What exactly is the multiplier effect?

Peter Rose

As an owner of two retail businesses here in Wyandotte, getting more people to reconnect to how our economy works is “kind of” important.

As a citizen of the region, my efforts are far more extensive and far more representative of why I write; of the message I’m trying so hard to communicate.  

If all I was talking about in these columns was, “Buy From me!  Buy From me!” I never could have written even a single column.

Having come through the holiday season many people told me in various ways as they shopped in my stores that they read my columns and appreciate the messages.  

Clearly, the people that do value local and need no reminders. 

I need not preach to the choir. Then again, perhaps there is no better army to mobilize than the people that understand the value of directing discretionary dollars to local and independent businesses.  

I’m quite certain that few out there are very interested in challenging their friends, but man, I sure wish for that – the more voices, the better!

Because it matters so much. It is not about any specific store, friends. I can’t stress that enough. While my stores do benefit from any shift away from national or internet, it is the economy in which we participate that benefits.  

Try this: My personal boats rise with the rest of the boats on the water that rises by the efforts of a community.  So, sure, I like that for me, but that improved water level benefits everyone that uses these waters. 

This happens because of what we refer to as a multiplier effect. Three and a half times more money stays local with purchases at local and independent operations because resources used to run national chains do not reside locally.  

The services that businesses use to make their own businesses work are not local, so most of that benefit (and it is substantial) leaves the region, leaves the state.  

Further, all profitability leaves the region as well. It goes to the shareholders and is not distributed locally. This is true of any business sector. Menswear, hardware, lighting stores, gift shops, restaurants – there are choices you make every day.  

Local choices, national choices.  Local redeploys, keeps your spending contribution percolating all around you. National decisions direct most of that benefit away from where you live and work and play.  

From where you own a home, the value of which is impacted by the degree of vibrancy of your local economy, which is impacted positively or negatively by your spending decisions.

I often feel that I should pull my punches a bit, here. I don’t want to sound too militant, too aggressive.  But if you actually do believe that this is for the greater good, not my own direct, personal gain, then the way I say these things should not be taken in any other way than the championing of common sense for the common good.  And that means I’m not being assertive enough.

I’ve been waving this banner since 2007 when I finally realized what was happening to local economies across America through this one phenomenon alone.  

When you see distraught communities, it is because money has been siphoned away, and not by other local businesses.  

Too few see it happening, let alone make deliberate choices to change that reality for the sake of the entire communities that are distressed. We used to all be connected – it’s what made communities!  

Now a huge percentage of the spending decisions are made from a purely unilateral, unconnected perspective. We get what we want, direct to our doors, or by shopping national, diminishing the dollars deployed locally. We simply don’t think of the effect of talking those dollars out of the network that feeds us back in a very direct way. 

There are levels of impact in any spending scenario.  

Direct Impact is spending by a business in the local economy to operate the business. 

Indirect Impact happens as dollars the local business spends at other area businesses, recirculating. 

Induced Impact refers to the additional consumer spending that happens as employees, business owners and others spend their income in the local economy.  

When I relay the results of studies done by telling you about 3½ times more money staying here, it’s more effective for you if you put dollar signs on that equation.  

If $1,000,000 stays local with national chain spending, $3,500,000 stays local by shopping at locally owned and independent choices. Employing people, being spent repeatedly. 

This is fact.

Make a difference!  Spread the urgency of thinking local, Going local by intention, on purpose, with every purchase.  Ask “Can I Get it Locally?” Every time.

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