Fifteen years ago, local business networks were spreading like wildfire across the country. More than two hundred communities had local business networks leading “buy local” campaigns, promoting the first forms of local investment, and advocating for an end to wasteful economic development policies that subsidized nonlocal businesses and put the locals at a competitive disadvantage. Two organizations, the American Independent Business Alliance (AMIBA) and the Business Alliance for Local Living Economies (BALLE), were leading the way, and many other groups, like Main Street America, were following with similar initiatives. BALLE’s annual conferences were the highlight of everyone’s summer calendars.
It all came crashing down. The movement’s best leaders got distracted, frustrated, or bored. Some got ill as they aged. Foundations lost interest. Personal fights thinned out the boards. A few thought that the best way to diversify the movement was to kill the concept of business networks altogether.
Many of us—myself included—continue struggling to figure out how to pick up the pieces of the movement and start anew. The power of local businesses in building local economies and a sense of community remains as potent a force as ever. And that power remains largely untapped as economic developers continue to embrace failed strategies of corporate attraction.
Around the country, two dozen or so business networks have survived—and some of those are thriving. None more than Local First Arizona, which now has more than 2,700 dues-paying members and more than 60 full-time staff. In this issue of The Main Street Journal, we’re pleased to interview Kimber Lanning, the founder and CEO of Local First Arizona. Yes, a statewide scale has contributed to her success, but so have effective business services, a powerful media strategy, and smart politicking. You’ll learn all about it below.
Paying subscribers will also find the latest listings of investment opportunities in promising local businesses and funds. If you’d like to see—and use—these listings, please click on the second button below.
Finally, a note that as tireless as we are in serving you, we need a break. We’ll take the next two weeks off, and will be back—rested and reenergized in early September.
- Michael Shuman, Publisher
A Paid Subscription Gets You:
✔️ News Links
✔️ In-Depth Interviews
✔️ Latest Listings of Local Investment Opportunities
✔️ Monthly In-Person Meetings with Michael Shuman
✔️ Notable New Resources
✔️ Partner News & Voices
✔️ Events
✔️ Job Listings
Interview with the Founder of Local First Arizona
MS: Kimber, thank you for talking with us today. Let’s go back to the beginning in 2003. Why did you start Local First Arizona?
KL: I think it's important to recognize the context at that time. My background is in the arts, and I opened a record store in Phoenix called Stinkweeds in 1987, which placed me squarely in the middle of the arts community. And I still believe bookstores and record stores have a special place in holding communities together. They were the most important “Third Places” before placemaking was a thing. I saw my store as creating culture in a city that was largely overrun by chain stores. In fact, our city leaders were fighting to get more chain stores to move in. There was a point at which we had two chain restaurants for every local one. Today, by the way, that ratio is reversed.
I believe that unique, independent businesses create a culture that connects people to their hometown and makes them feel connected to each other and to their place. But at that time, we had many bright young people leaving Arizona to go do great things in someone else's state because, they'd say, this place had no culture and no soul.
My focus was to simply connect more people to their place and keep young people here so they could do great things in our state. But then Civic Economics did a study in 2002 that showed the economic case for supporting a local bookstore and a record store in Austin, Texas. The study showed how counterproductive it was for the city to subsidize Borders to move in across the street from these stores. It was the economic case, not just the cultural value, and that cinched it for me. That's when I launched Local First Arizona.
MS: Fast forward twenty-plus years to the present, and you now have 5,700 certified local business members. Given that most local business networks have 100 to 500 members, that’s a remarkable number. How did you achieve this level of recruitment?
KL: This is a tricky question that has a very lengthy answer. We have quite nearly tried everything over the years, but I think some of our biggest reasons for success would include hiring an in-house marketing team, which has grown to eight full-time people, and leveraging earned media through storytelling and exceptional pitches. We have 2,700 paying members, but another 3,000 are listed in our directory.
The directory serves two important functions. The first to build value for the paying members to help them improve their search engine optimization and gain new customers. And the second is to create an easy-to-use and high-quality search tool for everyday people. If we’re going to change consumer behavior, we need to make it easier for them to find options. We are currently using AI tools to create a search experience that is as comprehensive as Google, but eliminates nonlocal businesses from the results entirely. So, over time, we've come to look at the directory as a tool that’s as valuable for the public as it is for businesses.
Some businesses join to help get found by consumers. Many join because our dues are still very low (starting at $79 for rural areas with up to 5 employees), and they want to demonstrate their hometown pride as well as participate in some of our civic engagements. Startup businesses join to have access to our business educational classes or resources. Another group of joiners are the large legacy businesses that want to be known as “Arizona grown,” or those such as our community banks and credit unions, who truly benefit from our “Move Your Money” campaigns that require people to open a local account.
MS: What is the range of services you provide to your members today?
KL: We provide a lot of services for small business startups, as well as for businesses looking to grow from, say, three to 10 employees or from 10 to 25 employees. Some examples:
Currently, we have six-month business accelerator programs in English and Spanish that help launch or strengthen startups. Those include a whole range of learning opportunities such as improving a personal credit score, building a loan readiness strategy, or strengthening capacity for HR, marketing, and business planning.
We also offer a wide range of boot camps (6-8 classes each) aimed at specific industries such as food businesses. We have launched five incubator kitchens, which cost the entrepreneurs about 25% market rate, and they also gain access to specific types of technical assistance within the food industry.
We believe that in-language support is important, and as such, we offer technical assistance in five different languages.
As part of our overall strategy to increase access to capital and financial power, we run four different micro-loan programs, which are aimed at rural communities, indigenous entrepreneurs, food businesses, or those businesses looking to reduce their environmental impact.
Finally, we offer assistance on specific topics such as Employee Ownership and Zero Waste initiatives.
We do our best to be responsive to what our business community needs!
MS: That’s an impressive portfolio. You also seem to do quite a bit of media for your members.
KL: Yes. We have helped thousands of businesses get a media spotlight over the years. And our networking mixers still have hundreds of attendees. Some businesses find value in our policy announcements, too, which alert them to both good and bad small business impacts.
MS: Were there any mistakes you made along the way that you think other local business network organizers could learn from?
KL: So many! I think early on, our biggest mistakes revolved around how we talked about the work. For many years, we promoted “Buy Local.” But then we decided that it is not the right message, because it flies in the face of equity. There are many communities that have no local ownership or no local options. So in about 2013, we started talking about diversifying the economy and creating opportunities for all. I recently gave a talk called “The Economics of Dissent,” where I spoke about the importance of buying secondhand and bartering, as well as DIY strategies like growing your own food.
I think also, at least initially, it was not great to have both a 501c6 and a 501c3 for a solid 10 years, because we had to do everything twice when we were still trying to figure out how to do it in the first place. But as it turns out, now 23 years in, the dual nonprofits are really beneficial.
MS: If foundation and government grants were to disappear tomorrow, would Local First Arizona still thrive? And what advice would you offer to other business networks trying to develop revenue streams to pay for their activities?
KL: Well, government grants have gone away already. We’ve had about 23% of our budget evaporate starting in January. But we have been able to replace that largely through foundation funding. Our budget is pretty diverse and includes foundation and corporate grants, membership dues, sponsorships, donations, and contracts, which we consider fee-for-service work. Having many different kinds of revenue streams helps us handle volatility. Given that, if foundation grants went away, we would still survive, but not in the same way, not with the 65 or so staff that we have today. Our membership dues only pay for about three or four employees, and many of our other programs would be vulnerable, but most would still be standing.
I think our biggest area of opportunity is fee-for-service work. For example, our County invested a million dollars in us to manage their small business technical assistance. And we were able to deliver a beautiful ROI for them. We hired an economic study group to show them how they won back their $1 million investment within one year in sales tax generation, and how that payback would also continue every year for the next decade. So they got a 10 to 1 ROI for that one contract with us.
We now have a $1.2 million line item in the state budget for rural economic development. We are also negotiating a contract with our local credit union coalition to drive new customers their way.
MS: One of your efforts that I was particularly impressed by focused on procurement. You commissioned a study from Civic Economics that showed how much more tax money in-state procurements generated for the Arizona economy. What changes in public policy came about as a result of that study?
KL: While that effort did not successfully lead to a permanent change in the state's procurement policy, it did lead to a permanent change with the City of Phoenix. The City now has a separate procurement process focused on local businesses, and the only way they will open the RFP to national or international companies is if they do not get three competitive bids from Arizona-based options. That has led to tens of millions of dollars being spent with local businesses. We recently helped the City break up their landscaping contract, which had been one massive contract with one national company for over 20 years. We were able to split that into 12 smaller contracts, and four graduates from one of our Spanish-language business accelerator programs won a piece of that business, which was huge for them.
The Speaker of the House, who blocked my state-procurement reform bill so many years ago, called me up just recently to tell me that he was wrong. I may get back around to it sometime soon.
MS: What other public policies have you successfully advocated for? And given Arizona’s conservative bent, how have you been able to sell these policies?
KL: Local First Arizona played a key role in limiting corporate subsidies in our state. We were able to get the state legislature on our side by showing the economic absurdity of the strategy, and they, in turn, limited municipal ability to issue corporate subsidies, period.
We also played a critical role in requiring Amazon to collect sales tax just like the rest of us. Many of us remember when Amazon claimed that local tax codes were too complicated and that they should be exempt, which they were for a very long time.
I think part of our success in Arizona is simply being able to speak comprehensively about business and economics, which is a lot more commonplace in Republican circles. I think even looking at the most recent presidential campaign, the Harris-Walz ticket was not able to speak intelligently about small business or economics, and I think it really hurt them in the end.
Today, I have friends from across the country who will send me talking points and ask me to offer suggestions when they know they're going to be in front of a conservative audience. I guess it's just a skill I picked up living here and cutting my teeth in front of audiences that will throw you out if you sound like a ‘bleeding heart liberal’ rather than a business leader. And when you’re a small female like me, you get only one shot! And I’m here as proof one can be both a bleeding heart liberal and a business leader. It’s all in the language you choose and the stories you tell.
MS: While Local First Arizona has been thriving, I would say that the national effort to spread local business networks has sputtered and almost disappeared. What ideas do you have for reviving the national movement and spreading your success?
KL: There are several factors at play. First, it's important to know that there's a whole new generation that doesn't join anything. There are only two kinds of power: there is money, and then there's organized people, and right now, money is kicking our asses. That motivates people to get involved, but they’re still not likely to join or pay an annual membership fee.
Second, to get businesses involved, it's important to include them in your overall strategy. That means that the typical Chamber of Commerce version of a Buy Local network is irrelevant and dead. We instead need to teach people, not just businesses, how to create and lead a movement based on the principles of local economies. If you can get one person to change their spending habits in a way that's way more valuable than one more business paying membership dues.
Overall, I would love to find more people like me who are business-minded but rooted in Triple Bottom Line ethics, who truly understand and value what an inclusive economy means. We are pro-business progressives.
MS: We at The Main Street Journal are interested in local investment. What kinds of programs do you have to facilitate more local investment in Arizona?
KL: I have a couple of answers for you. First, we have partnered with philanthropic foundations to get them to tap into their reserves, to give us low-interest funding, which we then turn into microloans. For example, we have a local foundation here that invested $250,000 at 1% over five years, which we then, in turn, lend out in microloans up to $30K at 3-4% interest. In addition, we run the Rural Energy for America program, which helps small businesses and small towns secure funding for clean energy projects. Often, we help them connect to SSBCI funding, which is the State Small Business Credit Initiative, to create investment pools. We also launched the Arizona Economic Resource Center during COVID, which helped small towns and tribes secure over $120 million in new grants and loans. We’re currently advocating for the state to set aside $50M for small towns to use as bridge funding for capital projects. Finally, we are using our voice to shape the Greater Arizona Development Authority so that they are more inclusive toward small regional projects and small businesses.
But in terms of 401(k) plans, or other types of Individual Retirement Accounts, we are not currently active in that space. We send those with interest to you!
One other thing I’m working on is opening up our Green Loan Fund to local investment. So folks could contribute a few thousand dollars, which we would then loan to small businesses to reduce their environmental impacts. People need to be very values-aligned because they won’t be making more than 3-4% on their money, but if they want to help, it’s better than having it sit in the bank.
MS: Finally, how do you personally invest locally?
KL: In a way, I've invested my whole life locally, meaning I have truly hung my hat on local economy work, and I eat this stuff for lunch. Investment for me looks like local banking, local mortgages, local spending at every turn. I use independently owned companies for nearly everything that I do (our local utility is a co-op), and I mostly invest any extra money that I have in real estate, which I then, in turn, leverage to support the local economy. Oh–and I give to local nonprofits as well.
MS: Amazing.
Keep reading with a 7-day free trial
Subscribe to The Main Street Journal to keep reading this post and get 7 days of free access to the full post archives.