The rural economy, while still challenging, is changing. Rural communities are increasingly diverse and innovative. Let’s explore a few advantages and disadvantages of running a business in rural America.
Opportunities For Rural Entrepreneurs
Thanks to the rise of digital technology and the recent migration to rural areas during the COVID-19 pandemic, it’s now easier to build successful, scalable businesses in rural America. Here are some reasons why:
1. Support from Community-Based Organizations
Rural entrepreneurs don’t typically have as many resources as their urban counterparts, so assistance from community-based organizations is critical. Today, several organizations nationwide are focused on supporting rural entrepreneurs, including the Center for Rural Affairs and the Rural Business-Cooperative Service.
In Investing in Rural Prosperity, Noel Andrés Poyo writes that community-based organizations “can bridge gaps in local government staffing and resource capacity.” Rural entrepreneurs can turn to the Internet or their local government office to search for these community-based organizations to see what kind of assistance they may offer.
2. A “De-Risked’ Environment
At an event at the Magnuson Center for Entrepreneurship at Dartmouth, Matt Dunne, founder of The Center on Rural Innovation, explains why investing in rural communities is a good move for businesses. “Entrepreneurs are always looking for ways to do work in a de-risked environment.” Rural communities offer a lower cost of living and a lower cost of doing business. Lower costs mean less risk for entrepreneurs.
For rural businesses that focus on their local market, there may be fewer competitors, which is also less risky for entrepreneurs.
3. Eager-to-Learn Potential Workforce
According to a survey conducted by Dunne’s organization, The Center on Rural Innovation, “12.5 percent of the current American workforce lives in rural areas, but these areas only account for 5 percent of tech workers.” However, “Rural residents express a high level of interest in tech jobs.” To encourage more interest in tech jobs, the report calls for additional training by:
—Increasing the visibility of the local tech community.
—Creating collaborative, cohort-based learning models.
—Investing in elementary and secondary school programs that expose young people to working with technology.
—Make training more accessible to working adults or those reentering the workforce to widen the talent pipeline.
Fortunately, many rural communities have taken on the challenge. For example, in Cape Girardeau, Missouri, Codefi’s Youth Coding League works with schools and organizations to teach introductory computer coding and science to 5th-8th grade students.
Challenges still exist, however.
Obstacles For Rural Entrepreneurs
Despite its great potential, rural entrepreneurs still need to overcome barriers. SCORE’s most recent Megaphone of Main Street report offers an excellent overview of the challenges revealing that 54.6 percent of rural small business owners say finding customers is the top issue keeping them “up at night.” Cash flow is a concern, and the report mentions a few other issues impacting rural entrepreneurs:
—45.3 percent—people moving out of rural America
—35.9 percent—not enough qualified workers in their communities
—19.2 percent—lack of access to broadband/high-speed internet
Let’s look into these challenges:
Access to Capital
With fewer banks in rural America, rural business owners don’t have access to the capital that entrepreneurs in urban areas have. That doesn’t mean there are no options. Several of the organizations on SCORE’s list of 10 Resources to Help Rural Entrepreneurs offer financial assistance. There are grants for rural entrepreneurs too. Free SCORE mentors with rural business expertise can help entrepreneurs navigate their financial options and guide them through the process.
Smaller Labor Pool
Typically, college graduates and young adults hoping to find well-paying jobs that suit their skillset move out of their small-town communities, leaving rural business owners struggling to find qualified, experienced and well-educated employment prospects. Finding local qualified workers remains a challenge.
But according to a report from the Federal Reserve Bank of Richmond’s annual Investing in Rural America Conference, “the ground has shifted.” Small towns are getting better at marketing themselves, as well as attracting and keeping talented workers. This is good news for rural businesses as this obstacle may be easier to overcome in the future.
Plus, even if a rural business operates on-site, a farm or hair salon for example, some jobs can be done remotely. Sales, marketing, customer service, accounting, human resources are good examples. Remote roles allow a business owner to tap into talent not currently available locally.
Access to broadband is essential because it helps small businesses recruit and retain top talent, maintain steady supply chains, and promote goods and services. As noted in SCORE’s Megaphone of Main Street report, 19.2 percent of rural entrepreneurs cite a lack of access to high-speed Internet as a significant challenge.
A 2021 Pew Research study shows that 72 percent of rural adults have broadband. Fortunately, as with skilled local labor, expanded Internet coverage is expected to grow.
In the meantime, business owners can check CNET’s article Best Rural Internet Providers of 2023 for a list of Internet providers that may be in their community. They can also ask their town council or nearby town government office about high-speed Internet provider options in their area, or when these will become available. If not soon, business owners can sign a petition to submit to their local government officials.
Investing In Rural America
Investing in rural entrepreneurship is vital for the nation’s economy. By supporting entrepreneurs, communities can create jobs, boost local economies, and attract even more startups.
There are many rewards to operating a small business in a rural community. SCORE mentors can help you navigate the risks. Find yours today.
This article was written by Rieva Lesonsky and originally appeared on Score.