Entrepreneurship on the Rise in Rural America

- from the desk of Jon Bailey, Center for Rural Affairs, jonb@cfra.org

Entrepreneurship on the Rise in Rural America

A recent study of Nebraskans suggests business ownership is on the rise, but notes high cost of health insurance as a possible hindrance to continued entrepreneurial expansion.

By: Mina Azodi

July 20, 2005 - Entrepreneurs are cropping up in the Heartland faster than most people think, says a new study by the Center for Applied Rural Innovation (CARI) at the University of Nebraska.

The annual report surveyed nearly 3,000 rural Nebraska residents on several topics, including employment. This year's poll marked the 10th anniversary for the CARI survey and focused on changes in residents' lives over the past decade.

One of the most important changes is the large number of rural Nebraskans who started their own businesses in the past 10 years, said CARI Professor Randy Cantrell.

According to the survey, 20% of rural residents now own companies. Most rural business owners turn to entrepreneurship as the only opportunity in a small town, said Cantrell. “You either have to leave an area you love to seek wage employment in a larger city, or you have to engage in an entrepreneurial activity,” he said.

Surprisingly, a large percentage of survey respondents had moved to rural communities from larger cities in the past decade. Rural towns are attracting a younger, more educated population than ever, and the increased mobility fosters entrepreneurship, Cantrell said.

"We know entrepreneurs require money," he said. "But they also need knowledge and management skills, and we're getting more people who have that."

Although entrepreneurship has increased among rural residents, Cantrell said legislators could do more to nurture small business growth in these communities. One of the issues hindering entrepreneurial expansion is the high cost of health insurance, Cantrell said. Nearly 70% of survey respondents said health insurance costs makes self-employment unappealing.

"What concerns me is that this feeling was the strongest among the younger respondents, who are the very people you want to engage in entrepreneurial activity," he said. "If this is strong enough to limit their willingness to start a business, then over time that will be very damaging."

The survey demonstrates that health insurance is an economic development issue, and not just an equality and access issue, Cantrell said. If legislators want to continue to bring young entrepreneurs to rural areas, they must see health insurance from an economic perspective, he added.

"Our research flies against the brain drain concept that says everybody who has skills never returns to rural towns," Cantrell said. "Continuing to attract these residents is critical for the future of those communities."

Questions? Comments? Post them here or for more information contact Jon Bailey, jonb@cfra.org or John Crabtree, johnc@cfra.org, at the Center for Rural Affairs.