Small business promotion with retail speaker Tom Shay
SBA_Menu Home Contact Us


Reasoning doing business with locally owned businesses

A book written by Ray Considine and Ted Cohn several years ago is titled by an acronym; W*A*Y*M*I*S*H. The acronym stands for Why Are You Making It So Hard. The subtitle of the book is ‘for me to spend my money’.

The issue at hand is developing ways to get residents to shop at the locally owned businesses. We quickly agree the inappropriate strategy to entice residents to shop with the local business is to tell them it is an unspoken responsibility to support the locals. We can, however, enlighten the customer about the positive ways it affects them by their making a choice to do business with the local business. Summarizing some of the studies that have been done on the economics of doing business with ‘the locals’ include:

A dollar spent at a locally owned business is re-spent six to fifteen times before it leaves the community.

A dollar spent at a national chain store only leaves 20% within the community.

For every $100 spent with a local business, $68 remains in the local economy. If that same money is spent with a chain store only $43 remains.

As a local firm leases or owns a building locally, that business provides an impact of $179 for each square foot occupied; that chain firm produces only $105.

Of each dollar spent with a sole proprietorship, 60 cents continues to circulate in the community. The chain store re-circulates only 20 cents of that dollar and the big box retailer only re-circulates 6 cents.

If you look closely at the numbers for these research reports, you see the numbers are not consistent with regard to percentages, but the numbers in the reports are consistent with their message. The money spent with a local business has a good chance of having a positive effect on that local individual. Instead of telling people they should want to shop locally, we should be showing them how it benefits them.

We have another reality: the local business that makes it difficult to do business with them. A community has a box store and a customer decides to drive past them so they can do business with the local business. So far so good, especially when the customer goes into the local store and sees more sales staff then they would have seen at the box store. Unfortunately, none of the staff in the local store speaks to the customer.

Another customer comes home from work one day and decides they want to go shopping. Again our customer decides to make the local business their first choice of a place to shop. However, when they arrive at the local business, they find the business has already closed. With the exception of the diehard customer who refuses to do business with someone other than a local, a trip to the mass merchant is about to happen.

The extreme is the local business with a handwritten sign on the front door. The message is, “No smoking in my store. No food or drinks in my store. No small children in my store. No packages from other stores in my store. If you don’t like my rules, then you should probably shop somewhere else.”

From a distance, the sign is funny. From being inside the community, it is embarrassing to everyone except the owner of the business. Many of the things that affect one business in the district affect all of the businesses in the community.

Add to these scenarios the one in which the local business creates a long and complicated procedure for a customer to exchange or return an item. With any combination of these being experienced by a customer, it would be hard to imagine that customer seeing it as being worthwhile to make an effort with the local business. Even with all of the financial advantages we first outlined, it becomes hard to do business with someone who gives every impression they don’t want to do business with the customer.

Some of these scenarios happen out of ignorance on the part of the business owner; some because the business owner sees their action, or inaction, as being insignificant. There may also be a justification by the business owner in which they compare themselves to the mass merchant and state, ‘They can get by with doing that; Why can’t I do the same thing?”

And therein lays the potential solution. The local business can do the same things with regard to ‘customer rules’, but then they would have to offer all the advantages that the mass merchant offers. As the local business cannot have those same advantages, they have to have something different. They have to offer something the mass merchant cannot.

Again, another part of the solution; the customer often holds the local business to a higher standard than they would hold the mass merchant. Because, in the local business a customer can meet and know the owner who may just be their neighbor; the customer can meet and know the employee who may also be their neighbor.

In making a decision, the owner can simply decide; they do not have a company rule book or a corporate office to contact. This creates for the local business both an opportunity and a responsibility; depending on how the owner sees it.

We cannot ‘shame’ a customer or tell them it is their responsibility to do business with the local businesses. We cannot shame these same local businesses into becoming friendly, customer oriented and open when the customer wants to shop. We can share with them that for them to ‘win’ they have to have advantages; as many advantages as possible. We can answer the question of WAYMISH.

Tom Shay is a fourth generation small business owner providing proven management and business building ideas through his Profits Plus Seminars, Profits Plus Solutions coaching, books authored, and articles written. Tom can be reached at 727-464-2182 or through his web site:

Profits Plus Solutions, Inc.
PO Box 1577
St. Petersburg, Fl 33731
(727) 464-2182
Fax: (727) 898-3179