A local business is an organization that sells goods or services to a local population.
“Local population” is obviously up for interpretation. Does it mean within a country? Does it mean a state? Does it mean a city. Does it mean a neighborhood within a city?
Or could it even be something really large like a continent? In the future, could it mean Earth?
I had been writing a few articles with tips for local business marketing and my wife asked the question in the title: What is a local business?
That made me think. It can be a small business, but a small business and a local business aren’t necessarily the same thing. A large business could be a local business. And a small business can certainly be a global business.
The key to it all seems to be the sells good or services to a local population.
It seems to be a specific decision by the entrepreneur to sell to a specific group of customers defined by location.
So the main decision for a business is if it decides to focus on location-based customers. And it would seem that if you’re a local business that you’re selling customers in your own location. Another way you could look at it would be having your business in one location, but selling to customers in another location.
Another little wrinkle would be travelers. Let’s say you’re a hotel. Almost always considered a local business, but you sell mostly to visitors to your location. But I think most would still categorize this as a local business because the customers are customers when they’re in the location. The customers don’t necessarily need to be residents. They just need to be in the location.
Why would a business want to be a local business?
Wouldn’t you want to cast as wide of a net as possible to give your company the best odds of getting customers?
I can see that argument, but even in today’s connected world there are distinct advantages to being a local business. Here are a few…
Time: People could order food from Amazon or another online company, but even with the fast shipping we have today it still takes two days in most places. Sometimes a day. Sometimes same day. Maybe it’ll speed up in the near future. I think you can get some things within an hour if you’re in a big city, but even an hour can be a long time if you’re hungry. You save a lot of time by going to the nearest restaurant or grocery store.
I still run to Walmart or the hardware store fairly regularly if I need something immediately. I love Amazon, but if I need to save time and have some urgency I’m running to the local store.
Local businesses still have the advantage of time in many instances. It should be a main focus. Don’t compete with the Amazons of the world if you don’t need to.
Community: There is definitely a community element to successful local businesses. It’s knowing the people you’re doing business with. I’ve been going to the same barber for several years. Same with the place that changes the oil in my truck. You get to know people. I think you can do that in the online world, but people do seem to have an element of wanting to be part of a community based on location.
Comfort: Building on the last one is the feeling of comfort. When you’re close to a person or people at a business there is a little bit of trust. You can’t fully trust a local restaurant, but there is a little sense that if they screw you in some way that their local reputation is more at stake. If someone screws you from across the world what can you really do to warn their other customers? You can’t really warn the entire world, but you can warn a local area. I suppose you could make worldwide news, but it seems in a localized area that businesses have more incentive to not screw up.
Communication: It’s amazing how we can communicate with pretty much anyone in the world today. At anytime. But you still do miss certain elements of communication when you’re not in person with someone. You can use video, but you still miss little cues. I’m sure it will improve, but for now local businesses have an opportunity at an advantage with communication.
Have you seen the film, The Founder? It’s a great movie if you love business. I’m not a huge fan of Hollywood. They always seem to paint the businesspeople as the bad guys in the films and tv shows. They try to do that with Ray Kroc, but I think they fail to make that case in this film.
Anyway, I just bring that up for the fact that a lot of local businesses are franchises. They’re part of large, even worldwide corporations, that have local footprints. Go down the block and you’ll probably run into your local McDonald’s. Not always, but usually there is a local owner and manager. And the customers are certainly all the area.
Local businesses still have a place in this world. They’re companies that serve location-based customers. Usually the business is located in an area and serves customers in that same area. And I don’t see these local companies going away anytime soon. The trick for the entrepreneurs of local businesses to focus on their advantages and the weaknesses of non-local businesses. If you try to play to the strength of the non-locals you’re probably going to fail.