Search
  • ourheadoffice

Local economy – Helping your money come back to you

Updated: Sep 8

Okay I am new to this blogging so be gentle with me! One thing I am not new to is the concept of the cycle of money that stays local vs sending that money out of the town, district, or country.


So, it is an easy concept, right?

You buy your packaging from a local supplier, giving your hard-earned cash to the local supplier. Meaning that money circulates locally, the local supplier uses it to pay their employee, that employee uses it to buy their groceries, the grocery store owner uses it to pay the power bill to Meridian Energy

Verse you use that money to buy a cheaper product produced by overseas buyer from the X Country, you spend less, they pay their employee, that employee in X Country buy their groceries and that store owner pays their power to X Country's power company.

There is an argument to say that import and export means globalisation has hit most corners of the world making us “one big local circle of flow” but as a small Island country we know that the “flow is not equal and never will be”. We import far more than we export.


Whilst some overseas suppliers can produce cheaper products

(eg If you buy the packaging from X Country for $0.50, and buying local was going to cost your $0.75 you save $0.25 per packet, that you either do not need to pass on to your customer, or can increase your profit margins, over 100,000 units that is a $25,000 saving) there are other factors to consider that can impact your business which may turn those savings into a negative rather than a positive.


Some things to ask yourself:

  • Unless you export your products, you just made a business contact with no marketing benefit, local supports local and great products sell by word of mouth, positive relationships with your suppliers can build a great sales team.

  • You'll need to keep more stock on hand because you will not be able to order a “quick run” if you get busier than forecast. This can result in a cashflow hit.

  • Does the $0.25 really make a difference or are you undervaluing your product? Could you pass this cost on to your adoring customers? Could you target higher end prices by keeping it local?

And there my friend lies the balance. Should we where possible buy local ABSOLUTELY yes, but if it is going to be at the expense of your product selling or enough profit to be viable then it’s a no.

Positive profit + positive environmental impact + Positive Communities = Sustainability.


You cannot always justify buying local, but there are always other ways you can top up your positive community bucket 😊


If you'd like some help working out the budget, product costs or cash-flow, give us a call for a no obligation chat



Happy balanced trading




19 views

© 2019 by Our Head Office.