What Local Leaders Can Do for Small Businesses as They Reopen the Economy

What Local Leaders Can Do for Small Businesses as They Reopen the Economy

Main Street is quieter these days, but not for lack of enthusiasm. Shops and restaurants may have to reopen slowly, but support for Main Street businesses is surging in Washington and around the country. With that enthusiasm, the prospect of reopening presents an opportunity to change the landscape of Main Streets to better support local economies.

Main Street has always been known for small and local businesses, but most downtown districts also feature national chains and so-called “formula businesses.” According to the Institute for Local Self-Reliance, formula businesses are “shops and restaurants that have standardized services, décor, methods of operation and other features that make them virtually identical to businesses elsewhere.” Although often successful themselves, these formula businesses tend to weaken Main Street as a whole—and the local economy.

Formula businesses homogenize Main Streets and downtown districts. Unlike small and locally-owned shops and restaurants, formula businesses are not unique to the community. They don’t make Main Street a more unique or vibrant place to explore. Rather, they turn downtown districts into predictable pit stops that fail to reflect the local culture or history.

Often part of a parent company’s national strategy, formula businesses have few ties to the local communities where they arise. Without these ties, they can be among the first businesses to vacate when the going gets tough. If a market isn’t profitable, the parent company may decide to move on to a different town. Meanwhile, local businesses invest in the community for the long haul. When traffic slows, local businesses stick around to weather the storm.

This year has brought an unprecedented storm to Main Streets across the country. The coronavirus outbreak has many national chains and formula businesses rethinking their strategies. But local communities should be rethinking their relationship with formula businesses.

A movement to ban formula businesses from downtown districts has slowly taken hold in recent years. Local officials in California, New Jersey, Florida and elsewhere have taken up the issue, with some bans going back to 2007 or earlier. Most recently, a petition circulated in New Smyrna Beach, Florida, late last year to restrict formula businesses in certain parts of the city. The petition aims to maintain “the unique character of the community” and to protect “the community’s economic vitality” through diversification. It has gained more than 5,000 signatures and has gotten the attention of the City Commission.

Novelty may be particularly important for cities like those in coastal Florida, which rely heavily on tourism. But diversification is beneficial to any local economy. If the community’s only anchor businesses are chain retailers, which are particularly susceptible to changing market conditions, then crises like this year’s coronavirus pandemic could spell disaster for the regional economy.

Now that cities and towns across the country face the prospect—and challenge—of reopening, it’s a good time to consider what businesses are there to reopen. Looking ahead, a diverse market of small and independent businesses will keep communities stronger as they face the next inevitable storm.

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