Rural Entrepreneurship Context, Issues and Trends

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Rural EntrepreneurshipContext, Issues and Trends
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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

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Geographic definition of rural

• All geographic areas outside metropolitan
  areas70-80 of geographic area of the US.
• RuralOpen country and places with 2,500 or fewer
  residents
• UrbanPlaces with more than 2,500 resident
• MetropolitanPlaces with greater than 50,000
  residents
• Non-metropolitaninverse of metropolitan
• Micro-politan- larger trade center in rural area

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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 

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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
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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

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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

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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

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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

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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

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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 Americans needs
• Entrepreneurial growth
• Represents core rural development opportunity

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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

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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

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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)

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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)