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Santa Fe Independent Business Report November 2003





















Small business embodies so much of what America is
all about. Self-reliance, hard work, innovation, and the
courage to take risks for future growth: these are
values that have served our Nation well since its very
beginning. They are values to be passed on from
generation to generation. We must ensure that our
small businesses continue to thrive and prosper, not
just for their own sakes, but for all of us.

-The State of Small Business:
A Report of the President
Santa Fe Independent
Business Report
November 2003


Table of Contents
I.
Executive
Summary
1

II. Cultural Benefits 3
III. State of the Santa Fe Small Business Sector 4
IV. Independently Owned Businesses in Santa Fe 7
V. Independently Owned Businesses Have a Larger Impact 9
VI. The Big Box Effect on Retail and Jobs 11
VII. Strategies and Recommendations for Success12
o

Have clear goals 13
o

Build neighborhoods 14
o

Build public buildings downtown 15
o

Target buy local campaigns towards businesses 16
o

Have measurable metrics 17
o

Improve infrastructure for parking and roads 18
o

Celebrate local businesses 19
o

Become a clearinghouse for small business info 20
VIII. Survey Results 19
IX. Bibliography and Resources 26




1
Executive Summary

Santa Fe is like no other community in the U.S. A strong tourism
economy and large base of unique cultural assets require that
city leaders pay particular attention to the role that small
businesses play. Eighty-five percent of all businesses in Santa
Fe employ fewer than 20 workers. Of these small businesses,
over 90% are locally owned. Simply put, this demographic is the
largest business asset in Santa Fe.

Independent businesses share is currently higher than the
national average, but in the past five years, independents have
been losing their ground. The share of the Santa Fe economy
that is locally owned showed significant decline over the last 5
years, with retail falling well below the national average.
Indeed, among a survey of over 100 independent Santa Fe
businesses, 37 percent expressed increased pressure from
national chains.

Larger businesses are growing in both numbers and
employment totals at rates much faster than those of smaller
businesses. The arrival of these larger companies affects
the small business sector through increased competition for
labor, higher rents, and usually a decrease in small
business sales.

Santa Fes future economic health will largely be
determined by the success of the local independent
business sector. While national businesses have a role to
play in every economy, purchases from national
businesses typically cause money to leak out of the local
economy. While seemingly insignificant when
considering a single purchase, the sum of these effects
is sizeable across an economy the size of Santa Fes.

Not only do national chains send money outside of the
community, they distort the local economies by shifting
activity away from downtowns and concentrating sales
on one property. This overstates the importance of large
retailers for tax revenues and jobs. In reality, large
retailers typically draw revenues from other areas of
town or neighboring communities. Studies show that
towns adjacent to locations with new big box operations
see sizable losses in both sales tax revenues and
employment.

The benefits of a thriving independent business sector
are not limited to the economy. Possibly more important
is that small businesses in Santa Fe define the
communitys self-image and are a point of pride for its
citizens. Large businesses, on the other hand, can

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homogenize Santa Fe and eliminate the different in the
City Different.

Many communities are now choosing to take control of
their own economic destinies. Much literature and
discussion exists today on the need for communities to
support their locally owned small businesses.


AngelouEconomics (AE) will extend this discussion to
Santa Fe through an objective look at available data and
research. We evaluate the issue on both an analytical
level and a social value level. While clear evidence
exists that small businesses have a greater positive
impact on a local economy than national chains, it may
be that the economic arguments are secondary to the
social and cultural value of supporting a vibrant small
business sector in Santa Fe.

We present several case studies on what other
communities have done to support their independent
business sector. With most cases, the key to success is
to be proactive early, planning for future growth from
outside influences rather than trying to recover and
respond when it is too late.

Finally, we present several recommendations that can be
taken by the leadership in Santa Fe in support of this
business sector. We hope that the information provided in
this report serves as a springboard for continued discussion
on the future of Santa Fes economy.


Summary of Key Findings
Small businesses account for 90% of all businesses in
Santa Fe and employ 30% of all private sector workers. Independent businesses comprise a higher share of Santa
Fe's economy than the national average. However, national chains in Santa Fe are growing faster
than independents 2.5 times faster and bring new
competition and pressure to the small business community. In many ways, this trend poses a threat to Santa Fe and
results in a large outflow of money from the local economy. The impact of dollars spent at independent businesses
deliver two times the economic impact of spending at national
chains. While the economic benefits of supporting local businesses
are clear, the true value derives from preserving the social
and cultural uniqueness embodied in Santa Fe's independent
business sector.

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Cultural Benefits of Supporting Local Businesses

The key to Santa Fes economic growth has always been its quality of life. The
landscape, culture, and people offer a diversity that cannot be found in other
communities in the United States. People move from all over to experience the Land
of Enchantment; the same allure draws tourists to the area.

As one businessperson stated,

[Tourists] travel here to enjoy something unique products, art,
architecture, etc. The more unique we keep Santa Fe, the better for all.

This is certainly true. Visitors provide a significant boost to the local economy,
supporting local retailers and contributing to tax revenues.

Santa Feans take pride in their small and independent businesses. Every time a small
business folds to a national competitor that pride is wounded. Supporting local
business becomes an important part of the local psyche, an important part of internal
marketing, and fuel for further entrepreneurial activity. The success of one
businessperson builds momentum and inspires others in the community to follow
entrepreneurial paths of their own.

Furthermore, small and independent businesses are an important way of preserving the
local heritage. Minorities, especially Hispanics and Native Americans in Santa Fe, use
small businesses as a springboard into economic prosperity that rarely exists in other
sectors of the economy. Support of small businesses goes hand in hand with
supporting the culture of underrepresented groups and a venue for sharing art, crafts,
and agricultural goods.

Definition of Small Business

The Small Business Act defines a small business concern as one that is independently
owned and operated and which is not dominant in its field of operation. As a working
definition, the above is fairly flexible and varies considerably from industry to industry.
Some manufacturers, for example, are permitted to have as many as 1,000 employees.
Out of necessity, and because interesting conclusions can readily be drawn, this report
will generally define a small business as one having fewer than 20 employees; large
businesses containing more than 500 employees; and medium-sized businesses
employing between 20 and 500 people.

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