How Small Businesses Help Build Our Economy

“When you support small businesses you are supporting a dream.” 

When you shop locally, you are helping a child get dance lessons, a team jersey, or a better education, you’re helping mum and dad put food on the table. You’re helping people, not corporations. But did you know that when you shop locally you are also actively helping to build the economy? 

Where we choose to spend our money has a huge impact on our economy and something as simple as shopping local creates a multiplier effect. Your support not only supports the dream of the small business owner you purchased from but goes onto creating jobs, encourage community upliftment and support thousands of other dreams. Supporting local small businesses can take place in a myriad of ways, taking your clothing purchases to a nearby boutique or dressmaker, getting your client gifts from a local producer instead of a bulk online shop, buying your fresh produce and meat from a local farm, or popping past a small spaza shop rather than a big retailer, your money and loyalty will stretch further than you know.

We are going to show you how choosing to spend R100.00 at your nearest small business such as your local butcher, fresh produce market, restaurants, spaza shops, dressmakers or the stalls at your local farmers market goes so much further than you think. 

How can R100.00 make a difference to small businesses?

Here are three very different journeys a R100.00 can take and how it can be used to make a dent in our economy. 

So let’s set the scene; Jane, a fashionable young lady, is looking to buy a new summer dress. Jane has 3 options:

1. Purchase directly from an overseas supplier

2. Purchase from a local chain store 

3. Purchase from a local dressmaker

If Jane chooses to spend R100.00 on a dress she found on an app that will be imported, the full R100.00 disappears from our economy’s wealth immediately, it doesn’t get a chance to circulate in Jane’s local economy or in South Africa’s economy for even a day, so, unfortunately, no one other than Jane benefits from that R100.00 spent. It kind of sucks right?

Now, if Jane steps into a local chain store in her nearest mall and spends that same R100.00 on a dress, R62.50 goes to national and international suppliers, R25.00 goes to wages and R12.50 will go to the shareholders at the JSE. In this instance, Jane’s money doesn’t circulate in her local economy but most of it continues to circulate in the South African economy. Good but not great.

But what if Jane chooses to #LoveLocal and spends her R100.00 on a beautiful dress made by a local dressmaker? The dressmaker (assuming a +/- 10% profit margin) would use R90.00 to buy material from a local retailer, who would pay R50.00 to the local farmer and R30.00 to wages. The farmer would spend R20.00 supplies for their crops, R20.00 on wages, and R10.00 profit. 

Just like that R100.00 created a local wealth of over R300.00 and it doesn’t have to stop there. This is admittedly an oversimplified breakdown but it illustrates how supporting local businesses can continue to generate wealth over and over again. If we as South Africans collectively dedicated just 1% more of the R1.86 TRILLION we spend per quarter, we could generate over R50 Billion in additional national wealth in just three months. You read that correctly, three months!

Have we convinced you to choose small businesses yet?

Spending money locally does more than support a small business. You encourage entrepreneurship and support dreams, increase wealth in your local community, increase local buying power, contribute to higher employment rates and an overall upturn in spending. In reality, small businesses aren’t small at all. They’re huge! 

Looking to support further? Here’s how you can support small businesses without spending a cent.

  1. Recommendations – Tell your friends. Telling your friends about the amazing service you received or the cool new place/product you found is great and FREE advertising for a small business and helps buyers make purchase decisions. 
  2. Like or follow them on social media. This helps to grow their fan base and allows you to stay up to date and keep them front of mind.
  3. Leave them a review. A positive online review goes a long way for potential sales. 
  4. Like, share, comment and save. These little bits of engagement help their advertising efforts, brand awareness and encourage them to keep doing and growing. 
  5. Drop a suggestion. Do you have useful feedback? Share it with them. I’m sure they’ll be grateful for it. 
  6. Had a minor mishap? Get in touch! Teething issues are not uncommon in new businesses. If something isn’t quite right, give them the opportunity to rectify the situation. Your five minutes of anger, posting a harsh review on a big online group will be forgotten by you by tomorrow but for them, the knock-on effects could be dire. 

The last 18 months have been a whirlwind for our economy and now, more than ever, we need to support small businesses. We are committed to supporting local, are you?