If you own or operate a local business here in South Florida, give yourself a pat on the back.
It’s not easy competing against national retail and restaurant chains, or against mega-international accounting, consulting and law firms.
You’re up against some real heavyweights. To name just a few: Walmart, Costco, Home Depot, Target — or Starbucks, Pizza Hut, Chipotle — or IBM, Deloitte, McKinsey. And, of course, there’s the heavyweight champion of the world: Amazon. Yikes.
But from a South Floridian’s standpoint, owners and operators of locally owned businesses are punching way above their weight. Because dollar-for-dollar, they have more impact on our region’s economic health.
It’s estimated that local businesses pump three to four times more revenue back into the local economy compared with nationally — or internationally owned —companies operating in the same geography.
Researchers call it the “local multiplier effect.” It has been studied in cities across the country, and it applies right here in South Florida. The people at the research firm Civic Economics, in Chicago and at the Institute for Local Self-Reliance, in Washington, D.C., say the impact comes from five sources:
The first reason is simple. Profits from locally owned businesses stay local, in the hands of locally based owners and investors.
Second, a higher percentage of salaries are paid to employees who live locally. There aren’t senior executives in faraway corporate headquarters.
Third, locally owned businesses spend relatively more money buying locally-produced goods, and fourth, they buy more local services from lawyers, accountants, advertising agencies, printers… you name it.
Finally, locally owned businesses give more to local charities. True, the Walmart Foundation gives away hundreds of millions of dollars annually, as do other national corporations, but as a percentage of revenue, that doesn’t hold a candle to the generosity of locally based companies.
Together, this all adds up to a significant positive impact on the local economy.
Studies show that on average, each $100 spent at locally owned businesses generates $45 of secondary local spending, compared to $14 for the same money spent at one of the big chains and less than $2 for the same $100 spent with Amazon.
That spread makes a huge difference to the local economy. But the challenges of competing against the big guys are also huge.
Here are a few tips:
▪ Do what you do best. Focus on what you do every time, what you always provide, or what you never do. These are the things that will distinguish your business from bigger competitors.
▪ Stand out by incorporating your personal values into your business. Show that your company is about more than dollars and cents by supporting a local cause you care about.
▪ Provide extraordinary service. Go the extra mile to create great experience for your customers, so that you – and not your competitors – are etched in your customers’ hearts and minds.
▪ Create powerful, competition-beating offers. Think about how to reduce the risk or hesitation your customers face when making a purchase. In addition to price offers, consider generous return policies, no-questions-asked money back guarantees, free trials, and rewards for repeat purchases.
▪ Accommodate special orders, remember customers’ names, and throw in an extra bonus once in a while. This will turn repeat customers into brand evangelists who are like mobile advertisements for your business. There’s nothing that builds business like word of mouth endorsements, even – amazingly -- from people we don’t know.
People love Amazon because it’s convenient. People love Walmart because it has low prices and a wide selection. People love Starbucks because it’s on every other corner.
People love your locally owned business because you’re part of our community and because you’re doing much more than the big guys from out-of-town to make South Florida great.
Adam Snitzer is a revenue strategy expert and president of Peak Revenue Performance, a consulting firm that specializes in helping companies attract more, high-paying customers. He can be reached at firstname.lastname@example.org, or via the company’s website at PeakRevenuePerformance.com.