By Marshall Kirby, Public Policy Analyst

Do you own a business based in the rural economy?  If you do, there have been two really great articles recently.  Whether you own/operate a farm, shop, or a service related to business in small towns across the country, you have probably recognized that you are the driver of economic growth and employment for your town or county.

This article details some trends and forecasts to expect in the coming months of 2011.  A couple key points from the article include the following. Farmers’ roles in society are quickly changing.  People are becoming more interested in knowing where their produce and meat is coming from and are paying attention to how it is grown/raised.  This can pay dividends for farmers seeking to connect to more customers and new supply chains.  Additionally, there has also been more attention paid to local businesses in rural areas, which can lead to growth and expansion opportunities.  On a related note, with tourist projections for 2011 being very promising, operators of businesses in small towns should pay more attention to attracting out of town visitors.  Additionally, the article mentions that this means that rural businesses need to begin to spend more time using social networking and other forms of advertising as small towns are catching up on the use of Google and other review sites to find and review businesses.

What else can we expect?  Well there is some troubling news ahead for businesses in rural areas.  With budget shortfalls affecting so many states, counties, and towns, individuals and business owners in rural areas may begin to feel the effects of budget cuts trickle down to them.  The article warns business owners to be aware that the budget shortfalls could mean that school consolidations and closing of post offices lay in store for many small towns.  Also, the article mentions the Health Care Reform law passed last year.  Some new things will be kicking in which will affect small businesses, including a 35% tax credit available to small businesses offering health insurance to its employees.  Very important to rural areas, there will also be an increased payment structure to rural medical centers and doctors, which will help to keep pace with increased demands for service.

Additionally, there are a few other points mentioned in the article.  With food prices rising and a higher global economic outlook on agriculture, locally owned agribusinesses have an increased ability to tap into global markets and export their goods.  This will no doubt be a strong benefit to farmers, but it will also open up opportunities for other entrepreneurs to assist farmers with filling their global orders for export.  Probably the most promising news for us is that recent numbers are showing a rise in sole proprietorships in small towns.  In fact, in some areas entrepreneurial activity is growing faster than jobs.  This will no doubt have a major impact on local economies, and will also provide unique challenges and opportunities for other businesses to compete and do business with each other.

The article mentioned another trend, which was later expanded on in its own article.  Ruralsourcing is a new buzzword in the business community.  Ruralsourcing is the practice in which businesses concentrated in urban areas with higher costs of living are “outsourcing” aspects of their workflow within the country to rural businesses which have a competitive advantage due to lower costs of living.  Businesses already engaging in this new trend have noted its advantages compared to outsourcing work overseas.  For one, intellectual property rules still apply which is an intangible benefit.  Additionally, data security remains solid and companies can have a shorter and more efficient supply chain.

As this article mentions, this phenomena has had a major impact on rural areas.  Many rural areas have been hard hit during the recession and they face high unemployment rates coupled with fewer opportunities to find work.  Ruralsourcing has been a blessing for many communities and businesses which seek to lower their labor costs while still having the advantage of American workers.  A number of firms have set up operations which help companies interested in sourcing out work to lower cost areas, and they have seen a steady growth, with more projected this year.  What is even more important is that as the trend grows, it will represent more growth in well paying jobs and less of lower level and lower wage jobs.  This increase will also impact other small town businesses, as this will help raise incomes and give more support to their local economy.

This is very exciting news for small business owners.  Often times, policymakers talk a big game in regards to helping small town and Main Street businesses, but their actions are concentrated with larger companies in more urban America.  Hopefully growth in rural America and small towns will continue as expected, as these businesses drive their economy and can be used as an indicator for national business growth and success.  There is an old expression, which says “As goes Main Street, so goes America,” and in this case let’s hope it is true.

Mr. Kirby joins The National Puerto Rican Chamber of Commerce with an experienced background in Public Policy Analysis.  He has worked for Americans for Informed Democracy, the Center for US Global Engagement, and for local governments in Virginia on issues ranging from international finance, national security, and other areas of foreign and domestic policy.  He holds a Master of International Development Degree from the University of Pittsburgh.

Marshall can be reached at 866-576-5222 x 8, or MarshallK@NPRChamber.org.

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