.S., they account for 64% of new jobs. This local employment reduces commuting times and strengthens community ties.

How does a business benefit the community?

Tax Revenue: Taxes paid by small businesses, including VAT and local taxes, stay within the community. These funds support public services like schools, parks, and public transit. This reinvestment enhances the quality of life for all residents.

Infrastructure Improvement: The taxes collected from small businesses help improve local infrastructure. This includes road maintenance, public transportation upgrades, and the development of green spaces. Better infrastructure attracts more businesses and residents to the area.

Local Spending: When people shop at small businesses, their money circulates within the local economy. These businesses often source products and services locally, further boosting economic activity. This local spending creates a ripple effect, benefiting other businesses and the community at large.

What is an advantage of small businesses?

Flexibility: Small businesses can adapt quickly to changing market conditions. They can introduce new products, adjust services, and implement customer feedback faster than large corporations. This agility allows them to meet the unique needs of their community.

Customer Relationships: Small businesses excel at building strong customer relationships. Owners and employees often know their customers by name and understand their preferences. This personalized service creates loyal customers who keep coming back.

Lean Staffing: Small businesses typically operate with lean staffing models. This means every team member wears multiple hats and contributes to various aspects of the business. This efficiency can lead to lower operating costs and a more cohesive team.

By answering these questions, we hope to shed light on the myriad ways small businesses impact their communities. Their contributions go beyond just economic benefits; they foster a sense of belonging and community pride.


Small businesses are the lifeblood of our communities. They bring more than just economic benefits—they create vibrant, thriving neighborhoods where people feel connected and engaged.

Community Impact: Small businesses help shape the identity of our communities. They reflect the local culture and character, offering unique products and services that you won’t find anywhere else. This uniqueness attracts tourists and fosters a sense of pride among residents. For example, towns like Asheville, North Carolina, have laws to protect local businesses, ensuring the community maintains its distinctive charm.

Economic Growth: The economic contributions of small businesses are immense. They create local jobs, reducing unemployment and allowing people to work closer to home. They also generate substantial local tax revenue, which is reinvested in community services like schools, parks, and infrastructure. According to the U.S. Senate Committee on Small Business & Entrepreneurship, minority-owned companies alone generate nearly $700 billion in annual sales, showcasing the significant economic impact of diverse small businesses.

At Tigner Financial, we understand the importance of small businesses in fostering strong, resilient communities. We are committed to helping these businesses thrive by providing the tools and knowledge they need to offer exceptional employee benefits. By investing in your employees, you invest in the future of your business and your community.

Learn more about how Tigner Financial can help your small business thrive.

Small businesses are not just economic engines; they are the heart and soul of our communities. By supporting them, we support the very fabric of our neighborhoods and ensure a prosperous future for all.