Megaphone of Main Street Research Series Spotlight on Small Business Needs
SCORE’s latest study in its “Megaphone of Main Street” research series, which spotlights overlooked and undervalued small business communities. In this and my last column, I provide a summary of the key findings in the analysis of this study.
Next to capital, there are two things every business needs in order to be successful in the Digital Age: high-quality employees and easy access to the latest technology. Unfortunately, Megaphone of Main Street survey respondents told us those can be much harder to come by in rural communities. That puts small businesses in rural geographies at a major disadvantage.
Population shifts have an outsized impact on rural entrepreneurs
Between 2010 and 2020, the population in rural communities declined by nearly 300,000 people, according to the U.S. Census Bureau. Although the decline is small—less than 1% of the nation’s total rural population—it’s the first-ever decade-long population loss in rural America, the University of New Hampshire reports.
In rural geographies, even small shifts in population can have big impacts, our data suggests. When we asked whether population shifts between urban and rural areas had impacted their business, nearly half of rural entrepreneurs (45.3%) said that they had, compared to just a quarter (25.5%) of non-rural entrepreneurs. That means rural businesses are 77.6% more likely to feel the impacts of population trends—including higher local costs of doing business, which rural business owners are 68.6% more likely to cite as a consequence of population shifts.
As a result, rural businesses find it more difficult to attract workers. When the rural population declines, the working population shifts. Small businesses in rural areas are 26% more likely than small businesses in non-rural areas to say they have trouble finding qualified employees in their area.
“Where are the workers? We can’t find laborers or [commercial] truck drivers. The regulations for trucking have made the job not easy to get into today. We’re losing truck companies because of the regulations.
They’re selling out or retiring. If we help transportation/trucking companies, it would help our truck repair business also. The farms are the only ones making it today with all of their grants and help they receive, but that hurts us. They are able to have newer equipment than the other small trucking businesses around us, and that affects our customer base, too. [We] need small business support equal to farming.” —Rural Business Owner
The study asked CEOs What are your specific challenges regarding finding and retaining qualified workers? The responses were: (The first percent was from rural and the second percent was from non-rural CEOs)
- No challenges finding and retaining workers 44.5%; 48.2%
- Few qualified workers in my area 35.9%; 28.5%
- Demand for higher wages 34.9%; 32.2%
- Difficult to deliver competitive health benefits 20.7%; 20.3%
- Workers still want to work remotely 8.9%; 10.4%
In addition, the study found that workers aren’t the only ones fleeing rural areas. Customers are leaving with them, according to rural entrepreneurs, who are 26.3% more likely than their non-rural counterparts to be concerned by having a limited local customer base.
Because they can’t grow their customer base as easily as non-rural entrepreneurs, rural small business owners must place extra emphasis on customer retention. But rising local costs have made it harder to satisfy their customers—in particular, rising fuel costs, which are vexing to half of rural entrepreneurs (49.3%) but less than a third (29.5%) of non-rural entrepreneurs.
Without internet access, technology is a trouble spot
Yet another reason rural entrepreneurs struggle to serve their customers is that they often lack access to even the most basic technology infrastructure and expertise. Rural America’s dwindling population, for instance, means there may be fewer IT experts and vendors locally who can help small business owners acquire the skills and services they need to connect to the digital economy.
But tech illiteracy isn’t exclusive to rural businesses. In fact, four in 10 small business owners in both rural (43%) and non-rural (45.5%) areas say they struggle with lack of technology assistance or knowledge.
Still, rural businesses do have unique disadvantages—the most fundamental of which is internet access, with twice as many rural entrepreneurs (19.2%) as non-rural entrepreneurs (9%) saying they struggle with access to broadband/high-speed internet.
That comports with findings from the U.S. Census Bureau, which says an average of 62.7% of households in rural counties have access to moderate- or high-speed broadband, compared to 83.3% of households in urban counties.11
More than a quarter (28%) of homes in rural areas lack broadband internet access, echoes the Pew Research Center.12 Because technology can reduce barriers to business formation, the gap is as much a challenge for rural Americans who wish to start businesses as it is for rural Americans who are trying to maintain and grow businesses.
Small business owners everywhere need help and health care to thrive
Although rural entrepreneurs are uniquely disadvantaged due to lack of population density and technology access, small businesses everywhere face real challenges. And they need real help to overcome them.
In both rural and non-rural areas, what small business owners said would most help them be successful in the coming year is better health care options, which could help them remain competitive with larger firms with regard to attracting and retaining workers.
Entrepreneurs also supported the idea of increased support for employees—in the form of stimulus, for instance, or increased funding for child care—and offered several unique ideas in their survey comments. One small business owner, for example, said more grant funding for small businesses would be helpful. Another stressed the importance of free education for small businesses on topics such as marketing, technology, regulations and finance.