Tuesday, April 17, 2012

The Money Multiplier Effect

In the world of economics and finance the money multiplier is a tool used to measure the impact of money loaned by commercial banks on the money supply, in other words the economy. Today’s post is about the money multiplier effect at the local level. Here’s how it works. Your customers pay you. You then pay your company’s bills. You pay rent, taxes, salaries and spend lots of cash keeping your business running smoothly. When your vendors and your employees take those funds they spend them on goods and services of other businesses, who in turn spend those funds on their expenses. Each dollar spent is spent again multiple times, this is the money multiplier. This brings me to the very important message that the Clovis Chamber of Commerce exists to support, spend local and grow the local economy.
This past weekend the Clovis Chamber played host to one of the biggest annual events in the Fresno/Clovis area, Big Hat Days. Despite the downpour of rain for most of last week the event went off as planned and without any serious weather issues. I attended the festival both days and so did 1000’s of other locals and I’m sure many who traveled in from surrounding areas to put the money multiplier into action. It’s no surprise, I’m a woman and shopping was at the top of the day’s agenda. If you went you know there was a huge selection of local and hand crafted goods, literally there was something for everyone. By the end of the day I had more shopping bags than I could carry. It felt good to buy local goods from small business people, rather than from a chain store that sends their profits to it’s corporate headquarters in some other city to be spent somewhere that isn’t here. When we spend our money with local businesses we keep those dollars in our local economy and that translates to more jobs and better jobs for our residents. The better the job market is the better the housing market is. As property values go up it makes our City more desirable and it attracts more business. That is the essence of the money multiplier effect.
Spending local really does make a difference, even if you spend a little bit more than you would at a large national chain store. You can rely on local businesses to give you better service and to be available when you need them. So I encourage you to browse the new Clovis Chamber Directory, share it with your customers, colleagues and neighbors and support the local economy that supports your business and buy local whenever you can.