The United States Bureau of Labor Statistics in a recent report stated that approximately 62% of all of the new jobs in the United States are created by small businesses. Nearly 50% of the United States' GDP is generated by small businesses. Though the Small Business Administration defines a "small business" as a privately held business that employs less than 500 people, studies indicate the majority of small businesses in the United States are more likely to employ less than 50 people. Many are probably in a service industry and are primarily dependent on nearby local customers to patronize them to stay in business.
In general, small business is more connected to the community and more sensitive to maintaining close relations with people in their community. Selling local products is one way in which small, community-oriented businesses create a competitive edge over large, national companies.
The economic impact runs in two directions. By purchasing goods and services from locally established businesses, patrons of the business are helping small businesses remain viable in a competitive market and are extending the economic benefit to the provider of the service or product. Without a local distribution source, it would be challenging for certain types of products (artisans in the community, for example) to continue to produce their product or service. Local patrons are simultaneously purchasing goods as consumers and generating an income stream for the small business. The economic benefit of patronizing local business is extended to local providers of the service.
Patronizing local services has the net effect of job creation and assuring local producers remain economically viable. The money generated by patronizing local small businesses generates local taxes and fees that then are reinvested in the community, supporting things such as local schools or infrastructure. As local consumers patronize local businesses, purchasing local products, they are creating an economic and social benefit that improves the quality of life in their community.