Nearly all entrepreneurs are committed to supporting their local economies, and it translates into their sourcing decisions, according to a recent study from American Express OPEN Small Business Monitor. Seventy percent of small-business owners surveyed said they purchase and source goods from other small enterprises. Many entrepreneurs have retained their commitment to their local economies despite uncertain financial times.
Switching to local vendors is a growing trend known as near-sourcing, Entrepreneur reported. Manufacturing quality and delivery issues were the biggest factors for businesses changing to closer suppliers, and it can lead to cost reduction. Entrepreneur cited the example of Gary Castelle, owner of a specialized apparel company, who switched from a national box supplier in Pennsylvania to a smaller distributor much closer to his business. The boxes had been costly to ship and were sometimes damaged in the process. There is no wait for deliveries, and Castelle said the local supplier even sent a few customers his way, giving evidence to the trend American Express OPEN identified of small-business owners helping each other.
Sourcing goods from local businesses can help companies save time and money. This can be especially helpful for businesses that need quick turnaround on a product delivery for a customer. Finding a vendor in a closer proximity to the customer base can significantly reduce shipping costs, especially since fuel costs remain high. Many large companies are beginning to produce more goods in the U.S., and the trend can also work for small-business owners who want to reduce costs and cut down on shipping time. Near-sourcing can provide environmental benefits since it requires less fuel to ship products, although this is rarely the main reason companies make the switch, Entrepreneur stated.