Looking for examples of local government supporting small businesses.

July 4, 2012 12:44 PM

I want to make a presentation to our town council on behalf of local business owners, and I'm having trouble finding examples of how local governments show financial support for small businesses.

The local government of my very small town (pop. 4000) has, for years, been awarding contracts for building and maintenance projects to companies from out of town. These companies are able to offer more competitive bids in part because the cost of wages is so much higher here than it is where they are located (5-8 hours south of here). The cost of goods/materials are higher too due to freight charges that companies south of here do not incur.

While my own business has not yet had occasion to tender a bid with the Town, we are professionally close with other local business owners who are directly impacted by this "outsourcing". People in town are quite upset about this, and while the local government isn't hurting for funds (which were amassed during better years, when both mills were open) the town itself is almost dying and people feel that what money there is should by all rights be kept in town whenever possible. It seems to me that that the playing field needs to be leveled so that local businesses can compete. The town's argument is that they have to go with the lowest bid, and while that makes business sense, they're crippling the town in the process. Like other towns hit by the recession, many family-owned companies here are just hanging on by a thread.

I'm thinking of putting together a presentation for the town council to show how other towns and cities have addressed such matters-- examples that show how everyone benefited would be ideal, if they exist. Since we haven't yet been directly impacted, I would like to support my fellow business owners while not having a personal axe to grind with the Town. I'm thinking that there must be some precedent of a town supplying financial rewards, perhaps in the form of property tax rebates or annual (or one-time) hiring rewards for each employee, just as examples. In our case it would be something to offset the higher cost of doing business given our remote location, but also in the best interests of the town itself. It seems that there must be a way to encourage small businesses to both stay local and to thrive-- after all, we small business owners employee the town's citizens, and downsizing or shutting down affects everyone in a town this size.

I'm having difficulty finding examples, though, mostly because I'm not clear on what search terms to use. Do you have either any concrete examples of local governments financially supporting small business, or can you help me think of search terms that will get me there? One note-- travel/tourism examples don't apply in this case, as this is as close to the opposite of a vacation destination as you can get.

Thanks!

posted by mireille to law & government (5 answers total)

I don't have examples for you, but there are tons of studies on the subject. Googling "economic development strategies local hiring" and "local hiring policies" turns up several studies that might be relevant. Also, try contacting staff at a university-based economic development program.
posted by she's not there at 1:20 PM on July 4, 2012

This is a microcosm of the protection vs. free trade discussion. Also look into autarky, but don't forget comparative advantage.

Bernstein's A Splendid Exchange dives into the history of trade and the corresponding policy that has helped and hindered it. Despite the title, his conclusion is rather ambivalent.
posted by b1tr0t at 1:34 PM on July 4, 2012

I think one term you want to Google is Economic Development Authority. Our local EDA provides low interest loans and matching grants to small businesses for projects that should increase sales (and thus sales tax revenue.) Facade improvements are a popular one around here. A friend owns a wine bar / restaurant and they got a EDA loan to put in a water mister and awning to make outdoor seating viable in the summer heat. A local pizza joint got a loan to install a brick oven. If you search our local paper site for EDA or Economic Development Authority you should be able to news stories about their various initiatives.
posted by COD at 3:03 PM on July 4, 2012

Are you in the US? Never mind trying to google your way through this-- contact your state department of economic development and ask them how for information on how this is done. Very likely the best way to encourage them to favor local businesses isn't by appealing to the goodness of their hearts. The fastest way may be to use state eco dev funds, which may or may not involve the city.

The scene you describe is antithetical to the way every smallish town I've ever been associated with does things. Usually, business like this is done between friends, people you've known for a long time, people you see in church, on the street, and in the Rotary or Lions Club (or Masons, or Knights of Columbus). It's so odd that I smell something funny about the whole business. That doesn't help you in the short term, but if "people in town" are upset about this situation (and they should be), then those are the people to replace the people who are making these decisions.
posted by missouri_lawyer at 4:06 PM on July 4, 2012

All excellent answers, thank you.

missouri_lawyer-- I agree, it's very odd. However, I am an outsider and I have zero experience with civic matters, so it's going to take more research on my part to find out how things ended up this way. I'm in Canada; there are programs in my province to help get small businesses started but there is no support for existing businesses. I think it's quite easy to get on the town's council (I was offered a position after being here for two years so I think they have some difficulty filling the positions) and I might consider that, but I don't know how that would work in terms of conflict of interest because I own a small business myself.

I have a lot of information to sift through and many calls to make-- I appreciate all of the terms and links!
posted by mireille at 7:39 AM on July 5, 2012