Fixing the Leaky Bucket

When our business leaders, planners, and politicians look at ways to revitalize local towns and rural areas, the usual proposed solutions focus on ways to bring more money into the community.  Typical approaches to bringing in money involve promoting tourism, agriculture, corporate relocations and other forms of inward investments.  What is often overlooked is the important concept of money flow within the community.

Think of your local economy as a bucket.  Bringing in money to your community is like pouring water in the bucket.  The bucket is going to have some holes in it and some of the water will leak out.  Some of the holes can’t be fixed so you will always have a leaky bucket.  The state and federal government will collect taxes, for example.  That is a hole that can’t be fixed.  

Other holes can be fixed.  Residents who shop at a box store, for example, will shop locally if the locally owned store offers the same product or service at a competitive price.  A strong shop local movement and messaging encourages more local shopping.   Locally owned and operated businesses have more flexibility in offering locally grown produce or locally caught seafood products.  Locally owned businesses often fill a niche that chain stores often fail to fill.

The idea of the leaky bucket illustrates the importance of money flow through a community.  The longer the bucket holds water, the less frequently the community needs to refill the bucket.  All that money flowing in and through the community can be used to sponsor a little league team or build a new park instead of finding new ways to keep the tap flowing into the community.

Let’s put the illustration in simple dollars and cents.  Some studies suggest that for every dollar spent at a locally owned and operated business, sixty-eight cents stays in the community.  The same dollar spent at a nationally owned store sees thirteen cents staying in the community.  In the middle are our locally owned and operated franchises.  For every dollar spent with them, forty-eight cents remain in the community.

Now an important concept comes into play, a concept called the multiplier effect.  The sixty-eight cents from your dollar that stayed in your community is spent by that business owner or employee at another locally owned and operated business.  Forty-six cents remains in the local community.  If the person who received the forty-six cents continues the trend of spending locally, the money will pass through seven more hands—for a total of nine of your friends and neighbors—before the leaky bucket has taken it down to two cents.  

At the national box store, the employee, who received the thirteen cents in his pay, spends it at another nationally owned business.  Only two cents remain in the community.  In effect, the original dollar you spent at the national chain is gone after passing hands to only one of your neighbors or friends.

In the middle are the locally owned and operated franchises.  You spend a dollar there and forty-eight cents stay in the community.  The business owner spends that forty-eight cents at a locally owned or operated franchise and a quarter remains in the community.  Continuing the trend on down the line and that original forty-eight cents would pass through the hands of six of your neighbors or friends before it disappears from the community.  

In the real world, it isn’t always practical, and often not even possible, to spend your money exclusively at locally owned and operated businesses.  But you do have the power to slow the leaks.  Several independent studies have concluded that a 10% shift in our spending habits to support locally owned and operated businesses would create hundreds of new jobs and tens—if not hundreds—of millions of dollars in new economic activity.

You have the power to patch some of the leaks in your local economy's bucket.  Here are steps you can take to slow, and maybe stop, some of those leaks:

• Whether you're a business owner stocking your store, a contractor stocking your toolbox and truck, or a shopper who needs something different, think local first.  Even if you think local once a month, you've taken a big step in slowing the leaks in your community's bucket.
  
  
• Download The Original Shop Local Delmarva app.  Currently, the app is only available for Android devices, but Apple devices are coming soon.
  
  
• If you are a business owner, get listed in the app.  You don't need an Android device to list your business.  Once I get Apple approval, the app shares the same database as Google.  I'm hoping for approval from Apple around the start of the new year.
  
  
• Follow The Original Shop Local Delmarva on Facebook and Blogger.  Get the latest news and updates before they even hit Cuddles Clipbbord.
  
  
• Participate on the monthly Shop Local Delmarva Day.  Details to be announced on Facebook and Blogger.

Please stay tuned.  A lot is coming.  As always, feel free to let me know what you want.  Email or call me.  The Original Shop Local Delmarva app is your app.  Help design the app and shape the Shop Local Delmarva movement the way you want it.