
There’s a local business revolution on the horizon, and we can make it happen - adrianhoward
http://markmaynard.com/2013/02/michael-shuman-theres-a-local-business-revolution-on-the-horizon-and-we-can-make-it-happen/
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arbuge
"Local businesses recirculate dollars in their communities. An analysis of
bookstores in Austin showed that, of every $100 spent in a locally-owned store
(Book People), $45 were circulated back into the community, whereas only $13
made its way back into the community when $100 was spent at the nearby
corporate chain store (Borders)."

Presumably the community local to wherever the Borders dollars end up is ok
with this.

My point is that this kind of analysis stops half way. So what if business A
doesn't channel its dollars to community A? Maybe it channels them to
community B instead, or spreads them out over communities A, B, C, D etc.
Perhaps there is a problem, but to figure out whether there is, the more
important point to analyze is: when you add it all up and average over all
businesses, is it a wash? After all, those dollars must be going somewhere,
and I would think that they're making some communities somewhere pretty happy.

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dasht
This quote is one of those intuitively plausible things that turns out not to
be true: "the more important point to analyze is: when you add it all up and
average over all businesses, is it a wash? After all, those dollars must be
going somewhere, and I would think that they're making some communities
somewhere pretty happy."

It doesn't work that way. Think of the "lifespan" of a typical book-buying
dollar:

(a) A dollar in circulation is created along side a corresponding dollar of
debt. Banks are not getting dollars out of their vaults when they make loans.
They are typing some numbers into a computer and creating entirely new
dollars.

(b) The dollar passes from hand to hand in various transactions, eventually
reaching our book-buying consumer.

(c) Someday, the dollar will likely cease to exist when it is used to retire
debt. Even before then, the dollar can wind up "parked" (noncirculating) in
large accounts that are held in reserve (e.g., in cash or in constantly rolled
over treasuries).

A dollar spent at a big corporation like Borders is much more likely to reach
state (c) sooner. This missing spending doesn't move to some other community,
it just never takes place.

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valuegram
"Local businesses recirculate dollars in their communities. An analysis of
bookstores in Austin showed that, of every $100 spent in a locally-owned store
(Book People), $45 were circulated back into the community, whereas only $13
made its way back into the community when $100 was spent at the nearby
corporate chain store (Borders)."

It's interesting they used book people as an example since they were a major
force behind the "keep Austin weird" local business campaign.

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jon-wood
Its great to see people recognising the importance of local businesses!
They're the core of most communities, and if we let them die then the
community around them also dies, and will be hugely difficult to bring back
again.

We're working on this problem for food shops at Hubbub[1], providing a way for
people who would like to support local shops to order online, and receive
delivery at a convenient time. Through doing that they get better (and often
cheaper) food, and the money stays in their local community, rather than going
to a multinational chain of supermarkets.

If you're as passionate about supporting local shops as we are we'd love to
talk to you, we're hiring now! Check out the details at
<http://developers.hubbub.co.uk/> or drop me an email.

[1] <https://www.hubbub.co.uk/>

~~~
onemorepassword
How do you get local retailers to participate? In my experience, small store
owners are so self-involved that they don't want to put any time and energy
(let alone money) into cooperation, and are utterly averse to innovation.

Basically, anybody I know who has ever tried anything in this area now thinks
"fuck it, let them get killed by big chains and online shops", because there
seems to be zero survival instinct in this industry.

Where I live, and I believe it's the same in most of the UK, shop owners still
close their doors at exactly those ours when the consumers with any kind of
buying power want to shop, despite all the competition. They don't even want
the support of cold hard cash in exchange for goods, let alone anything
"online".

~~~
redwood
Another way of looking at it: There are millions of businesses trying to
target local businesses, and they're all calling many times a day. If you're a
small business you have so many pitches coming your way, you have to say
"enough's enough" at a point and focus on your core business.

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orofino
There are a number of startup idea here, the most apparent of which is just a
market (or portal) for your local market. If you've built your market you can
then take the same approach and software a couple hundred miles down the road
and start all over again in a new market.

This is intensely interesting to me. The source mentions
<http://missionmarkets.com/> which seems like it has a bit too much business
speak to be approachable by smaller investors, but has a number of good ideas
to help address risk.

I think... I need to start doing more research in this area.

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raheemm
There are some really amazing ideas in this article -- Direct public offering
being the most intriguing. I imagine a local, kickstarter platform that would
enable local businesses to raise funds and issue DPO shares. The main
challenge seems to be that local businesses fall into the high-risk, low-
return part of the risk-return graph. But then every WalMart, Microsoft and
Google did start out as a local story. This is indeed revolutionary.

~~~
redwood
This startup out of NYC is doing something similar: www.smallknot.com (I saw a
rep give a talk at a TechStars-hosted local business event).

This is the kind of thing that's hard to do on a nationwide basis so there's
plenty of opportunity to do something similar in other markets, I'm sure!

Local business tech is hard: inherently more human sales required per dollar
of revenue generally. But clearly it's the way to create lots of small-medium
sized businesses with local specialties.

