Rural Entrepreneurship Context, Issues and Trends

Learning Objectives Define ‘rural’ America Understand impact of demographic and economic changes in rural U.S. Explain how current trends influence rural communities Understand concept of community resilience and its relevance to entrepreneurship Recognize challenges and opportunities for retail entrepreneurs in rural communities

Geographic definition of ‘rural’ All geographic areas outside metropolitan areas—70-80% of geographic area of the US. Rural—Open country and places with 2,500 or fewer residents Urban—Places with more than 2,500 resident Metropolitan—Places with greater than 50,000 residents Non-metropolitan—inverse of metropolitan Micro-politan- larger trade center in rural area

Demographic characteristics of rural communities 20% of US population lives in rural area Over the last several decades: People in 20s have left rural areas Older people have moved to rural America Rural birthrate has declined Hispanic population fastest growing racial/ethnic group Non-Hispanic white growth rates lowest of any group Modest growth in African American population 

Social and cultural profile of rural communities Value Attribute Rural Urban Community Interaction Mandatory Voluntary Roles Ascribed Achieved Sanctions Particularistic Universalistic Orientation Group Individual Leadership Traditional Rational

Social capital in rural communities Social capital (SC) built through interactions, relationships, networks-unique in rural communities Developed through interaction among community members Key influence on community business environment Economic prosperity associated with social capital Signals of SC are civic participation, community embeddedness and expectations of reciprocity

Rural economy Core economic activities in rural areas rooted more in old economies than new economies Diverse economic activity in agriculture, natural resource industries, processing/ manufacturing, government, retail/service Economic vitality dependent on distance to urban areas, natural amenities, cultural opportunities

Changes in rural America Rural America has experienced significant changes in the last half century Decline in reliance on farming and other natural resource based industries Low tech manufacturing declined due to global competition Population shifts: more older, more Hispanic, fewer young residents

What is ‘brain drain’? Many rural communities have lost younger residents to urban migration Younger, educated rural residents find employment, social opportunities in urban centers Loss of younger residents is associated with rural community decline

What is a ‘resilient community’? Successfully adapts to change by utilizing and developing resources that mitigate effects of change Collective capability to form partnerships, build social capital, and social cohesion Demonstrates improvement in well being of residents Able to retain younger, skilled and educated residents

Trends and Opportunities for Rural Communities Suburbanization Competitive challenges and economic opportunities for rural communities Seasonal residents Growth brings challenges and opportunities to rural places Elder industries Offer recreational/retirement opportunities to meet older American’s needs Entrepreneurial growth Represents core rural development opportunity

Trends and Opportunities for Rural Communities Lone eagles Urban Americans moving to rural settings and making their livings via the Internet Next generation of business and community leaders, community philanthropists, mentors for future entrepreneurs Technology Rapid advancement makes it easier for rural entrepreneurs to reach broader markets; also raises the competitive stakes for rural businesses

Value of local retailers Local retail stores enhance rural communities Provide convenient access to goods/services Source products locally Employ local residents Pay taxes Reinvest profits in the community

Challenges for rural retailers Declining local market Competition from chains and Internet High operating costs/lack of economy of scale Availability of qualified employees Narrow profit margins Taxes and regulation Lack of community support (outshopping)

Challenges for rural retailers Declining local market Competition from chains and Internet High operating costs/lack of economy of scale Availability of qualified employees Narrow profit margins Taxes and regulation Lack of community support (outshopping)