Keepin’ it rural
My first visit to rural America was in 2005, driving
along the main road of a small Texas town of roughly
7000 residents called Mexia, towards land that my
husband’s family has ranched for generations. Mexia
is a large town by relative definition- famously home
to the only Walmart in all of Limestone County. The
next town over is Tehuacana, Texas, with a populati-on
of 283 people.
Less than 20 percent of Americans live in rural areas,
but rural areas cover 97 percent of U.S. land mass. Ru-ral
areas are defined by the U.S. census as communities
with less than 50 000 people. Their populations ha-ve
steadily shrunk over the last few decades as (most
often) younger generations have moved to urban and
sub-urban areas. Rural areas were slower to recover
after the 2008 financial crisis and overall see slower
growth than their urban counterparts.
According to the U.S. census only 17 percent of bu-siness
operates in rural areas, the majority of business
is located in cities. With increases in infrastructure and
broadband investment for rural areas, this trend might
slowly be shifting. Rural areas are more economically
and demographically diverse than ever.
With a shift away from farming and small ma-nufacturing
towns, rural communities now support a
wide range of jobs, from digital services to advanced
manufacturing to recreational tourism. Rural Ameri-cans
have some of the highest rates of upward eco-nomic
mobility in the nation, with higher high school
graduation rates and higher rates of homeownership,
than their urban counterparts. Could ‘keeping it ru-ral’
be a positive trend for small businesses and rural
communities alike?
Location, Location, Location
Through Amcham Finland’s Launchpad USA platform
we work with many Finnish companies heading into
the U.S. market, briefing them, working with them,
and walking them through critical decisions like mar-ket
entry and operational locations. Gone are the days
where California and New York were the obvious and
perhaps only realistic choices, our successful mem-bers
have entered and expanded in many other cities
KOLUMNI
ALEXANDRA PASTERNAK-JACKSON, CEO at Amcham Finland, is working to make Finland a more open and
international place to do business and to help Finnish companies navigate the US market. She has taught on the
importance of networking as well as held non-profit board positions, both in Finland and the US. Alexandra holds
an MBA from Haaga Helia University of Applied Sciences and a BA from the Elliott School of International Affairs
at the George Washington University. She lives in Helsinki with her Texan husband and two kids.
and clusters.
Many people assume that if you locate your business
in an urban area, like New York or L.A. you are bound
to be more successful than others located in more rural
areas. At first glance, this might make sense because
cities have more consumers, more prospective emplo-yees,
easier access to business assistance ecosystems,
logistic and supply chain infrastructure, and more ca-pital
flows through urban areas.
However, locating to an urban environment does
come with some drawbacks - significant competition,
higher operating costs, and higher taxes. Your dollar
revenue could be higher, but your profitability might
suffer. The higher your cost line, the lower your profits.
Ultimately, to be profitable, you need to run a lean ope-ration.
The largest expenses for operating a business in
the United States are business insurance, taxes, labor
costs, inventory, land/office space, and advertising. All
of these costs are lower when you operate in a rural area.
Large companies like Salesforce, Lockheed Martin,
and Amazon have all partially relocated their opera-tions
to smaller towns. It’s not just big companies that
are going rural. According to the 2016 Small Business
Credit Survey, a study conducted by twelve federal re-serve
banks that surveyed 10 303 small businesses (with
less than 500 employees), rural small to medium sized
businesses tended to be more profitable, with longer
survival rates, and an easier time getting financing for
scaling operations. In many ways, rural business out-performed
urban companies of similar size. They were
more likely to be profitable and more likely to break
even than their urban counterparts.
With the onset of digitalization and the rapid growth
of online businesses, labor force location seems to be
less of a factor than ever. Telecommuting and remote
work allows rural workers to pursue opportunities far
outside of their traditional commuting zone. There is
still work being done to ensure that all of rural America
has access to broadband internet, and though changes
are being made it is still too slow for some communities
to benefit from the shifting patterns of employment and
new digital industries that need employees.
However, progress is being made, and the rich cul-tural
connection and American history tied to rural
areas means that many people are committed to kee-ping
rural America going and helping its businesses to
flourish. When it comes to thriving business and econo-mic
development, keep your eye on what’s happening
in rural America, towns just like Mexia, Texas have a
role to play in America’s future economic prosperity.
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