Margaret Mead once said, “Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has”. Community leadership should rightfully encourage and campaign for their local citizens to hop on the local hyper-local spending bandwagon when shopping. Oftentimes they overlook the largest inexcusable local item in their spending bucket. How business and government spend local tax dollars, in or outside of the community is critical. Every community government, civic, and local organization should attempt to spend as much as humanly possible in hyper-locally spending before one dime gets spent non-locally.
Citizens should be encouraged at all levels to hop on the hyper-local train. More importantly, they should be led in this effort by their city government and local business community. While consumers are spending ten dollars here and a hundred dollars there, city government and the business community often measure their spending in tens of thousands, hundreds of thousands, even millions of dollars at a time. How many local citizens does it takes to equal that amount of spending?
I have seen far too many businesses, civic organizations and governments preach hyper-local only to farm out the purchase of their city vehicles to out-of-town dealers, their event or sports facilities to out-of-town operators, their road and construction projects to out-of-town contractors, and their design and architect services to out of town “experts”. Additionally, add in office and expendable supplies sent to National chains due to simple convenience, pricing and so forth. I am aware of many communities that have spent hundreds of thousands of dollars in recent years on studies and renderings for future planning. Future planning that often never sees the light of day with no foreseeable action even in the planning stage. All those dollars leave the community never to be seen again.
Every local community should put or have in place safeguards against this financially destructive behavior. How destructive is this behavior to a community? Some communities spend three to five million or more on services, products, vehicles and so forth with out-of-town businesses. That is the equivalent of 3000-5000 of their own residents spending $1,000 each year and having them take that spending to anther town and spending it there. Imagine being able to land a new company that employed 60-100 people with $50,000 a year jobs – that is the equivalent loss on the hyper-local spending front of the revenue equation each year.
Before getting too critical, we must understand there are certain items that may prove very difficult to purchase or contract through strictly local avenues. This is certainly acceptable as government must always be accountable as the fiduciary stewards of the taxpayer’s dollars. However, there is a huge flaw in the process. Most communities rightly so, seek out the lowest bidder for their various products and services. What exactly does the lowest bid really mean? Does that lowest bid factor in the 3-7X compounding impact of those dollars remaining in the local community versus being spent outside the community? I’m guessing it does not. Does it factor in any taxing dollars that remain local by keeping those millions of dollars local? I’m guessing it does not. Does it factor in the number of jobs that might be saved over time by keeping those millions of dollars local? I’m guessing it does not. Being truly fiduciary means factoring in all the ramifications of your spending, not just the easy ones. Those aspects include local impact of your decisions as it relates to local compounding of dollars, local taxes at all levels, local wages and potential job creation and job stabilization that occurs when you spend local versus out-of-town.
Moving forward, communities must take the approach where every dollar has to be maximized in any way possible. Knowing the compounding capability of each dollar should always be factored into every decision. It isn’t uncommon where a local bid 10-15% higher than a competing out-of-town bid may be a better bid for the community after all the local impact financial considerations are measured.
With the fallout of COVID, the financial concerns facing local communities will intensify in the coming years. Communities must watch every dollar being spent. They must spend and invest every dollar locally as much as possible as if their community’s livelihood depended on it, because it very well may. Investing in your local community provides the highest return of your dollars. They can be used in creating uniqueness that adds to the heart and soul of the community and will always return more than any other investment they can make.
John A. Newby, author of the "Building Main Street, Not Wall Street " column assists communities and their local media companies combine synergies allowing them to not just survive, but thrive in a world where truly-local is lost to Amazon, Wall Street chains and others. His email at: john@360MediaAlliance.net.
Concerned about COVID-19?
Sign up now to get the most recent coronavirus headlines and other important local and national news sent to your email inbox daily.