Daily money

Local is lekker: Why it’s important to source from, and support, small businesses

When you support a local business, you support an entire community. Here’s why going local is good for business.

According to small business specialists SBP, local small business owners are currently experiencing “survey fatigue” because everyone is curious to know how COVID-19 lockdown measures have affected SMEs. Never has there been such a flood of research surveying South Africa’s small businesses. Bringing together the findings of several of these surveys, SBP concludes that our small businesses are in trouble.

That said, recent Sage research found that, despite the challenges, small businesses are resilient and ready to try again – but they need all the support they can get.

As the country approaches 20 months of lockdown restrictions – and with SA’s vaccination rollout lagging – many of the SMEs that we rallied behind at the start of the pandemic have now depleted their savings and face closure.

This is a problem given the fact that small ventures are critical engines driving the South African economy. According to McKinsey, SMEs represent over 98% of South African businesses and employ 60% of the country’s workforce across sectors. These small and medium-sized ventures are also responsible for a quarter of job growth in the private sector, which is why it’s so important to source from and support small businesses wherever possible.

Spend wisely, source locally

During uncertain financial times, consumers and businesses count every cent. Meanwhile, local businesses count on our patronage to stay open. When you choose to buy from an independent, locally owned business instead of a national chain, a much larger portion of your money is returned to the local economy. This boosts job opportunities and injects a strong sense of culture into the community.

While it may not be possible to source all your raw materials and goods from local small businesses, making an effort to source as much as possible from entrepreneurs and SMEs can significantly benefit your business.

Below, we outline why it’s a good idea to source from small businesses.

Greater control: When you are further away from the different elements of your supply chain, you have less control over it. As we’ve seen throughout the pandemic, businesses that sourced their goods from further afield experienced significant disruptions, which ultimately affected sales. As such, local sourcing is a great business continuity strategy.

Reduced carbon footprint, reduced costs: In line with the point above, when you source items from local suppliers, these goods don’t have to travel far to get to you, and you don’t have to store them, which reduces your carbon footprint and your costs. It’s simple; the further your raw materials and products must travel and the longer they need to be stored, the higher your costs. When you localise your supply chain, you’ll spend less money on handling, storage, and logistics.

Better relationships: When businesses have personal relationships with the different producers and suppliers across their supply chain, it’s easier to address and resolve concerns and negotiate terms.

New marketing opportunities: More and more, modern consumers favour brands with a social conscience. As such, if your company decides only to support local suppliers, you can promote this decision as part of your marketing and advertising strategies, since this can attract a range of new customers.

Improved sense of community: They say that a rising tide lifts all boats; this is especially true for small businesses. Suppose a town or neighbourhood has a healthy small-business district. In that case, property values increase, and housing demand rises because the money spent at local companies adds value to the local economy, creates jobs, and benefits everyone who lives in the community.

More personalised experience: Local products are created with local consumers in mind.

When you source products made in South Africa, they are made for South Africans by South Africans to suit the needs and preferences of South Africans. It’s a win-win-win.

Alternative, free ways to back a small business

While the best way to support small businesses is to shop with them as often as possible, there are other ways to help without spending a cent. Here are a few ideas:

Share your expertise

Small business owners typically have tight budgets, so they can’t always afford to hire people with specialised skills. It doesn’t matter if you’re an accountant, marketer, or graphic designer; chances are that a local business in your community could benefit from your expertise. If you have extra time on your hands, why not sit down with your closest small business owner and give them free guidance and advice.

Share your experience

Many small businesses rely heavily on word-of-mouth advertising. When someone outside of the company speaks positively about the business, it builds buyer confidence and promotes trust. If you’ve had a great experience, tell people. Tell your friends, colleagues, and family about the brand and encourage them to support the business too.

Get social

There are so many ways to show your support for local, small businesses using the Internet and social media. From liking a page and following the brand to sharing posts and commenting on content, every little bit helps. And if you’ve had a great experience, take a few minutes to write a review.

Don’t ask for discounts

We all love a good deal, but if too many customers expect discounts because they have a good relationship with the business owner, the business model becomes unsustainable. Like everyone else, small businesses need to get paid a reasonable rate for their time and work; customers shouldn’t pressure them to provide discounts or freebies that the business cannot afford.

Be intentional about buying local

Shopping locally requires more thought and effort. If you want to go local, you need to be intentional about it. This doesn’t only mean choosing to support your local small business instead of the major retailer at the mall down the road. It also means thinking local all the time. If, for example, you’re sending gifts to friends or family who live abroad, spend a few moments researching independent stores in their towns and, where possible, favour these businesses over bigger brands.

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