8 Ways Small Businesses Shape Communities

8 Ways Small Businesses Shape Communities


Small businesses play a leading role in the growth, economic development and personality of their surrounding communities. Besides being a major source of revenue for local governments, they’re a significant contributor to regional employment markets, values and politics.

Below are eight ways small businesses help enrich the districts and neighborhoods in which they operate.

Create local jobs

Small businesses are a massive source of employment. The Small Business Administration (SBA) reports that smaller companies employ 47.5 percent of the private U.S. workforce. And the younger the company, the more jobs created. According to the National Bureau of Economic Research, companies less than five years old create nearly 20 percent of all new jobs in the country. Next time a new salon, eatery or design firm opens in your community, expect several new job listings to follow.

Extend economic opportunities

Entrepreneurship helps build the middle class by giving lower income populations a chance to prosper more quickly and exponentially than they might as someone else’s employee. Small business ownership also gives women, minorities and other underrepresented groups the opportunity to create the job they want.

Women hold less than 5% of the CEO positions at S&P 500 companies. For women of color, that figure is even lower. Entrepreneurs, however, have the power to create their own career trajectory, bypassing widely reported hiring and performance biases at private companies and starting off at a higher rung on the corporate ladder.

In addition, entrepreneurs concerned with leveling the employment playing field have the autonomy to hire more underrepresented workers and women- and minority-led vendors. Some small business owners also make it a policy to employ a high percentage of veterans, disabled workers or former prisoners. Entrepreneurs also can establish corporate responsibility programs that directly benefit underserved populations—another decision they may have little to no control over when working for someone else.

Stimulate the local economy

Small businesses don’t just help line municipal and state tax coffers. Local workers patronize neighborhood restaurants and cafes for lunch and coffee breaks. They also eat, drink and shop at other neighborhood businesses on their way home from work. Likewise, local entrepreneurs tend to do business and partner with one another. And a successful business district can increase local property tax values.

Foster innovation and growth

A small business hub can add ingenuity, creativity and a healthy sense of competition to a struggling, lackluster district in need of a jumpstart. Up-and-coming entrepreneurial hubs tend to attract Small Business Development Centers, grants, business plan contests, coworking spaces and other vehicles for business development. They also tend to attract more artists, entrepreneurs, and creative workers and thinkers. All these additions can help the entrepreneurial ecosystem.

Boost sense of community

A thriving business district can help foster a sense of identity, community and civic pride among residents. Plus, businesses committed to their surrounding community are more likely to get involved with local organizations (think Little League and Girl Scouts), charitable causes and politics. They’re also more likely to participate in parades, street fairs and other special events.

Increase local resources

Nobody wants to live in a grocery or nightlife desert. Successful restaurants, bakeries, cafes, bars, nightclubs and retail shops beget more successful businesses. For residents of the neighboring community, this means greater access to goods, services and entertainment options. Besides the convenience, consumers enjoy choosing from a more diverse range of products and services in their own backyard.

Improve customer service

Small booksellers, shopkeepers, restauranteurs, dry cleaners and other retailers and service providers often get to know their best customers’ names and preferences. Shoppers and diners appreciate this heightened level of attention from entrepreneurs, which can strengthen their loyalty and trust in the business. As a result, local businesses may enjoy a revenue boost from their most ardent supporters, especially around holidays and other special dates.

Help the environment

Small business storefronts leave a smaller ecological footprint than big box stores and shopping malls. For starters, having more small companies in the neighborhood cuts down on employee commute time. What’s more, local residents and out-of-town visitors can walk to Main Street rather than driving on the freeway to reach a shopping mall or plaza 10 or 15 miles away. There they can grab a bite to eat, knock a couple of Saturday morning errands off their to-do list and do a little shopping, all in one walkable business district.

The relationship between small businesses and their surrounding communities is a reciprocal, symbiotic one. Each relies on the other to thrive: small businesses shape the growth and identity of their immediate region, while community members directly contribute to the success of the small ventures in their midst.

The views expressed by the author are not necessarily those of Fifth Third Bank and are solely the opinions of the author. This article is for informational purposes only. It does not constitute the rendering of legal, accounting, or other professional services by Fifth Third Bank or any of their subsidiaries or affiliates, and are provided without any warranty whatsoever.