Local Business Statistics: Economic Impact, Benefits, Failure

Local Business Statistics: Economic Impact, Benefits, Failure

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Small businesses are an essential part of every local economy. If consumers support local businesses, a substantial amount of money will stay in the community.

Owning a local business may seem overwhelming, but it’s possible to succeed if you gather all the necessary information—let’s start here.

Top Local Business Statistics: Editor’s Choice

General Facts About Shopping Local


1. 9.11% of the US population are local business owners in 2021.

More than a quarter of those businesses are owned by immigrants. It’s interesting that immigrants have a 16% share in the workforce, and yet 18% of all business ownership.

Around 48% of overall entrepreneurship growth in the US is credited to immigrant owners.

2. 97 out of 100 consumers search for local businesses.

Buying local statistics show that 97% of consumers regularly search for local businesses online.

This stunning statistic is proof that every local business should implement a solid online marketing strategy that will help their business websites rank higher in SERP.

3. 82.76 % of consumers will pay more to support small businesses, according to  2021 statistics on buying local.

Eight out of ten consumers will pay more to support a local business rather than a large corporation.

Moreover, 54.39% of consumers say that they shop locally because of better service and products, 14.88% go for the price, and 19.66 % shop locally because they’re used to it.

4. Two out of three Facebook users visited a local business’ page at least once a week.

When it comes to the effect of social media on a local business, statistics show that Facebook is a great channel to gain new customers, considering that a lot of users seem to treat the platform as a search engine for local businesses—well over 60% expect to find useful information on business on Facebook.

5. 70% of buyers support local businesses by buying online or online and in-store combined.

Also, 57% of people say their reasoning for buying locally is because they want to support small businesses, keep the money in the community as a way to grow it.

Local Business Failure Statistics


6. A new Walmart store decreases the local economy output by a predicted $13 million over 20 years.

The Walmart Effect on small businesses is more impactful than one would imagine.

There is also an additional loss in this calculation—$14 million would be lost in wages over the same period of time (or $660,000 per year) .

The difference in wages is estimated to be at least $3 per hour.

7. 80% of local businesses with employees survive their first year.

According to the recent local business trends, roughly 80% of employee-based businesses survive their first business year.

However, the stats also show that percentage drops as years go by, reaching 50% and 30% during the fifth and tenth year of doing business, respectively.

8. 25% of local businesses fail due to low sales or low cash flow.

According to a review of local business failure, the primary reasons why local businesses close are low sales and low cash flow.

Furthermore, 21.9% of respondents claimed that retirement was the reason for shutting down the business, while 20.3% said that the business closed because the owner sold it.

9. One out of twelve businesses closes every year in the US.

As statistics show, one out of twelve businesses closes, and only four out of a hundred businesses survive the first ten-year period.

The biggest problem is that 82% of businesses don’t have proper cash flow management, forcing them to close prematurely.

Benefits of Supporting a Local Business


10. When consumers shop locally, $68 out of every $100 stays in the community.

Shop local stats prove that more money stays in the community when consumers buy locally. When shopping at a non-local business, only $43 remains in the community.

Local taxes, wages, and donations stay in the local economy no matter where consumers shop, which can’t be said for purchasing services like marketing or accounting.

11. Small businesses employ 55% of the American workforce.

The economic impact local businesses have on the US economy is pretty amazing. Since the 70s, 66% of all employment has been credited to small businesses.

Since the 80s, local businesses have created roughly 8 million jobs and have kept the US economy stable.

12. 59.3% of local businesses usually use recycled materials.

According to shop local statistics, when consumers shop at local businesses, they are helping the environment.

That’s because 59.3% of local businesses occasionally use recycled materials, while 7% claim they always use recycled materials.

13. 61% of consumers choose to buy at local stores because they offer unique products.

Buy local statistics indicate that shoppers prefer buying products at local stores.

The numbers show that 61% of them prefer local stores because they offer unique products, 49% can’t find the products they want to buy anywhere else, 40% support local businesses and the community, and 29% want to try new retailers.

14. One out of five consumers shopped locally during the winter holidays in 2020.

Additionally, almost half of the buyers were willing to shop in-store—given they’re offered a contactless paying option. Another 77% of consumers wanted mandatory mask-wearing in stores during the holiday season.

Economic Impact of Shopping Locally


15. The number of small businesses in the US reached 31.7 million in 2020.

Small local businesses are vital for the US economy, as they account for 99.9% of the total number of businesses in the US.

Small businesses usually hire less than a hundred employees. However, they are responsible for millions of new jobs created in recent years.

Today, 60.6 million employees work for small businesses, which is roughly half of the US workforce.

16. If every US family spent $10 more every month at a local business, over $9.3 billion would be returned to the economy.

According to local shopping statistics, local businesses generate 70% more local economic activity per square foot than big-box retailers.

What’s more, buying locally benefits the local economy, as it generates 3.5 times more wealth than shopping at chained-owned businesses.

17. Of 1,400 surveyed small business owners, 52% donate to charity.

It seems that every other small business owner regularly donates to charity. According to a survey that included 1,400 small business owners, 52% donate regularly.

Moreover, 46% donate up to $1,000 in cash.

18.  Minorities own eight million small businesses in the US.

Business owner statistics suggest that there are 8 million minority-owned businesses in the US.

The leading demographics are Hispanic businesses (3.3 million), followed by African American (2.6 million) and Asian (1.9 million) owned businesses.

Other Relevant Local Business Statistics


19. 90 million local businesses have a Facebook page.

Furthermore, with the shift in consumer behavior inflicted by pandemic protection measures, people turned to shopping locally—there was a 23% growth in search clicks for local businesses on Facebook.

The trend was boosted by the hashtag #SupportLocal gaining traction during last year.

20. Local business SEO statistics show that small businesses spend less than $10,000 on digital marketing.

Most small businesses have modest marketing budgets, as they spend less than $10,000 on digital marketing.

Furthermore, local business SEO statistics suggest that 80% of small businesses don’t invest in content marketing. Experts claim that they are missing a key marketing opportunity.

21. Interestingly, 18.7% of local businesses reported that the COVID-19 pandemic had little to no effect on them, and 5% even reported a positive impact.

Local business statistics show that the coronavirus harmed 76% of small businesses. However, some businesses have thrived, such as home improvement and pet-related businesses.

22. 96% of local businesses are viewed at least 25 times a month in search results.

What’s more, Google My Business statistics show that 86% of local businesses are viewed more than 25 times on Google Maps.

Shopping local facts indicate that the average business receives 1,009 searches from customers each month. 84% come from discovery searches, and 16% come from direct.

23. 68% of buyers will leave a review of a local business if asked.

With the already mentioned 97% of consumers searching for a business online, it’s very likely they would want to read reviews and other people’s experiences.

Numbers show that 73% of people trust those online reviews they read online, so asking customers to leave their honest opinions could be beneficial to grow sales.

Local Business Statistics: The Takeaway

As a local business owner, you will probably face great challenges along the way. The competition is becoming fiercer every day, and the COVID-19 pandemic is not making people’s lives easier.

However, these statistics clearly show that it’s possible to succeed if you are well-prepared and know what to expect.

With this knowledge in mind, you’ll be able to grow your business successfully.

Frequently Asked Questions

How many local businesses are in the US?


Currently, there are 31.7 million small local businesses in the US. Such companies are the backbone of the American economy, as they comprise 99.9% of all US businesses.

Why should you buy from local businesses?


When purchasing at local businesses, customers are stimulating the local economy. This is mainly because locally owned businesses usually purchase from other local businesses such as service providers and farms.

Furthermore, local business owners are people who live in the community and often invest in it.

How does buying locally help the environment?


One of the reasons that buying locally is good for the environment is because consumers reduce their food miles. They don’t have to drive long distances to buy at supermarkets—they can simply walk to the store.

Furthermore, by supporting local businesses, consumers enable farmers to protect the land and wildlife. Farms are operated by local farmers who usually don’t sell the land to local developers who might destroy it.

Last but not least, many local food manufacturers don’t use pesticides and other harmful chemicals, enabling consumers to eat organic and keeping the land healthy at the same time.

How important are small businesses to local economies?


Since small businesses are in direct contact with consumers, they are more up-to-date on what products and services would serve the common good.

These companies have fewer levels of hierarchy, so they are generally more open to trying new concepts and ideas in a shorter time frame.

Local business statistics show that smaller businesses also boost the local economy by providing employment to people with different work experience and educational backgrounds.

Sources

Armadillo EDC, BLS, Bright Local, Business News Daily, Clutch, Facebook, Facebook, Facebook, Fundera, Huffpost, Lighthouse Marketing, Oberlo, Pie Insurance, SBA, Small Business, Small Business Trends, Small Business Trends, Start Blox, Statista, United States Census Bureau