Why You Should Frequent Small Businesses – And Pay With Cash

Large online retailers and national chains offer perks like competitive pricing, massive inventories and fast shipping, but they lack in a few important areas.

Here’s a closer look at the perks of shopping small, and why you may want to use cash when you do.

What Is a Small Business, Exactly?

According to the U.S. Small Business Administration (SBA), a small business is an independently owned business that has 500 or fewer employees.

While national corporations have a large footprint, they only account for 0.1% of American businesses. The other 99.9% — 33.1 million businesses — are small.

And U.S. small businesses play an important role in our country’s economy. They’ve created nearly 63% of net new jobs since 1995 and employ 46% of private sector employees.

Why Should You Frequent Small Businesses?

Shopping with small businesses offers many benefits, from enriching your local community to providing a more personal shopping experience. Here’s an in-depth look at the benefits:

[READ: Shopping Tricks to Keep You Under Budget]

Support Your Local Community

When you spend money with small businesses that operate in your area, you’re helping to support and enrich your community.

“Supporting local small businesses keeps money in the local economy and creates a virtuous cycle for all members of the community,” Ben Johnston, chief operating officer at Kapitus, a company that provides loans to small- and medium-sized businesses, said in an email.

Johnston explained that sales to local businesses pay the wages of workers who typically live in the community, and enable businesses to purchase local goods and services, creating further benefits.

“Local businesses also support the community tax base and sponsor local charities, teams and events, putting additional resources into the fabric of the community,” Johnston said.

Tony Giannattasio, the mayor of Milford, Connecticut, echoed a similar sentiment.

“As mayor of a city with a vibrant small business community, I know firsthand just how vital our small businesses are to our residents. By choosing to spend your money within your local community, you’re not just allowing your neighbors to earn a living, you’re also keeping your money in your local economy,” he said in an email.

[Is It Time to Toss Your Wallet?]

Lower Your Carbon Footprint

Shopping with local small businesses can also help to reduce your negative impact on the environment.

“Small businesses, like coffee shops, bookstores and restaurants, are often social gathering spots that bring our community together. When you spend your dollars at those local small businesses, you’re also decreasing your carbon footprint. The shorter the supply chain, the less environmental impact we create,” Giannattasio said.

Different and Quality Products

Another perk is the product selection small business owners offer.

Small business owners carefully curate a lineup of products based on the needs, wants and preferences of their customers. The items are often higher quality and more unusual than what you can find from a big box retailer offering mass-produced items at scale.

[READ: How to Start a Small Business.]

Personalized Customer Service

Last, small business owners often offer a personal customer service experience. You’re not buying from a faceless corporation. The majority of small businesses are sole proprietorships, and those that do have employees employ an average of 11.7 people, according to a March 2023 publication of frequently asked questions from the U.S. Small Business Administration Office of Advocacy.

As a customer, you’re never too far from the owner, and they often take a personal interest in customer satisfaction.

For example, I like to visit a local clothing boutique run by a mother-and-daughter duo. One of them is always in the store and they love to chat about their new products and hear what customers like and don’t like.

They then take that feedback and use it to decide what to stock next. The personal service is refreshing and much nicer than having to go through three or more tiers of customer service before a person will talk to you off-script.

Consider Paying in Cash When Shopping Small

When you head out to shop small, you may want to stop by the ATM first.

Paying in cash typically saves the small business owner between 2% and 3% of the transaction price in interchange fees. Interchange fees are the fees charged by the bank, the processing company and card network to process a credit or debit card transaction,” Johnston said.

By the end of the year, if the owner makes $100,000 in sales through credit cards, an average of $2,500 would go to card processing fees.

“Cash also allows business owners immediate access to their money, without having to wait for processing. While this may seem insignificant, it is a key consideration for anybody who has ever opened up their own business,” Giannattasio said.

That said, handling cash can come with costs and risks as well.

“Some businesses have found electronic payments to be very efficient by streamlining the checkout process, assisting in accounting for sales and payment of taxes and reducing the cost and risk of handling cash and transporting it to and from the bank,” Johnston said.

Square estimates that cash-only transactions can cost retail segments anywhere from 4% to 15%, so you may want to ask businesses you frequent what kind of payment method they prefer.

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Why You Should Frequent Small Businesses – And Pay With Cash originally appeared on usnews.com

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