Panacea for the economy: local business, Part 1

Our new blog series will be tackling a very current issue, local businesses and benefits they create for the local economy. Up until Christmas time, I shall focus on exploring the topic more closely, covering the benefits and theory behind the “act local” trend and providing some of our own experiences on the topic as a manufacturing quality control software (SPC) provider operating in Wales and France. According to recent study, UK adult spends on average £88 per week on local shops and services within a 15-min walk of their house. Purchases at local businesses amount to £218 billion, almost double the value of the internet economy. (Santander Business Banking research 2011) This research reveals that local businesses remain relevant and integral part of any community.

The term “local” can be interpreted in different ways: local can mean shops 15-min walk from your door, UK based companies or European businesses. It all depends on the scale in which you operate in. Private consumers may appreciate locally produced vegetables while manufacturing companies operating in UK might prefer to do business with partners located in the same area, country or monetary zone with similar regulations and standards. Reasons vary but same basic drives remain as in basic consumer decision making: the idea is that when you buy local more money stays in the community, driving future development. According to Susan Witt, Executive Director of the E.F. Schumacher Society, "buy local" campaigns serve another function as well: alerting a community about gaps in the local

market. Also having quick delivery and reaction time for services are key benefits for many to choose a local partner.

Institute for Local Self-Reliance has created a list “Ten reasons to support local business”: 1. Local character and prosperity 2. Community well-being 3. Local decision-making 4. Keeping money in the local economy 5. Job and salaries 6. Entrepreneurship 7. Public benefits and costs 8. Environmental Sustainability 9. Competition 10. Product diversity Next week we continue the series and look more closely each of the reasons listed above and reflect our own experiences on them. Hope you all have a great week and keep supporting your local businesses! Jenna Business Development Team

Panacea for the economy: local business, Part 2 Hi everyone! Last week we started to explore the topic of local business, different levels of “local” and the benefits created to communities they operate in. As I mentioned, the Institute for Local Self-Reliance has conducted a list “Ten reasons to support local business”. We are now going to have a closer look at first five reasons and reflect our own experiences on each of them.

1. Local character and prosperity As I noted, our company operates in both UK and France. This gives us two reflection points: local meaning UK-based and other meaning European. Culture is present in all things related to business: the way you contact your customer, way you speak to them, way you price your products and way you close business deals. Culture and local customs play a remarkable role whether you operate in a certain neighbourhood, country or a continent. Knowing the local way of life and doing business can have positive effects on customer relationships and knowing what and how to provide your services and products. In our company, we are extremely lucky: we have a diverse cultural employee base consisting of people from the UK, France, Germany and Spain. We are able to transfer the cultural knowledge of these countries in to way of doing business and offer services in various languages, making communication more flexible. Local regulations are an important factor to consider. It simplifies the business process immensely if both parties have the same regulations and play by the same rules. This is true in all levels of local business: the price level of oranges in neighbourhood shops, certain manufacturing software must fulfil X regulations to be considered for standard X and European Union has regulations for products sold in it that might vary from similar regulations in Asia. Quality standards also vary between economic areas: best practises might not mean the same in the US as it does in Europe.

2. Community well-being Giving something back to your local community is something we all wish to do. We have found out that the best way to do this is to support local young professionals. Helping local University graduates not only gives them the first professional experience they need but also helps the community to keep the knowledge and talent that they have created in the area. GoWales is a wonderful program that operates here in Wales and supports youth employment by providing variety of work tasters and placements and we have cooperated with them for several years now.

3. Local decision-making When local consumers decide to support local business, they know what they are getting with familiar regulations and standards. Also because the local business is supported, they have the power to decode the supply for the local community. Knowing your customers and being able to provide exactly what they need is the key to great business. Experienced professionals can provide the knowledge and support the customers need. If this is combined with local knowledge and regulatory awareness, better combination of a

business partner is hard to find. Locally driven quality initiatives are beneficial for all parties: knowledge sharing, new idea creation and local collaboration all prove that local project, especially in R&D, creates possibilities that could not be achieved if the two parties operated, let’s say, in different continents.

4. Keeping money in the local economy This is a self explanatory point and the basic idea behind “support local” ideology. Spending the money locally allows the local businesses thrive, hire new workers who will also spend the money locally. The economy will get stronger, offer more services and products and better healthcare. If we take France as an example, company operating in France knows the regulations and cultural ways of that specific business area. They are able to offer services and products people need, the way they prefer. This leads to more business and the company will spread the wealth created by paying wages of employees who spend it in local economy, pay taxes to local government and buy supplies. The money goes into circulation again and the economy gets stronger.

5. Job and salaries Well this one goes without saying. Supporting local product or a service helps the business to support their employees and to pay them sufficient salaries. Local employees know the community and customs of the clientele, helping the business to provide the best consumer experience possible and make sure products are meeting the need in the market. Next week we will look at the final five points why you should support your local businesses. Then it is almost Christmas time! Everyone have a great week and remember to support your local shops! Jenna Business Development Team

Panacea for the economy: local business, Part 3 Hello there! Final part of our local business series is here and Christmas is just around the corner. As mentioned previously, supporting local business can create benefits for the local economy and improve the products and services provided. According to the Institute for Local Self-Reliance, there are ten reasons to support your local business. Last week we explored the first five points and now it is time to finish the list. We are reflecting each point into real life situations so they are a bit more comprehendible.

6. Entrepreneurship First of our points today is pretty obvious one: entrepreneurship! By supporting your local business, you support the local entrepreneur behind it. Entrepreneurs are associated with terms like “innovative, flexible and in-depth knowledge”. Local businesses focusing on innovation are one of the most dynamic catalysts for local prosperity. Opposite are businesses involved in community production, many of which are globally owned factories, are among the worst. Local businesses are usually created to fulfil a specific need that exists amongst the community, answering the pull rather than trying to push a product already out there. This helps fulfilling customer needs and creates sustainable economic growth for the community. The business needs to decide its target segment and whether it plans to satisfy the need in communal, national or international level (see point 1). 7. Public benefits and costs Local community keeps the money created by local businesses, invested towards future development and benefit of that community. Study in the US (2009) found that small business communities “provided for their residents a considerably more balanced economic life than did big business cities” and that “the general level of civic welfare was appreciably

higher.” Locally owned businesses rarely move, and their proprietors are not inclined to move to Mexico or Malaysia to get a higher rate of return from their business. This means that they are much more reliable generators of wealth, income, and jobs.

Same study in the US shows that only about 34% of the revenue from national chains is reinvested into the community, which is very low compared to the 65% return from local businesses. Local businesses utilise other close by businesses that can provide supportive deals, flexibility and quick reaction times.

8. Environmental Sustainability Local businesses are usually established in the city centres, instead of on the margins of communities like large chains, so they contribute less to pollution, congestion, habitat loss and urban sprawl. Even when we consider this in a larger scale, let’s say Europe versus the US, local purchases do not require long distance transportation and thus do not create unnecessary pollution. Especially if the product or a service requires personal attendance from the seller (set-up of a system or regular training), the closer the provider is geographically, the less harmful effects the extra travel has and the quicker reaction time can be provided.

9. Competition Basic economic theory states that in perfect competition, the competition forces businesses to develop new products, services and technologies, which give consumers better selection and products. The better selection usually leads to lower prices of products, compared to the prices if there was no competition (called monopoly) or just a bit of competition (called oligopoly). Now, if we consider local businesses bringing more competition to local community and challenging the large chains, consumers in that specific community (whether it is a city, country or a monetary zone) benefit of the results. In Europe for example, small local producers of electronics can provide better quality and specialised features (emphasis on quality) compared to large Asian manufacturers (that emphasise quantity).

10. Product diversity As mentioned above, increased competition leads to more product diversity. Retailers go through competing goods and services to find those that appeal to their customers. Even though a single local shop may have a smaller selection than a big chain outlet, a variety of independent retailers creates great diversity. It is a known fact that by cooperating with small and medium sized businesses (most local companies) you get more flexibility and “it can be arranged” type of deals. For example, medium sized software company is able to provide tailored and according-to-specific-requirements built products, designed together with the customer. Large providers have their already made packages that sell well enough without making special deals. Happy Christmas everyone! Our next blog post will be in 2013 and we shall start a new blog series then. If there are any specific topics you would like to, let us know by contacting us contact@infodream.co.uk or by commenting this post.