Exec Spin: Buy Local, Bid Local
Thursday, July 25, 2019
Posted by: Gary Hotze
Julia Kanouse, CEO, ITA
Walk around many neighborhoods in Chicago, and you will see many signs and stickers with such slogans as “shop local” and “buy local” which are often a creation and promotional program originating from the neighborhood chamber of commerce. This push for residents to invest in the small businesses of their community has created profitability and growth for many of the small business, restaurant and retail corridors in the City at a time when traditional national brick and mortar stores have flatlined or struggled. Could such a strategy be implemented on a larger city-wide (or state) scale for tech services and software? As a powerhouse, B2B tech community, could we encourage enterprise businesses to “bid local” and “contract local”?
If you look under the hood of many Silicon Valley software start-ups, you’ll find that their first or second major client was another Valley company. Fittingly, I believe there is a tremendous opportunity for Chicago-based companies to invest in our tech community via their purchasing power. Within many companies and government agencies, there are procurement processes and philosophies that award contracts to women and minority-owned businesses or companies that have lower CO2 footprints. Creating a similar stimulus would amplify this power.
Tax incentives represent a significant opportunity to encourage “local buying” behavior. The challenge at the state or city level will be determining how to administer it while convincing the public that it won’t cost a fortune in public resources to implement. The government’s execution would need to justify the administrative costs by demonstrating a measurable increase in economic activity.
For example, a baseline of local to local business buy-in would need to be measured. Companies would have to report this voluntarily, or more-than-likely, the City or the state would require individual companies to report this figure. It would also need to be tracked to prove that the tax incentive program is increasing the number of companies that buy local year-over-year. This level of government oversight and regulation may prove unpopular in the business community. Moreover, the entire process may prove to be one hurdle too many here in Illinois as we begin to wade through decades-old financial obligations in the coming years.
Instead of going the regulation and tax incentive route, let’s get some of the largest enterprise-scale companies in the state to agree to a joint initiative that would shift a foundational percentage of yearly IT spend to local tech companies and start-ups?
Initiatives and organizations such as P33 have already begun such processes here, locally, in the hopes of channeling homegrown technological innovation and business acumen to reshape and grow the Chicago economic ecosystem exponentially. It’s not a farfetched idea. We have a veritable Fortune 500 in our backyard with companies such as ActiveCampaign, G2, Mediafly, Showpad, and Yello providing local tech services comparable to (or, being honest, better than) more prominent national technology brands.
Considering these local alternatives vs. more well-known names or even allowing them a seat at the table is an excellent place to start. Moreover, if ITA were to throw its hat in the ring by launching a “bid local” and “contract local” initiative would you be interested? Let us know. We are always in the business of doing more Chicago for Chicago, and a program that fosters such investment could be a great launching pad for creating the next big thing here at home.