Rural EntrepreneurshipContext, 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)