Encouraging Rural Businesses To Prosper & Grow

Rural businesses are those firms that are established and operate in rural settings, far from the metropolitan areas that have traditionally been the site of most non-agricultural business enterprises. Most businesses continue to conduct business in large cities or thriving suburbs, but analysts contend that technological advances, demographic changes, and increased attention to "quality of life" considerations have all combined to spur meaningful business growth in many rural areas as well. As of 1998, according to Terry Neese in LI Business News, about 20 percent of small businesses (defined as those having fewer than 500 employees) were located in rural areas.

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The challenges facing rural areas—in which three-quarters of the world's poor reside—are a pressing concern for national governments and international organizations. Decent work deficits are severe and are exacerbated by the lack of access to social protection, low rural incomes, absence of labor law coverage and a high degree of informality. Rural areas face additional barriers which hinder economic growth, including weak labor market institutions, inadequate infrastructure, fewer educational opportunities and underinvestment in the establishment of rural businesses.

Small-scale entrepreneurship is a proven strategy to revitalize rural communities. Owning one's own business can create genuine opportunity across rural America with the support of a modest public investment. The importance of entrepreneurship is particularly profound in the most rural areas. Small entrepreneurship is the one development strategy that consistently works in these communities. This strategy also has the capacity to bring back young people—including those who earn a college degree. Small business development helps rural people acquire assets and create wealth. That is essential. Asset and wealth-building through home ownership, business ownership and enhanced education lead to important long-term psychological and social effects that cannot be achieved by simply increasing income. Small businesses are also very philanthropic.

Increased receptiveness to new businesses has also had an impact on the growth of commerce in some rural regions. As Brian Steinberg observed in Entrepreneur, "many small towns in states such as Iowa and Indiana are crying out for new businesses. Dependent for generations on sagging agricultural or manufacturing economies, these towns need entrepreneurs and the jobs they supply to stay economically viable."