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Spurring Rural Entrepreneurship: 8 Innovative Business Models That Don’t Break The Bank

Becky McCray | June 3, 2016

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Starting a business in a small town or rural place isn’t easy. Financing can be a major roadblock. In some small towns, local banks may not support unproven business owners. In other towns, the formerly-local banks are now owned by out-of-town conglomerates with far-away loan approval committees. In still other rural places, there simply aren’t any banks any more.

Then there are the usual going-into-business challenges. Finding suppliers, space or employees can be especially challenging in a small town.

Rural small businesses are also working against the national trend. A new study by the Economic Innovation Group finds an increasing pattern of geographic concentration when it comes to startup and job growth, and a steep drop off of small business creation in less populous areas.

Baby Steps

But starting a new business doesn’t have to involve great risk or sums of capital. Micro-startups and innovative rural business models let entrepreneurs try out small business ideas and succeed or fail in a manageable way.

Here are eight different ways to jumpstart a small business without a huge bank loan. They’re all variations on a theme, and are patterned on real businesses in real small towns—although they can also be used in neighborhoods within larger cities, in the suburbs or in busy urban centers.

The best way to take action against the dire decline in rural enterprise is for more rural people to take these small steps towards starting their own small business.

1. Single-day pop-ups. You may be more familiar with these as booths at events, but have you thought of them as a smaller step to going into business? Whenever a crowd of people attend an event, that’s a natural place for temporary businesses to set up and test their business ideas. Waynoka, Oklahoma, (population 1,000) used a popup fair to add more life and interest to their downtown during the once-every-five-years all-school reunion. Food booths, shopping, and services like photography all livened up the street in front of two existing businesses (photo, above, by Jeanne Cole, Waynoka Chamber of Commerce). Reunion-goers had more things to do downtown so they stayed downtown longer.

“We see our downtown becoming an incubator for new ideas, the perfect place for entrepreneurs to try out new concepts,” says Homewood, IL marketing and events director Rachael Jones.

2. Tiny business villages. Tiny houses are everywhere, so surely we should have tiny businesses, too. Groups of them are springing up on empty lots, forming tiny business villages. In Pascagoula, Mississippi, (population 22,000) tiny-house-style Katrina Cottages were gathered on what used to be “a big dirty lot.” There are 17 cottages, each under 1,000 square feet. All the cottages are connected by a deck that gives more outdoor selling space. The cottages are arranged around an open green space that’s now a popular public gathering spot.

3. Shared spaces and subdivided buildings. Picture a tiny business village, but built inside a big building. That’s a shared space. Cathy Lloyd in Washington, Iowa, (pop. 7,200) converted a former department store building with 15,000 square feet into a collection of little shops only a few hundred square feet it. She called it The Village. In the courtyard “town square” in the middle of the building, there are tables and push carts available for micro-micro businesses to grow in. And that’s what happens. Many businesses grow from a tiny table to a little shop to a full-scale business. Others reach a size that is comfortable for the business owner and stay there. And that’s a win, too.

“I truly believe that this is the future of retail in small communities,” says Lloyd.

Similar projects are happening in bigger towns, too. Grand Rapids, Michigan, (population 194,000) has the Shops @ MoDiv. A developer, frustrated by empty retail space they couldn’t rent, decided to try an experiment. They cut the big space into 10 small and easy-to-configure spaces. The smallest are the size of a closet and the biggest, a bedroom. Even the entryway is being shared by three local artists.

As one of those artists, Rose Ellis, told a local media outlet: “You couldn’t get me out with a crowbar. It’s the best business plan I never thought of. It has turned my life around.”

Season-long pop-ups can fill in an empty building for a few weeks, boosting life downtown. Photo by Becky McCray
Seasonal pop-ups can fill an empty building for a few weeks and add vitality. Photo by Becky McCray

4. Seasonal pop-ups. Season-long pop-ups are temporary businesses that last for a few weeks or a few months. Instead of a 5-year lease, they may sign up for 5 weeks from Thanksgiving through Christmas.

The Village of Homewood, Illinois (population 20,000), is proud of its walkable business district, but not all the buildings are full all year round. Rather than face empty spaces through the holiday season, they filled up seven empty buildings with pop-up retailers just for those few weeks. “In Homewood, we see our downtown becoming an incubator for new ideas, the perfect place for entrepreneurs to try out new concepts,” says Homewood’s marketing and events director Rachael Jones.

For more information, download the 8 Innovative Rural Business Models resource guide 

5. Business inside a business. Walk into any small town beauty salon, and you’re likely to find that the women who work there are actually independent contractors who rent their booths—in other words, businesses within a business taking advantage of the shared foot traffic. Maybe there’s also a massage therapist seeing clients in a side room. They’re all business owners. Look around at the displays. Besides the hair care products offered by the salon owner, you may see jewelry, scarves, candles and all manner of retail items. These are pop-up temporary businesses, often set up by other potential entrepreneurs testing out the market. Except they don’t call themselves that. They think they’re “just” selling something.

The potential goes well beyond retail. Insurance, real estate or law offices may have an underused front window, extra office or open floor space. Goffstown, New Hampshire, population 18,000, has a project called Art on the Walls. Each quarter, they install the works of local artists in area businesses. They are taking advantage of the available wall space and the existing traffic to connect artist-entrepreneurs with new markets.

Beauty salons are natural examples of business-inside-a-business, with clothing, scarves, jewelry and other products offered by pop-up temporary retailers. Photo by Becky McCray.
Beauty salons are natural examples of business-inside-a-business. Photo by Becky McCray.

6. Co-working spaces. Independent professionals who make a living through their laptops usually get by using whatever workspace they can find. In co-working spaces, they can share workspace with other professionals, and they get a chance to connect and interact with each other. These spaces usually provide shared equipment, open work areas, private meeting space, small offices, and maybe training space. They’ve become common in big cities, but can be a boon for small towns as well.

Joel Bennett, who founded a co-working space in Pella, Iowa, (pop. 10,000), described co-working as workspace that is “more professional than a coffee shop, more interactive than a home office, and more interesting than a table at the public library.”

We tried one in my town, Alva, Oklahoma, but it didn’t work out. I didn’t build up a big enough community of potential co-workers to make good use of it, and the sponsoring organization has since closed their office in town. And that’s OK, because failure is part of entrepreneurship. Experiments like these come and go.

7. Maker spaces. If a co-working space is “bring your laptop and come work together,” then a maker space is “bring your tinkering project and come work together.”

In Sonora, California (pop 5,000), a group of local organizations took over a floor on an empty hospital building. They outfitted it with co-working space and equipment, including a fast Internet connection, gaming platforms, computers and software, and conference and training space. They also added 3-D printers, an electronics lab, a prototyping metal shop and a woodworking shop. Few entrepreneurs could afford to buy all this equipment themselves, but many could afford to pay a small monthly amount to join the space and share it.

A similar idea that builds on that is shared artist studios. In Sulphur, Oklahoma (pop. 5,000), the Chickasaw Nation operates the ARTesian Gallery and Studios. Local artists can work in small individual studio spaces and share gallery space. Mark Mulligan with the Chickasaw Nation sees it as a collaborative co-working space for artists, or an arts incubator. He related it to his experience in college, meeting other artists who worked in different media, trying new things, and sharing ideas.

Darlene's Home Cooking
Food trucks and trailers are not just an urban phenomenon. Photo by Becky McCray.

8. Mobile businesses. You’ve seen plenty of food trucks in bigger cities, but they are relatively new in small towns. Some small towns resist outside food trucks as “invaders,” while others embrace them as added vitality.

Altadena, California (pop. 42,000), is just north of urban Pasadena, but feels a world away. “We still can keep horses here, and it’s not unusual to see them out and about the streets of Altadena,” says local resident Lori Elliott Webster. “Accordingly, the pace is a little slower here, and people are used to going down into Pasadena to do their shopping.”

In 2010, locals started a food truck night. They attracted six or seven food trucks once a month, but they also attracted some resistance from locals who felt it would hurt local restaurants. “And yet our neighboring restaurants had never been busier!” said Webster. “It was great fun, and helped boost interest and spending in a sleepy area.”

Mobile businesses are much more than food. Retail businesses, especially women’s boutiques, are going mobile. Financial planning, bookstores, even bridal shops and wedding planners are moving out into trucks and trailers.

Smaller steps toward entrepreneurship

Each of these rural business models acts as a step up and a way to grow a business without going big all at once. The more business ideas that get tried, then the more entrepreneurs will have more opportunities to learn. If they can try out an idea with a pop-up display in a salon, they can learn more about what will work with local customers and gain market intelligence. The result is more entrepreneurial activity and a healthier local community.

Becky McCray owns a retail store and a cattle ranch in rural Oklahoma. She writes and speaks about rural small business. Download a resource guide with links and more examples of the 8 Innovative Rural Business Models at http://smallbizsurvival.com/locavesting

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