A big city can be a great place to launch a new business. It offers a large market with lots of potential customers, a wider variety of available skilled employees, better access to suppliers and transportation, the list goes on. But not all of us want to live in a big city. Many entrepreneurs seek the slower pace and quality of life that small towns offer but think that there may not be as many good business opportunities. In fact, many rural entrepreneurs find that there are just as many good opportunities, maybe even more, with just as much revenue potential and potentially higher profitability. Sound intriguing? Read on…
Owning a business in small town or rural area offers a number of advantages. First, quality of life is often greater. Less traffic and congestion, better schools, lower crime, more outdoor recreation opportunities, etc. make smaller towns appealing for both owners and employees. Second, entrepreneurs also often find that smaller markets offer less competition. Instead of 20 or 30 coffee shops or half a dozen Thai restaurants, you may only have one, or none, in your town. An entrepreneur in a smaller market can even sometimes create a temporary local monopoly, exploring a niche that hasn’t yet been pursued locally, at least until competitors realize what a good market it is. Third, fewer competitors often means more pricing power and higher margins. When you don’t have dozens of companies competing for your customers, you can sometimes charge a little more for products and services. Fourth, smaller markets are often cheaper places to do business. Office space, wages, advertising and business support services are often much less expensive than in bigger cities.
Better quality of life, less competition, higher margins, lower costs…sounds like an entrepreneur’s dream. So what’s the catch? Unless you operate an online business which can be located anywhere, most of the time growth potential is limited in small markets. If you start a successful business in Atlanta, you can continue growing by just targeting another part of the same market. In a smaller market, you can quickly hit a limit to growth. Another limiting factor is the labor market. It can be more difficult to find the right employees with the right skills when you need them in smaller areas. Another issue is that sometimes markets aren’t big enough to support some business models. Take my hometown as an example, Boone, North Carolina. The city’s population is around 13,000. Even if you include the county and students at Appalachian State University, there are still less than 60,000 potential customers, not counting tourists and visitors. While that’s a big enough market to support several coffee shops, a couple dry cleaners, lots of restaurants (thanks to tourists), it is too small for businesses like Best Buy or Barnes and Noble or even a big multiplex movie theatre.
So how can you overcome smallness and retain all of the obvious advantages of owning a business in a more rural area? Sell online to customers all over the world? For a few businesses, that might actually be an option. A more viable option for many rural businesses is to think regionally. Using Boone as an example again, if you add up the total population of just the counties that border Watauga County, instead of 60,000 potential customers, you now have a market of over a quarter million people. A majority of those people live with 30-45 minutes of town and many of them already come to Boone periodically for shopping, cultural and recreational activities. Of course, people aren’t likely to drive 30-45 minutes to go to a coffee shop or get their prescription filled, but they might very well drive that distance to buy something they can’t get in their own town or something BETTER than they can get locally. You can make it even easier for remote customers by taking your business to them or giving them a place online to do business with you.
Let’s take this example one step further. What if you considered your market to be everyone you could reach by car within an hour or so? When I ran a technology firm in Atlanta, I would frequently drive an hour to the other side of town to visit a customer. If you include all of the counties within one hour of Boone, now we’re talking about 620,000 people! Some businesses might be able to serve that market out of single location. For others, it might mean opening multiple locations throughout the region.
The keys to making this happen are to think regionally and harness the power of the internet. If entrepreneurs, business leaders, educators, economic development officials and chambers of commerce work together, everyone can win. Yes, it might mean a little more time in the car occasionally to drum up business. And yes, it will likely mean a bigger marketing budget and more investment in information technology. But if the result is that your business now has 5-10 times the growth potential without having to give up all of the benefits of living in a small town, it just might be worth it.
Don’t live in a big metropolitan area? Create your own!
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