The Heartbeat of Community: Small Brick-and-Mortar Stores Power Local Economy

small town shops

I assess my company’s value on the local community: how much of my revenue is spent locally, and can I do anything to improve it?

Labor

Obviously, all our employees live in town. You can’t do brick and mortar retail remotely. That’s about 11% of our expenses. Also, wages are reinvested in the community. None of my employees are billionaires. People who earn normal, people-level amounts of money spend all of it. None of it is removed from the economy through hoarding. These salaries are spent on local rents, local utilities, local car purchases, clothes, medicine, and other goods and services.

I’m at 100% here. I can’t improve this figure, but it’s a lot of money reinvested into the community.

One important difference between the small business and the large megacorp is that the CEO salary also stays local in a small business.

Rent

The owner of our shopping center lives in town and occasionally visits the store. The property manager lives in town. The property is not part of a major chain. All the properties they represent are in Jacksonville. My landlord’s taxes get passed on to me as part of a CAM (which is really more of a triple net).

Rent is about 12% of our expenses.

I can’t improve this figure.

Service and Maintenance

Our HVAC person is a local independent technician.

I’ve had to shop around for plumbers because I haven’t been happy with any of them. Sometimes I use a chain. I could improve this figure by a small amount if I could find a plumber who a) fixes plumbing, and b) doesn’t charge 3 times as much as other plumbers. I’m astonished and dismayed at how hard that is.

My light guy is a local independent.

Merchandise

Our largest supplier has multiple warehouses, but they are based in Florida, and we order from their Florida warehouse. One of our secondaries has a Jacksonville location, but they are not based in Jacksonville. Of course, we have multiples sources of merchandise to get stuff that’s out of stock at our primary or exclusive to that vendor (like Games Workshop). We also stock nearly any game-related products we can source locally.

We have a display of locally designed games that I gathered from their sorted-by-category placement throughout the rest of the store and merchandise below a sign displaying their local status. It’s intended to be a focal point for customers who are eager to support the community and an enticement to any local game or game accessory producers who haven’t already reached out to us.

Our Jacksonville-based merchandise purchases are only about 1% of our expenses, but if we extend our definition of local by about 100 miles, I can add another 35%. Peach State Hobby in Orlando is our primary distributor, providing us with all our role-playing games, Magic, the Nolzur’s miniatures line, almost all of our non-GW hobby supplies, and a large minority of our board games.

I am creating more merchandise so that we can improve this figure. While my publishing division won’t ever supplant Wizards, I’d like a fair bit of our sales to eventually come from our own products.

With a large franchise, the franchisees buy nearly all their merchandise from…themselves. The local Domino’s buy from Domino’s National Commissary, owned by corporate Domino’s. So roughly 30-35% of that national company’s local consumable budgets go right back into the company.

Utilities

Electricity is a local expense, and—this being Florida—it’s a lot of money. It’s not cheap to cool a 5,100-square foot building filled with gamers. Phone and internet expense goes to the necessary giant mega-corporations. Insurance is underwritten by a large corporation through an agent in our shopping center.

At one point, Jacksonville was the insurance capital of the world. During the 90s, a lot of those companies moved their corporate headquarters out of town. Back then, I could have claimed my liability insurance premium stayed local, but that’s not the case anymore.  

I don’t think I have any Jacksonville-based options for insurance carriers or Internet carriers that have a reputation I trust. I tried a local phone carrier once, and it inflicted almost terminal damage.

The local portion of our utility expense is about 3.5%.

I can’t do anything to improve this figure.

Taxes

I pay the Florida sale tax, of course, on sales collected in the store. Without providing detail to give, let’s just say that it’s…enough. I owe various small fees to the city of Jacksonville and the state of Florida. Payroll taxes are federal, so that’s a zero.

When I talk about sales, I always talk about net sales (and so should you). That’s the amount of sales you conduct not counting sales tax. If I ever make a statement here about seeing $10,000 in sales, that figure doesn’t include the $750 I collected and turned over to the state of Florida. However, the aggregated smaller, fixed figures fees might be another .5% (it’s not, but I’m rounding it up because my running total isn’t even, and I want it to be).

Marketing & Advertising

I didn’t spend a lot on paid advertising. Social media provides a fantastic method of reaching people without having to spend money.

I did attend most local game conventions. The convention organizers are all local, the venues are physically local (but their owners typically are not), the staff, and much of the convention’s revenues tend to stay local.

I did pay to boost a specific type of Facebook post. That expense was never more than 2% of my sales.

My sign company was a local independent.

I could have spent a little more money on local advertising. It’s more expensive and hit-or-miss, but a small budget devoted to that avenue could have been productive.

Summary

If we include our nearby inventory purchases, 63% of our expenses stay in the community or the state. That’s a larger impact than I expected, and it demonstrates how big an impact a local purchase can make.

Compare that to an Amazon purchase, in which 0% of the money goes to the community. Sure, a few pennies go to what’s called “last mile” delivery, or getting it to your door, but nearly all of it goes elsewhere. Buying local matters.