How Southern Communities Are Fostering Local Business Growth
As traditional industries like manufacturing and agriculture continue declining across rural America, entrepreneurship is emerging as a vital economic engine for many small towns, especially in the South. Local leaders are getting more proactive about nurturing entrepreneurial ecosystems by providing support systems, resources and an environment conducive for aspiring business owners to thrive.
The Rural Potential
Research shows rural counties tend to have higher rates of self-employed business proprietors compared to metro areas. However, rural entrepreneurship had been waning for years prior to the pandemic, with more firms closing than opening annually in rural regions between 2008-2018.
That negative trend now appears to be reversing. Organizations like Higher Purpose Co. in Mississippi are empowering Black entrepreneurs through coordinated funding assistance, business training, marketing help and more. Rural communities are increasingly tapping into the underutilized talent pool of older workers and entrepreneurs as well.
Entrepreneurship is especially critical in providing economic opportunities to people of color who are disproportionately impacted by unemployment and other economic challenges in rural areas. According to recent data:
- The unemployment rate for Black Americans in rural areas is consistently higher than that of white rural residents. Rural unemployment rates recovered faster from 2020 to 2021, remained highest for Black or African American residents.
- Rural Black Americans are more likely to live in persistent poverty counties, where poverty rates have been consistently high for decades.
- Black-owned businesses in rural areas face significant barriers to accessing capital. In 2022, only 1% of VC funding went to Black founders, dropping by 45% from 2021, versus 36% for the industry overall.
Rural America’s diversity demands nuanced understanding and tailored approaches. Policymakers and advocates must recognize the varied nature of rural communities and their unique systemic challenges to effectively address rural issues. While certain rural narratives dominate national discourse, it’s crucial not to overlook the experiences of rural residents in less prominent areas with distinct demographic and economic profiles. The pressing concerns of commonly discussed rural communities are significant, but they shouldn’t eclipse the equally important stories and needs of rural populations in other regions. Acknowledging this complexity is essential for developing comprehensive and effective rural policies.
Older Founders, Greater Entrepreneurial Potential
The Kauffman Foundation figures about one-quarter of new entrepreneurs in recent years have been ages 55 to 64 years. Their success stories help inspire a broader entrepreneurial mindset.
Research reveals a distinct entrepreneurial advantage for older business founders. A study published in the American Economic Review: Insights found that a 60-year-old starting a new venture is three times more likely to succeed than a 30-year-old counterpart. With valuable experience and connections accrued over decades, older entrepreneurs appear uniquely positioned to overcome startup hurdles and achieve sustainable success.
Renewal Through Entrepreneurship
While no panacea, economists view entrepreneurship as one of the most promising paths for revitalizing rural Southern economies. Research shows rural businesses started by locals and newcomers alike can have powerful ripple effects by generating employment opportunities, reviving main streets and downtowns, and inspiring more entrepreneurial activity.
However, significant barriers remain, including access to capital, workforce challenges and connectivity gaps. According to Goldman Sachs, “60% of loans to small businesses are made by banks within 10 miles of the borrower and around 75% of loans are made by banks within 25 miles of the borrower.” The ongoing decline in the number of small banks, as well as reduced competition among credit providers, means rural small businesses can face acute financing challenges.
Overcoming Obstacles
To overcome these hurdles, rural leaders are making entrepreneurial support systems more inclusive and tailored for underserved groups like older workers. From skills training programs aligned with open jobs to microloans and mentorship, coordinated efforts aim to empower aspiring business owners.
By directly investing in local entrepreneurial talent across all demographics, rural Southern communities can unlock a powerful catalyst for sustainable economic renewal and growth.
The Center for Workforce Inclusion, operating in 422 rural counties, has been an important resource for older workers living in rural communities for over six decades. To learn more about our work and impact in this segment, click here.
This article is part of our series on rural workers. Also check out 6 Ways Rural Areas Can Capitalize on the Reshoring Wave.