Over the last year Justin and I have been working with a small number of rural businesses to help them develop. We struggled with what rural meant in this context.
Is a rural business one that is based in an area with few homes or other buildings and a low population density? Or is it a business that serves such communities? Is a business in Alnwick, which is clearly a town, a rural business as the area is surrounded by open countryside? Indeed, is Northumberland a rural county or not?
The truth is that there is no satisfactory definition that always holds true. That’s the way life is and it let’s us apply our own definition to the word.
There is however, an assumption that rural businesses face different problems than those in more urban areas. All businesses face the same problems, products people want to buy at a price and volume that can turn a profit, access to markets and finance. The products differ but then so do the markets. What is the real difference then?
There is clearly an issue for rural businesses due to population density. If customers are scarce then it is more difficult to sell the volumes you need to cover costs. Businesses rely on volume and if it is not there then it they will fail. This much is obvious.
On reflection though, there are two real issues that rural businesses face, finance and infrastructure.
In a capitalist economy, money will flow to where it can get a better return. It is much easier to turn a profit in a city than in a village and so it is much easier to invest in the former than the latter. Money flows to money. Investors are much less likely to invest in a rural business than in an urban business and therefore rural businesses are much harder to develop.
Good and services flow along infrastructure. Good roads, rail, broadband etc. allow the easy flow of products and services from provider to consumer. Rural areas, due to their population sparsity have relatively poor infrastructure which restricts the flow of goods and services. It is much easier to get products and services to flow in urban areas than rural ones. It is much easier to get products and services to flow from urban areas to rural ones rather than the other way around.
The biggest problem therefore that rural businesses face is competing with their urban counterparts. It is an unfair fight.