How to invest in local businesses

How to invest in local businesses

Investing in local businesses is a smart move for small businesses as well as major corporations.

Local businesses and small businesses often have a similar customer base. They also tend to have the same small marketing and advertising budget. With these two commonalities, sponsorships and cross-marketing investments easily transpire between the two. One might ask, why network with a local business. Why not invest in larger businesses, with greater exposure? Because corporations don’t intimately serve the community as local businesses do.

Local businesses benefit the community through economic stimulation. Local businesses provide employment for the community. Also, local businesses tend to employ the underemployed and/or undereducated sector of the community. Many places of employment require reliable transportation to access them. Local businesses provide employment for those without the resources needed for employment.

Local businesses also encourage the community dollar to circulate within. Many patrons live in town A, work in town B, and shop in town C. The community dollar suffers because there is no revenue circulating in the community.

The most common type of investment between small businesses and local businesses is sponsorship. A prime example of this exchange is for a beauty pageant. A beauty pageant director aims to produce a local pageant. The director’s main concern is promotions. By approaching local businesses that share the same customer base, the director offers a sponsorship. The sponsorship may include the director extending a limited amount of print, radio, and television advertisements in exchange for in house promotions.

Advertisement is not the only benefit of investing in local businesses. Company image can benefit from its association with local patrons. This builds goodwill between the financial institution and the community citizens. In turn, it may draw business to the institution, due to their well-earned reputation of community involvement.

As a corporate executive, your company may benefit from investing in local businesses also. Larger companies benefit from investing in small businesses through enhanced exposure. Your company’s investment could be monetary or product donation. Bank officers might appeal to their investment department to underwrite a mortgage for a community project such as a recreational center, or affordable housing. In turn, the community project will display a sign or advertisement for the bank or financial institution.

The best type of company to invest in is a not for profit company. Whether it is a financial or product/service donation investment, it is tax-deductible. Thus as an investor, your company will benefit twice from investing in a local business. Investing in not for profit companies is also an image enhancer. Your company’s image will be directly linked to a charitable organization.

Government agencies are regularly dedicated to investing in local businesses. On the state and county level, one can find agencies dedicated to funding business start-ups and expansions. These agencies dispense conditional grants to local businesses. The conditions of the grants are usually that the business is beneficial to the community. In other words, there are more grants available for drug rehabilitation centers than nail salons. This is not to minimize the purpose of a nail salon. But the government’s philosophy on business grant donations is heavily seated in community benefit. The grants are an investment into a project that is assumed to multiply its benefits directly into the community.

Whether you head a corporation, or a small business, choosing investments is a serious decision. One should choose a business investment that brings a variety of return on investment opportunities.

Investing in local businesses allows one’s company free advertising, image enhancement, and the satisfaction of making direct and indirect investments in the community at large. Call up your local Chamber of Commerce for a directory of local businesses, and see which one could present a profitable investment for you.

Investing in local businesses

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