2011 Trends Driving Rural Small Business

Local, government and economic development are the three key factors shaping rural small business in the coming year. Within each of these factors are smaller subtrends. Here’s a closer look at what to expect for rural businesses in 2011.

Local Movement

Local foods, shop local, local business. Local, local, local. This collision of trends into an entire movement is reshaping small town economics. It must be big, because big businesses are trying to get in on it. Here are the subtrends that smart small town businesses can use this year.

The Three Major Factors Driving Rural Small Business

1. Local Foods: Farmers are the next food stars.
Local foods made up five out of the 20 top food trends in a National Restaurant Association survey of chefs. Clearly, people are thinking more about where their food comes from than any time in recent history. More farmers and producers are using social networking tools to connect directly with customers. More restaurants will be featuring celebrity suppliers and treating farmers like food stars. Opportunities are here for producers, value added processors and even simple things like farm visits.

2. Shop Local: A focus on building better businesses.
A “Shop Local” slogan is not enough anymore. In the next evolution, shop local projects will work to improve local businesses to better meet people’s needs, because more competitive local businesses are a natural draw for customers. One good model: the Main Street Four Point Approach(R). Look into the Economic Restructuring point for more on improving business competitiveness.

3. Local Travel: Meaningful tourism is more engaging.
Travel is expected to be up, reaching record levels in 2011. Visitors to small towns want to do more than watch an event. They want to be part of it, and they want their spending to make them a part of something larger. This represents a progression of engagement in tourism. Visitors pay a premium when they think their purchase is doing good, whether that is a renewal of the environment, of an area’s history, or of a particular culture. Smart small town tourism businesses will build more engagement with visitors and move towards renewal.

4. Mobile = Local: Connecting is good for business.
Small town people are carrying smartphones, playing location based games, and using Facebook even while out of the house. Visitors and travelers are using Google Local to find businesses in even the smallest of towns. Travelers and locals review small town businesses on sites like Yelp and Urban Spoon. All of this is happening now. Smart small town businesses are taking advantage of this, and 2011 should see more businesses in small towns offering coupons and deals through the established players like Google and Facebook. Mobile-friendly information and QR Codes will pop up, even in remote locations.

GOVERNMENT

Government is always a big driver of small town trends, partly because more small town people work in government jobs as compared to urban areas. This year there are two major subtrends.

5. Government Budget Crunches: Small towns take a big hit.
States were hit hard with reduced revenues in fiscal years 2009, 2010and 2011. Looking ahead, 40 states are projecting another shortfall in FY 2012. Local businesses are likely to feel a pinch as their customers are affected. When states consider trimming services, outlying areas are likely to be targeted. School consolidation is likely to come up as well. One key federal indicator: post office closures and suspensions are way up.

6. Health Care Reform: Some support for rural access.
Provisions of the new law are kicking in, but what will they mean? With court rulings and discussions of repealing provisions, health care is a real wild card right now. A 35 percent tax credit for small employers providing health insurance will be felt soon, as small businesses file 2010 tax returns in early 2011. Increased payments to rural health care providers should also provide some benefit during 2011 as rural areas continue to struggle to maintain health care services. For more information about which provisions start when, review the Implementation Timeline from the Kaiser Family Foundation.

ECONOMIC DEVELOPMENTS

Each small town’s economy is driven by a specific mix of local factors. No one economic forecast can cover all small towns and their unique economies. There are a few economic factors that cross regional boundaries, though.

7. Economic Outlook: Strong ag prices boost rural prospects.
The Rural Mainstreet Index is at its highest level in almost three years, carried up by strong agricultural markets. That is also supporting a positive outlook for more rural jobs. One worry is the recent run-up in farmland prices in many areas. No one wants to see yet another real estate bubble burst, dragging down the rural economy. For now, though, rural entrepreneurs have a better economic climate than many of their urban counterparts.

8. Rural Sourcing: Small towns capture jobs from outsourcing.
The wave of global outsourcing may have crested, and small town business can benefit by capturing more of these jobs through ruralsourcing. Rural service firms claim a number of advantages over global firms: shorter supply chains, better data security, intellectual property protection, cultural compatibility, and convenient time zones. Costs are lower than traditional urban firms, reflecting the lower rural cost of living. Those small town companies capable of partnering with large corporate clients stand to gain new business throughout 2011.

9. Ag Exports: Global trade is a rural issue.
Far from being disconnected from the wider world, rural areas have a direct link to world trade: agricultural exports. The U.S. trade deficit increased to $46.3 billion in August, while the agricultural industry managed a $1.8 billion trade surplus. Many ag-related small businesses go into that total, and this is an area with big opportunity for small business.

10. Entrepreneurship: A rural boom in sole proprietors.
More folks are starting small town businesses. New numbers out of South Dakota show a boom in sole proprietors. Sole proprietor numbers increased faster than jobs in most rural counties. Look for opportunities in supporting these new business owners and in partnering among rural business owners.

OVERALL

  • This is a big year for small town business:
  • Local is cool.
  • The rural economy is strong.
  • More small businesses are springing up.

Certainly, there are tough spots, but the overall rural business outlook is good, with many new opportunities out there.

29 Comments ▼

Becky McCray


Becky McCray Becky McCray is a small town entrepreneur, co-owner of a liquor store and a cattle ranch. She writes at Small Biz Survival about small business and rural issues, based on her own successes and failures.

29 Reactions

  1. Awesome post, Becky!

    And, it’s your 2nd Annual one here on Small Business Trends!

    I learned a new term; ruralsourcing. WOW.

    The Franchise King

  2. Thank you, Joel. Honored I was able to bring a new concept to your attention. It’s actually my third annual post, the first one was 2009. I think I learn something new each time I do one.

  3. Good Post.

    In 2011,the local will be the focus. In internet, this will be playing a huge role. There will be new apps to find the Local Restrauant, Local Supplier & similarly the tools to review and rate them. Combined with the power of the Social Medai & Mobile media, Local market will get huge advantage. We saw this trend in reviewing the web applications, which are targeting Geo & Local.

  4. As a daily reader of this blog (and as someone who shares at least one link to the blogs here on our Facebook page), I was really excited to see our economic development methodology – the Main Street Four-Point Approach – mentioned. Thanks! Just one caveat – the reason why it is so successful is because we don’t just focus on local economic development. That is our end goal, just as much as saving the historic fabric of the community, but we accomplish it by being holistic and tackling infrastructure, marketing, events, sense of place, and more. It isn’t one project=one solution, which is the downfall of many failed economic development programs.

    One resource to share – to boost your heritage tourism programs and to learn from others already doing it successfully, dig around the National Trust’s Cultural Heritage Tourism Toolkit for case studies, tips, and other information. (This doesn’t require membership). http://www.preservationnation.org/main-street/main-street-news/cultural-heritage-tourism-survival-toolkit.html

  5. Thanks, Mike, for adding your experience. I think Geo and Local are pretty central to the whole purpose of mobile.

  6. Andrea, thanks for adding more depth and the additional resource. Main Street is an effective program for small towns.

  7. Love to see the support for local businesses and I feel that the general sentiment among consumers is that they would like to support local businesses. However, there is still a gap between what people want to do and what they actually do. But we’re making progress and need to keep it up.

  8. Thanks, Robert. As you say, the sentiment is a start, but it’s only a start. The smart small town businesses will take advantage of this sentiment in every way they can.

  9. Looks like a lot of things are going to be changing and growing in 2011. This is going to be a good year, I can feel it. It seems like everyone is going local and business is about to start booming.

  10. Thanks, Tynnisha. There are certainly plenty of opportunities out there this year.

  11. Becky: I think that the point number 4 will have a great impact. I am “checking-in, hanging-out and checking-out” (H&M slogan together with Foursquare” stuff with my iPhone on a regular basis. I would use a geo-location based app when I visit a small town or rural place, if I want to find out what’s happening in the area.

  12. Thanks Becky for the in-depth review of trends that will positively impact rural communities. What you’ve done is outline what’s on that great big bus of opportunity that is rumbling through every small town. The question each community and small business needs to answer is whether they’re going to jump on the bus, grab hold of the bumper and get pulled along or ignore the bus all together.

    It’s a profoundly important time – possibly a tipping point for many rural communities.

  13. Martin, that is exactly why I encourage small town businesses to use location based services to reach visitors and tourists. Thanks for adding.

    Joanne, you are doing important work, helping rural tourism businesses get on the bus, rather than get run over!

  14. I shared more trends for rural business with my newsletter subscribers. You can read the archive online here: http://eepurl.com/b8Xmr

  15. Very encouraging article! It bothers me to see so much energy spent on trying to attract businesses to our little town, and it really isn’t working anyway. We have empty commercial buildings, unemployed people, many unfilled needs, and I have talked with lots of people with great ideas! To me this spells entrepreneurship! I hope to share articles like this to our economic development commitee…lots of good information. Thanks again.

  16. I love that business and consumers are starting to slowly keep it local. It’s always a challenge to convince local business owners to target their messaging locally on their sites. Hopefully that trend will change.

  17. Lila, entrepreneurship is where I put my hopes for small towns looking for more business. Thanks!

    Mike, I think it changes in pockets. You’ll find groups of folks doing great stuff working alongside others who still don’t get it. Convincing the hold outs is much harder than finding and helping the ones who get it. Or that’s my opinion.

  18. I think #4 on your list, mobile, is going to be huge. In fact I sort of wish someone would come along and develop a location-based service that focused specifically on rural communities, or some sort of instance-based application that folks could take it upon themselves to use in their own small town.

    Right now sites like Groupon are taking off in bigger cities but I’m looking forward to having those same opportunities in my small town.

  19. Dave, thanks for jumping in. Rather than creating a separate service, I think the most promising development will be integrating location into existing services. We had a great discussion on this in the comments on “How Do You Make FourSquare Relevant for Small Towns?” http://j.mp/cURdjd

  20. This is a great article. My wife and I have operated retail clothing stores in a small town and fully understand the challenges small businesses have competing with large corporations.

    I’m a website developer and internet marketer, so I was able to create search engine optimized websites for our businesses which was critical to us being able to survive the economic downturn.

    Now, we’ve just launched ishoplocal which allows local entrepreneurs the ability to quickly start their own small business by operating an online local community website promoting their community and small businesses.

    If anyone is looking to start their own business or would like a website to promote their community, please check it out http://www.ishoplocal.us.

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