Impact of Neighborhood Quality on Small Business Growth

July 5, 2013 | By | Reply More

Cities can enhance their economic and social viability by keeping established small businesses from leaving their neighborhoods and encouraging them to invest in their locations. Small business owners may be more likely to invest in the growth of their businesses if they see their surrounding neighborhoods thriving as well. This according to a study commissioned by the Research Institute for Small and Emerging Business, Inc. (RISEbusiness).

neighborhood quality

The study, Small Business Development and Neighborhood Quality of Life, examines ways for local governments to enhance the business development of their communities.

Authored by William B. Gartner of the University of Southern California, the study suggests that a small business owner’s optimism (or pessimism) about future sales growth significantly affects whether a small business owner undertakes efforts to invest in, or enhance, business operations. “Improving neighborhoods, therefore, can be viewed as a way to stimulate small business investment and growth, which subsequently leads to further improvements by these businesses within their business neighborhoods,” states Gartner.

The study identified several factors that affect small business owners’ growth expectations. The three major determinants are:

  • crime
  • neighborhood appearance
  • transportation accessibility

Local governments need to reduce crime, particularly burglary, robbery, damage to property, drugs and graffiti, to increase small business owners’ optimism about the future of the locality. The upkeep and cleanliness of the neighborhood’s streets, sidewalks and buildings also impacts on small business owners’ expectations of future sales growth.

RISEbusiness President and CEO Mark Schultz noted that,

“While the findings may appear to be obvious, the actions required on the part of local governments have not been so apparent. Local governments must do a much better job of operationalizing their community development strategies and of utilizing them as a business development tools  for ‘location, location, location’ has been and continues to be the mantra of businesses hoping to survive and thrive.”

Recommended Books on Business Location and Neighborhoods:


Isabel Isidro

Isabel Isidro is the co-founder of A mom of three boys, avid vintage postcard collector, frustrated scrapbooker, she also manages Women Home Business, Starting Up Tips and Learning from Big Boys. Connect with her in Google +.

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