How Rural Small Businesses Are Overcoming These 3 Challenges

Small businesses are essential to their rural communities, but they also face challenges that can temper their growth and success. 

In rural areas, small business owners operate more than 84.8 percent of the establishments in their county and employ 54.3 percent of workers, according to the SBA Office of Advocacy.

Here are three obstacles rural companies can face and some advice on how your rural business can overcome them.


Limited Access to Capital

Business owners in some rural areas lack access to the type of funding opportunities entrepreneurs in urban areas do.

There are several initiatives aimed at addressing the discrepancy, including from the USDA, which committed to a $981 million investment in partnerships aimed at creating new and better market opportunities in rural areas, in part through increased access to capital. 

Through affordable financing and technical assistance, USDA's funding programs are designed to support individuals who want to start businesses in rural areas and small business owners seeking to grow, the agency said.

"It opens the door to new economic opportunities for communities and people who historically have lacked access to critical resources and financing."

Other options for funding opportunities include the USDA's Rural Cooperative Development Grant program, which helps individuals and businesses start, expand, or improve rural cooperatives and other mutually-owned businesses through Cooperative Development Centers. 

The USDA also offers a Rural Business Investment Company (RBIC) license, available to new developmental capital organizations and intended to help meet the equity capital investment needs in rural communities.


Labor Shortage

Like their city counterparts, some business owners in rural areas report problems finding qualified workers for job openings.

According to a post by the Association of Equipment Manufacturers (AEM) about rural businesses, one out of every four businesses located outside a metro area struggles to find qualified workers, compared with one out of six in metro areas.

A contributing factor to the labor shortage in rural U.S. is a declining population, which shrinks the labor pool in those areas.

While business owners can't change shifts in population, they can use other tactics to find more candidates. For example, you may be able to attract potential employees if you get your business out in the community more — make yourself known to local residents.

"Reputation matters in close-knit rural areas. People want to feel that companies are part of the local community," says a blog posted by staffing firm PeopleReady on its website. 

"It's important to get involved in your area, such as sponsoring charity events or participating in local sports or school programs. Your potential candidates will see that you're willing to invest in the community, which builds trust."

For more ideas on finding qualified employees in rural areas, please read our blog article Help Wanted: The Labor Shortage in Small Towns


Access to Entrepreneurial Ecosystems

Another possible challenge facing rural entrepreneurs is limited access to business resources and support, including venues to network with other new business owners.

"Many rural areas lack the professional and networking opportunities that are readily available in urban areas, which can make it difficult for small business owners to gain the knowledge and connections they need to succeed," says RuralRise co-founder Ina Metzer.

Access to these types of resources is important because rural business owners make significant contributions to their communities, not only through job creation but also through their innovation and impact on and within entrepreneurial ecosystems.

"Entrepreneurial ecosystems play an important role in the growth of rural startups," explains Metzer in an article for the Kauffman Foundation's Uncommon Voices series.

If you're a rural entrepreneur, seek local opportunities that put you in conversations with other small business owners, such as university outreach programs and Chambers of Commerce groups and events. 

Also, seek out communities that focus on rural entrepreneurs and business owners. For example, the Rural Ideas Network and USDA's Rural Business-Cooperative Service can provide various resources, including capital, training, education, and entrepreneurial skills, to help those living in rural areas start and grow businesses. 

Rural communities are also included in the SBA's HUBZone program, which offers improved access to federal contract opportunities to rural communities.

Having a network of other entrepreneurs and small business owners can be invaluable. 

"If there's no alliance in your rural community, help form one. It will benefit you and help other business owners and the community as a whole," the USDA notes.

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