Rural small business trends are always different from general small business trends. This year, the difference is in the economic outlook. With the consensus of economic predictions for 2012 showing slower national growth and the odds of a renewed U.S. recession at 1 in 3, the national economy doesn’t look good. Contrast that with the local economies in rural areas. The Rural Mainstreet Index is at its highest level since 2007, and rural small business looks promising.
Here are the top 9 small business trends in small towns and rural areas this year:
1. Strong farm commodity prices mean strong local economies. That is the biggest factor in the strong Rural Mainstreet Index and is also driving a continuing boom in farmland prices, as investors look for “safer” investment classes. That makes a strong foundation for local agriculture-based economies.
2. Some places get “just one more” oil boom. Relatively strong oil and natural gas prices mean a continued boom in production, mostly happening in rural areas. Several regions are seeing new or renewed plays. That brings new residents, new businesses and temporary prosperity.
3. Supporting the local economy takes more than “Shop Local.” We’re seeing more interest in moving money into locally-owned community banks and credit unions. With extra-tight lending standards for small businesses from big banks, many small businesses are turning to alternative financing methods. The book Locavesting by Amy Cortese outlines a number of local investing and business financing alternatives. More new businesses will consider cooperatives as a viable form of business this year, and 2012 is the International Year of Cooperatives.
4. Self-employment continues to rise. With all these positive trends in rural small business, there is more reason than ever to expect a continued increase in self-employment and business startups in small towns. We have to factor in the highly entrepreneurial Millennial generation, too, as the Kansas City Business Journal reports.
5. Ruralsourcing brings more high-tech to rural areas. Ruralsourcing is competing with global outsourcing, bringing manufacturing and IT service jobs into rural areas. With global supply chains threatened by higher shipping costs and rising manufacturing costs in China, we’re also seeing more projects returning manufacturing to home shores, Agurban reports.
6. Government cuts hurt. One negative factor is that 42 U.S. state governments are facing budget shortfalls again this year, the Center on Budget and Policy Priorities reports, though recent revenue is up slightly for many. After trimming services three years straight, outlying areas are likely to be targeted this year. Watch for big cuts in two rural mainstays: tourism and arts funding.
7. Online doesn’t mean in front of a computer. Mobile Internet access just keeps growing. Tablets and smartphones are changing the way potential customers look for businesses everywhere, including in small towns. The strength of cell signals and WiFi availability are important for tourism, and for small business capturing mobile customers. Rural businesses need to get mobile-friendly now.
8. Online reviews make everyone a local. Business pages have been created for almost every single business (even in small towns) by Google, Facebook and Yelp!, among others. Reviews and comments by customers give every visitor an inside view into local businesses. Result: We’re all in one big small town. This will help some terrific local businesses be found more often, and hurt some that really haven’t kept up their quality.
9. Rural broadband drives business development. With around 28 percent of the rural population still lacking access to 3mpbs or better service, much more needs to be done on access. Those who can access broadband are using it to build businesses and conduct commerce at a record pace. Expect more public and private projects to develop more business use of broadband.
Overall, most small town businesses have plenty to look forward to in 2012. The challenges of outside competition, the need to innovate and improve service, and the importance of connection with customers won’t be going away. But the economic outlook is generally strong, and new opportunities are out there. We have more information about the 2012 trends and updates during the year at our Rural Trends page.
Main Street Photo via Shutterstock