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Buy Local, Eat Local . . . Invest Local 37
dark. Who among us can truly comprehend the Byzantine structures
and operations of the typical Fortune 500 corporation?
“There’s something about investing in local businesses that
you can read a 15-page business plan and understand, as opposed
to putting money into a company like General Electric, where
you could have every degree under the sun and spend two years
reviewing their books and records and still not really understand
what they’re doing,” says Eli Moulton, a lawyer based in Vermont
who has helped many small companies in the area raise money
from customers and local residents. “And yet, as a society, whether
it’s driven by special interests or not, the focus in this country is to
push money into the public markets. I think in many respects it is
to support this huge fi nancial industry we have.”
Local Companies Are Profitable
Small and midsized companies do not share the economies of scale
of their larger counterparts, but neither do they have the bloated
overhead and bureaucracy of big corporations. That shaves a layer of
cost and allows them to be more nimble and responsive to their markets.
Many locally owned companies are fi rmly established in their
regions and enjoy strong brand recognition and loyalty— lessening
or eliminating the need for costly advertising campaigns. They also
represent much greater growth potential than supersized corporations
that have already saturated their markets. According to the
federal government’s Statistical Abstract, sole proprietorships —
the business structure favored by many small businesses —are nearly
three times more profi table than corporations.
Companies that operate in a smaller geographic area and use
local suppliers have lower shipping and logistical costs, and are buffered
from rising oil prices. In an age of peak oil, climate change,
and rapidly growing global demand, that is a signifi cant advantage
that will only grow in importance. The Middle East is once again
in turmoil, and oil prices were beginning a roller coaster rise in
early 2011, driving down shares of many oil- dependent companies.
Someday in the not too distant future, we could be looking at $200a-
barrel oil and $6- a- gallon gas, in which case the local model will be
looking pretty smart. Prices at the gas pump aside, there is a growing