Why Small Businesses Shouldn’t Be Afraid of Operating in Rural Areas

Normally, the blog posts you read here at Love Small Town America are brought to you  by members of the staff. We delight in sharing our thoughts with you. But we know that there is a whole, wide world of people out there with thoughts and opinions that relate to small town growth and prosperity and today we’re excited to bring you our first guest post, from Phillip J. Reed on behalf of Exede. We were not compensated for this content – we just thought it might make an interesting read for all of you! Access to high speed internet is crucial to the success of small towns and especially small town businesses like ours, so this topic resonates with us. We’d love to hear what you think. Leave us a comment!

Why Small Businesses Shouldn’t Be Afraid of Operating in Rural Areas

By Philip J. Reed, on behalf of Exede

When entrepreneurs think about starting their own business, they usually do not consider rural areas as an attractive place for investment. In fact, many business owners are scared to establish a company in a rural area. However, we know that rural areas provide businesses with many advantages that cannot be matched by large cities. Although that list of advantages is almost endless, we will give you just the five best reasons to establish a business in rural America.

Reliable Communication Infrastructure

One of the most persistent misconceptions about creating businesses in rural areas is that there is a lack of infrastructure, especially when it comes to reliable communication technology. Businesses must have access to telephones and the Internet in order to stay in touch with customers, suppliers and workers.

Fortunately, modern advancements in technology have narrowed the gap between rural and urban areas with respect to communication infrastructure. For instance, penetration rates for broadband Internet access have already reached 75 percent in rural areas, and this number will only increase as more satellite Internet providers offer their services to rural customers.

Lower Business Costs

On average, business owners do tend to have more pricing power in urban areas, which have residents who earn more money than their rural counterparts. However, when it comes to profit calculations, prices are only half of the story.

Business owners must also consider the costs of doing business in a given area, and those costs are often far less in rural areas. Most of the major inputs for a business – land, labor and materials – are much cheaper in places where there is less competition for resources. Unlike rural areas, that competition can be fierce in cities.

This helps to explain one of the defining trends in America over the past thirty years: the migration of companies to the Sun Belt. Desperate to avoid the high costs in congested urban areas, many businesses have flocked to the rural areas in the South. This trend will only continue as more businesses come to appreciate all the benefits of rural living.

Loyal Customer Base

Rural areas tend to be very close-knit communities. Whereas cities are usually filled with groups of strangers, people in rural areas have much stronger social connections that bind them to their neighbors.

The same thing also applies to rural businesses, which can develop better relationships with their customers. A typical urban business may have hundreds or even thousands of customers in a given day; there is no way for those business owners to establish any deep connections with them.

Therefore, rural businesses that treat their customers well tend to garner more loyalty from the community. Word of mouth is a very strong marketing tactic in rural areas; residents will listen to their friends and frequent businesses that receive a good recommendation. This repeat business is especially valuable to entrepreneurs who are attempting to get their companies established in a new area.

Fewer Competitors

Although many business owners focus on the fact that rural areas have fewer total customers than city or suburban areas, they fail to consider the logical flip side of this observation: Rural businesses also have fewer competitors.

For instance, if you were thinking about opening a restaurant, you might think that New York City would be a great place to sell your culinary delights. With a population of more than eight million people who are confined to a relatively small area, New York City would seem like the ideal place to establish your business.

However, many other restaurateurs have already come to the same conclusion, which is why there are 4,200 dining establishments in the five boroughs of New York City. If you come to any small town in rural America you will not see the kind of competition that leads to price wars, which reduce the profits of every business owner in an industry.

Business-Friendly Governments

In general, cities impose more burdens on business owners than rural areas. Not only do cities tend to extract more money in taxes, but they also enact more regulations that increase costs for small businesses.

Alternatively, rural governments tend to work hard to attract new business owners by providing beneficial tax breaks and offering other business-friendly policies. Unlike cities that have thousands of companies, rural areas never take their businesses for granted.
In CNBC’s latest list of business-friendly states, three of the top five states – Virginia, North Carolina and North Dakota – had rural populations that were higher than the national average. The message is clear: Rural America is a great place to start a business.

Conclusion

It should be clear by now that business owners can thrive in rural areas. With low taxes, loyal customers and reliable broadband satellite Internet, rural businesses have access to a unique business environment that helps nurture success. Therefore, if you are a business owner, come join us and enjoy the many benefits of rural living!

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