There’s no question that small businesses can help to stimulate rural communities — they drive entrepreneurial spirit, help economic growth, and are the foundations of innovation (sounds a lot like farming in general, doesn’t it?).
However, in a world where so many small businesses are doomed to fail, how is that reflected in our rural areas.
Choices magazine, the publication of the Agricultural & Applied Economics Association, recently published its research titled “Survival Rates of Rural Businesses: What the Evidence Tells Us.”
In it, the magazine says:
“In rural areas, a small business closure is often quite visible and widely known across the community. Because it is often viewed as a failure, it can create an environment within the community where potential entrepreneurs become risk averse. The local disapproval of failure can discourage risk-taking related to both start-ups and expansion decisions, leading to a stagnant and even declining local economy.”
However, rural communities are stronger and more perceptive than that.
So what do hard numbers tell us? Well, it’s good news. New businesses in rural America have higher five-year survival rates than their urban counterparts. This is likely due to lower opportunity costs in rural communities along with different perceptions of risk.
The lesson is that if rural communities are to have vibrant economies, they must reenergize their efforts aimed at supporting entrepreneurship.
You can read the entire Choices magazine report here.