News Release:  07/12/06
From Gail Leverson, Cass County Economic Development Corporation

How New Businesses Impact Local Economy --- The Ripple Effect…..

Have you ever dropped a stone in the water and watched how the ripples keep moving out further and further?  The community is like water and new business start ups and expansions are like that stone tossed in the water.  They have a ripple effect on the local economy. 

The ripple in the economy from a new business start up occurs from one of two phases – (1) construction, and (2) operations.  Each activity will generate a direct impact and an indirect economic impact. 

For example, the construction of a $500,000 building will produce a direct impact of that cost from the purchase of building supplies and construction wages.  The construction phase will provide additional indirect benefits from the spending of the workers wages.  Indirect spending includes gas, groceries, food and other items purchased by the construction workers.  These benefits typically bring another 15-20% of the construction cost into the local economy.

The operations phase of the business is the second activity that will provide community benefit.  A business with ten full time employees earning an average of $15 per hour will create a direct benefit of $312,000 in wages.  The wages will be spent locally and they will generate additional jobs from the services and goods purchased.  Ten full time employees can create another 2.5 jobs from their indirect spending in the community.

This is how the ripple effect continues throughout the local economy.  The new business will create community benefits far into the future.