Rural economies are becoming more versatile and, hopefully, more sustainable, bringing resilience to small town business in the face of industry changes.
Diversification is a real possibility thanks to technology enabling entrepreneurs to connect to a global marketplace. This is manifesting itself in several ways. For one, information technology (IT) companies are becoming comfortable setting up shop in small towns. Meanwhile, state and local rural development authorities are investing dollars in infrastructure and helping companies that want to innovate and hire new workers. And in tourism, rural areas are able to entice visitors to come and see local attractions, creating opportunities for new service industry businesses in their communities.
TECH BUSINESSES IN RURAL AREAS
It’s perhaps an unexpected marriage – rural and tech, but the combination has promising advantages. Traditionally, having software developed in the common tech hubs isn’t cheap. According to the Huffington Post, the average pay for Silicon Valley workers in the middle of their careers is well north of $100,000. To save money, companies outsource to countries with lower average wages. But what is gained in savings is often lost in language and time barriers.
A new solution is outsourcing IT tasks to rural areas closer to the customer. It’s a win-win. The customer is able to work with people in the same time zone, while not having to pay Silicon Valley wages. The IT pro may earn somewhat lower pay, but their cost of living is also less, and the quality of life is often outstanding.
Several companies are now running software development hubs in smaller towns and hiring hundreds of people. There are also firms that provide training to rural residents interested in coding or other technology-related tasks.
“Speed to market has become a key driver and really I think replaced lowest cost,” said Rural Sourcing, Inc. (RSI) CEO Monty Hamilton. RSI has development center locations in small cities across the country and has a goal to establish more locales and hire thousands of IT pros. Hamilton said companies wanting to stay competitive in today’s economy are looking at how they can best utilize technology and the most efficient ways to build out digital solutions.
“When they begin to look at those things, rural sourcing becomes a very competitive alternative.”
The company has cultivated a tight-knit work environment at its locations, where there is high energy, lots of collaboration and people working across projects and across teams to help each other out. “They truly enjoy being in the office and hanging out with each other,” Hamilton said. “At one of our offices, there’s a stash (they don’t think I know about this, but I do) of Nerf guns in closet hidden away somewhere so that every afternoon at a certain time a Nerf gun war breaks out.”
Those who wanting a career in tech, but also wanting to live in smaller towns these days can successfully do both. While RSI targets cities with around 500,000 people, other companies are involved in towns much smaller. They work to find and train the next generation of tech professionals, and rural communities and their schools are encouraged to facilitate programs that position their residents well for today’s jobs. If there is a strong enough talent pool, a community can be positioned well to attract a tech business to locate there.
“For some of these rural communities, they’ve got to find leaders and visionaries who will help them understand how they compete,” Hamilton said. “What assets do they have that they can leverage today to be competitive in a digital world?”
One asset that any rural community has is existing businesses and business-minded residents. State and regional development authorities are seeing growing entrepreneurship in small towns. In Utah, the Governor’s Office of Economic Development (GOED) is feeding that energy.
“We’re seeing more of an entrepreneurial spirit rise up,” said GOED Rural Development Director Linda Gillmor.
Gillmor discussed how Utah has invested heavily in broadband over the last decade. Some of the state’s rural main streets actually have faster broadband speeds than neighborhoods in Salt Lake City. This has opened up opportunities for those wishing to stay in their hometown to create a business or work remotely and make a solid income. Gillmor said local community leaders continue cultivating this by doing a “SWAT analysis” – taking a look at the communities strengths, weaknesses, assets and threats – and building programs that will better-position their areas for economic growth.
An important effort for communities, according to Gillmor, is to cultivate what’s already there. Utah is continually awarding “Rural Fast Track” grants. The funding assists companies with upgrading equipment and creating new jobs. The companies are required to at least match the funding one-to-one with their own investments, but Gillmor said the companies typically invest several times more than that.
For a recent round of fast track investment, GOED expects over 80 jobs to be created between eight companies. Types of companies range between tech, manufacturing and even the oldest industries in the area. One grant was awarded to a three-generation, family dairy in Cache County. The funding was used to purchase automatic calf feeders and cow milkers.
“Agriculture is changing,” Gillmor said, adding that if family ag businesses want to stay in business, they need to add technology so they can be more efficient.
A new batch of applications for fast track grants are considered monthly. And Gillmor emphasized that even if companies don’t immediately qualify, her department still works with them, in concert with the local development authority, to find the best way to help.
“That’s where we call the economic development director, and we encourage them to help this business get whatever it is that they need to grow.”
Local economic development leadership can play a very important role, and many are also working hard to cash in on their areas’ tourism appeal. They identify what makes them unique and invite tourists to come on over and stay awhile. They also work with businesses to provide the right amenities to help make it a pleasant stay for their guests.
Staying in the Beehive State, one example is Parowan, a city of about 2,800 with pioneer roots. It is uniquely located near Zion and Bryce National Parks, as well as other outdoor attractions, and is 190 miles north of Las Vegas. The city was able to attract an entrepreneur who is connected with a Chinese travel agency. He bought a former Days Inn and converted it to a lodge and Chinese restaurant. His goal is for the lodge to be a place for Chinese tour groups to stay as they explore the region.
Cedar City Daily News reporter Bree Burkitt covered the ribbon cutting ceremony at the new lodge.
“If it works as well as he said it’s going to, that hotel is going to be booked all summer, and it’s going to bring in a huge and very different influx of people into Parowan,” Burkitt said.
She explained that local officials are excited about the new business and are very pro-growth overall, while the residents are excited to see some growth and a new restaurant to enjoy.
Changes like this are necessary if small towns like Parowan are going to survive. “With how Southern Utah is growing, it’s very much a sink or swim situation,” Burkitt said. “We’ve seen this with a lot of the other towns in Southern Utah, where they either have to grow or they just die.”
She said Parowan’s city manager feels an urgency to attract younger families to the community to ensure it has a bright future.
Ben Rowley is an entrepreneur and journalist. He covers topics important to rural business. Find more content at RuralBusinessHQ.com.