Small Businesses Have Deep Roots in the Local Community
/by Jennifer Smithberger
When you think of the traditional, hometown community, what images pop into your mind? For us, we picture a thriving main street centered around the small businesses dotting the landscape. Our idea of community features small businesses at the center. Why? Because small businesses help give communities character, they create millions of jobs for their neighbors around the country, and, as we found in our 2020 Spring Into Kindness Small Business Study, give back to their communities in a big way.
Even though we are still in the midst of a nationwide quarantine, small businesses have come out with novel solutions to help their communities stay healthy and fill in the gaps where aid is needed. In recent years, there have been several grassroots movements starting up in many areas of the nation to support local businesses. The “Shop Local” movement has sprung up to strengthen local small businesses in reaction to the rise of national big box, chain and eCommerce retailers. When it comes down to it, communities and small businesses rally around each other to keep local economic ecosystems in balance.
This mutually beneficial relationship between small businesses and communities showed prominently during our 2020 seedership Spring into Kindness Small Business Study. In fact, one of the key insights we learned from our study showed that small businesses favor local causes and nonprofits over national or global causes. Not only that, local charities and nonprofits tend to come to small businesses frequently and throughout the year when asking for support.
Ever wonder why you see small businesses sponsoring local little league teams, or running their ads in the community daily and weekly papers? It’s because small businesses are one of the many roots that feed the rich ecosystem of community living. Let’s dive a little deeper into some key findings from our study and explore what it means for small businesses and their communities.
Small Businesses Support Local
Turns out the aforementioned “Shop Local” movement of locals supporting small business works in reverse also. In fact, according to our 2020 Spring into Kindness Small Business Study, 97% of small businesses that gave back last year choose to support local causes and nonprofits versus the 42% that gave to national causes, or the 17% that gave to global causes.
Local in, local out. This finding makes perfect sense given the recent trend over the years of consumers wanting to support businesses that are active in helping support their communities. A 2018 study by market intelligence agency Mintel found that a business’s charitable giving efforts influence 73% of American’s purchasing decisions.
The relationship between small businesses and local causes is so strong that local causes and nonprofits often go to their local storefront to ask for support in some form. Our study delved into how often small businesses give back or are asked to give back to their local communities. We found that in total, 87% of the businesses surveyed were asked at least once a month to give to the local community. Further, our study found that around 11% of businesses reported that they were asked to give between six to 10 times in a single month, and 6% get asked more frequently than that!
It’s been reported that members of the community tend to want to shop local, but our study found that small businesses prefer to give local as well. So, we know that consumers favor charitable businesses, and that small businesses are big charitable givers, how can these two concepts connect with each other? What is the missing link? Well, given the findings of our study, we believe small businesses can do more to close the communication gap between their charitable giving efforts and their consumers. They need to be actively sharing and building their brand story around the good they do for the community.
Small Business Giving Tends to be Understated
We found that the top reason small businesses give back was to do good in their community, followed by the personal satisfaction they get from it. Beyond that, there are other benefits businesses can earn if they make community building part of their brand story. Besides being charitable, businesses that share their community giving efforts are able to strengthen their brand reputation, increase employee retention and engagement, deepen their relationships with their customers and earn positive media coverage.
Being visible about giving is almost as important for business growth as committing to giving back on a regular basis. Our study revealed that small businesses could do more to promote their charitable efforts. In fact, three out of four reported there was opportunity to make the promotion of their giving more effective.
This finding may be related to the channels small businesses choose to use when promoting their giving efforts. Our study found that small businesses tend to rely on intimate and low-cost methods to connect with their customers. The biggest platform was by word-of-mouth (69%), followed by Facebook (67%), and their business website (51%).
While studies show, word-of-mouth is the most trusted form of advertising, it often provides short-term visibility boost. However, being consistent and sharing giving efforts through other channels can help extend the positive impact on the community and the business. Our 2020 Spring into Kindness Small Business Study showed that there are communication gaps that business owners and managers should be aware of to maximize the potential of their community giving efforts.
“small businesses and communities are so intertwined with one another that it’s hard to say that one would be complete without the other”
Small Businesses and Communities Hold Each Other Up
These findings help concrete the idea in our minds that small businesses and communities are so intertwined with one another that it’s hard to say that one would be complete without the other. Our study showed us that small businesses are a reliable source of support for their communities. Of the causes that our studied small businesses give back to, they largely favor ones that are local and directly benefit the neighborhoods that frequent their shops.
When people support local businesses, they are also supporting local charities and nonprofits. And with the growing trend of shopping local, communities want to give back to businesses that are kind and charitable to their neighbors.
Since small businesses are a foundational part of their communities, they need to be more aware of the potential being visible and sharing their giving efforts can do for business growth. With platforms like Facebook or other social media channels, it can be very cost-effective but businesses only tend to share one post about their charitable efforts. This limits the potential reach and impacts the story can have on their audience.
So, a big takeaway from our study reveals that businesses that do good can do more to maximize their impact. The kindness is there, businesses need to be more conscious of the positive feedback loop that keeps small businesses giving and growing: sharing.
Founded by Connecticut residents Ray and Jennifer Smithberger, seedership is a community storytelling platform designed to make it easy, transparent and engaging for small businesses to track and share the good they do every day. The start-up was developed to bring greater visibility to this good and help build a sustainable kindness movement driven at the community level. Learn more at www.seedership.com. The 2020 Spring Into Kindness Small Business Study is the first of its kind, completed earlier this spring.
