Rural Small Businesses Play Key Factor in American Economic Growth but Experience Roadblocks to Success
Tuesday, June 28th, 2022
Small businesses with less than 50 employees provide 42% of all jobs in rural America, according to a meta-analysis from SCORE, mentors to America's small businesses and a resource partner of the U.S. Small Business Administration.
Small businesses contribute significantly to the health of rural economies but face a number of challenges, according to SCORE's analysis, including:
Rural America recently faced its first-ever decade-long population decrease of nearly 300,000 people between 2010 and 2020. For small business owners, the shrinking population means fewer customers and employees, which translates to lower profits and labor issues.
Rural entrepreneurs also struggle when it comes to obtaining venture capital, angel investments and other funding. Nearly 60% of rural communities rely on smaller banks and credit unions as a main source of financing, but 89% of counties that were deeply affected by bank closures were in non-metropolitan areas. Additionally, only 0.7% of angel investor dollars go towards small, rural businesses.
Depending on income, 20-30% of non-metropolitan homes do not have broadband internet access, which impacts new business creation in rural markets.
"The road to entrepreneurship can be more difficult for some," said SCORE CEO Bridget Weston. "We know that resources differ from community to community, which is why we want entrepreneurs in rural and non-metropolitan areas to know they aren't alone. We're here to help rural small businesses receive the support and guidance they need to start and grow."
SCORE supports rural small business owners
SCORE clients Dave and Susan Sperstad, co-owners of Touright Bicycle in Little Falls, Minn., live and work in a rural and economically disadvantaged part of the state, which can be a challenge for anyone looking to start a business. "Having SCORE out here and available to help us so we didn't have to close the shop, that levels the playing field for folks like us," Dave explains. Touright Bicycle shop is now a thriving and a vibrant part of their community.
Jim Mansfield, owner of Four Hills Farm in Versailles, Ky., struggled with business growth in his rural community at the beginning of his entrepreneurial journey and reached out to SCORE for assistance. "Farming is a business, and SCORE has been very helpful with everything from accounting, marketing, business growth and employee management issues," he explains. "[Our SCORE mentor] Kurt has been invaluable. He's helped us avoid major mistakes and taught us to keep excellent records to focus on the bottom line. He keeps us accountable with 'homework' that we may have overlooked at first but always helps our business grow."