How to Use Rural Entrepreneurship to Save Your Small Town

by Joanne Steele on March 22, 2013

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Economic Fuel homepageWhether you go to the USDA rural development website or check out your local micro enterprise assistance organization, you’re going to run into talk about “entrepreneurship.”

In the not to distant past, rural development in the United States focused on moving some kind of industry into a rural area to replace or supplement the farming, mining, or logging jobs that were disappearing. In many other countries, there wasn’t much talk about rural development at all!

Over the past 10 years, the tide has turned and the future success of “rural” is seen as closely tied to entrepreneurship. Small locally owned businesses that support a family and have one or five or ten additional employees, the heart of rural communities through the ages, are again coming into vogue. AND they’re getting assistance necessary to ensure success.

First question: What is an entrepreneur?

I like this definition from the Business Dictionary:

Someone who exercises initiative by organizing a venture to take benefit of an opportunity and, as the decision maker, decides what, how, and how much of a good or service will be produced.

An entrepreneur supplies risk capital as a risk taker, and monitors and controls the business activities. The entrepreneur is usually a sole proprietor, a partner, or the one who owns the majority of shares in an incorporated venture. According to economist Joseph Alois Schumpeter, entrepreneurs are not necessarily motivated by profit but regard it as a standard for measuring achievement or success. Schumpeter discovered that they (1) greatly value self-reliance, (2) strive for distinction through excellence, (3) are highly optimistic (otherwise nothing would be undertaken), and (4) always favor challenges of medium risk (neither too easy, nor ruinous).

Now we’re on the same page re: entrepreneurship…

What is rural entrepreneurship?

This term is used so much now, it’s worth the space to define it. Not everyone is business is an entrepreneur and not every entrepreneurial person is a good fit for rural assistance.

To get some definitions I went to the Rural Policy Research Institute (RUPRI) Center for Rural Entrepreneurship. They have produced a handbook that should be a must read for every rural chamber and rural development organization: Energizing Entrepreneurs – Charting a Course for Rural Communities. Scroll down to the first link under Resource Library and click to download the pdf.

Three kinds of entrepreneurs in rural communities

Potential entrepreneurs – People who have some entrepreneurial skills and motivations who are thinking about starting a business. This group also includes youth who have had some entrepreneurial training in school and after school programs.

Business owner entrepreneurs – People who already have businesses and are looking for ways to grow and find new opportunities. Business owners who are satisfied to pretty much continue to do what they’re doing are not entrepreneurs.

Entrepreneurs – “The entrepreneurs in your community are those who are actively seeking new markets, developing new products or services, and exploring new ways of doing business. ” From Rupri training course, Energizing Entrepreneurs p. 109

 Gazelles – This 4th additional type is rare and valuable in rural areas. The Gazelle or serial entrepreneur is someone who starts new businesses, sells them to folks who just want to own and run a business and goes on to start another business.

Why rural entrepreneurship is important

We’re moving away from a “look outside for a solution” to building sustainable rural communities to looking within. Instead of looking for that big business that will relocate and bring 100 or 500 jobs, we’re looking at how to create 10 or 100 vibrant local small businesses from within, that will support a family and each generate 1 or 3 or 5 additional new jobs.

How can your community encourage entrepreneurship?

 1. Understanding what entrepreneurship means.

2. Understanding what entrepreneurs need.

The incentives model where a community offers tax incentives, or free utilities or cash to relocating businesses is part of the “attract a big business and our problems are over” era. Those kinds of incentives are not necessarily a good match for the kinds of small local business builders we need to support.

What entrepreneurs need is based on which type of entrepreneur they are.

 Potential or aspiring entrepreneurs – These entrepreneurs need incentives, information and training for taking an idea through the steps to become a functioning business.

In Humboldt County, California an organization called Economic Fuel, funded through Security National holds an annual entrepreneurship competition for Humboldt County college students and recent grads. Each year since 2006 young entrepreneurs compete for a total of $118,000 worth of prizes.

The competitors submit a comprehensive business plan and present a 2 minute elevator pitch to the judges.

Entrepreneurs who register for the competition have the full-time staff of Economic Fuel plus 40 experienced local business owner volunteers who are available to help with all aspects of that business plan creation. With this kind of qualified assistance at their disposal even the losers are winners!

Six of the eight 2012 winners are in business and reporting growth and success. So this program for aspiring entrepreneurs is a model other areas should consider copying. It works! Go to the Economic Fuel website and see how much you can shamelessly duplicate. With a model like this that works, you have something to take to potential funders. Questions? Email or give them a call AFTER April. Their 2013 competition is in full swing right now.

Business owners who are growth-oriented entrepreneurs – These people need targeted and specific assistance.

Many micro enterprise assistance programs have excellent options for startups, but these seasoned business owners may not be well served by a 12 week how to start a business class. They need experienced counselors who can design a specialized assistance program that addresses their individual needs.

Kentucky Highlands Investment Corporation provides us with a good example. Their website may not reflect the local work they do as well as this USDA blog post In Kentucky, a Model for Relevance.

I was struck by the flexibility in their approach to problems of any size and dimension. They see the value of entrepreneurship to rural revitalization and put their money behind the businesses they work with.

Entrepreneurs – These business developers have similar needs to the business owner entrepreneurs plus they may need additional assistance to fulfill needs and house their efforts.

In small towns, this requires vigilance by other community business people. Entrepreneurs are often willing to pick up and move to an area that meets their business needs rather than stay and make do. It becomes the responsibility of community members to nurture their entrepreneurs.

Here is Dunsmuir, FireWhat? is a good example. When FireWhat? first moved to town, they received partnership assistance from another startup, Pusher to produce their mobile app and get it on the market. They quickly outgrew their first space and with the help of a local developer and supporter of local entrepreneurship, are moving soon into a building renovated to exactly meet their growing needs.

How can a community interested in entrepreneurship proceed?

No small town starts down the road to entrepreneurial development with all the resources lined up and ready to go. The process is in fact, entrepreneurial! Awareness leads to desire for more education, which leads to action which eventually leads to results.

1. Build your awareness of what you can actually do in your own small community. Go to the RUPRI website and download the entrepreneurship handbook. Email it to others in your community who will help.

2. Take some type of local action based on what you’ve learned. An article I wrote on local rural redevelopment for the St. Louis Federal Reserve Magazine might help. Once you get started you’ll see what kind of outside help will be helpful and what you and your team can do locally.

3. Once you have something to report, start reporting. Share the excitement with the folks in your town.  Find an umbrella organization to work through like your local chamber of commerce and use their membership lists and social media to broadcast your efforts and successes. Your positive results will attract more investors of time, energy and money.

4. Find and use regional resources. It’s always best to start with a local team, and soon you’ll see how to use the micro enterprise organizations, SBDC groups and local investors that you’ll learn about as you work.

 

 Two more articles on entrepreneurship to expand the topic…

Could EntrepreneurShip Investigation Help Keep Your Youth at Home?

Federal Self Employment Assistance Program Can Help Unemployed Entrepreneurs

 

 

 

 

 

 

 

 

 

 

1 Liz Illg March 26, 2013 at 11:00 am

Joanne,
You’ve done it again! This comprehensive overview of rural entrepreneur-ism should be a “must read” for every organization in rural America interested in the local economy. Here’s another reference for you from a small town in Washington: http://vimeo.com/channels/tc2porttownsend
Thanks for your work in this area.

2 Joanne Steele March 27, 2013 at 9:07 am

Thanks for the inspirational link! Liz, please take a look at the work I’m doing for small entrepreneurs at http://takecontrolofyourinternetmarketing.com as well. This blog looks at the big picture and Take Control is set up to help individual entrepreneurs learn the ropes of internet marketing – essential in our current digital environment.

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