Starting a Company

Starting a Business in a Small Town

Written by Amy Bax for Gaebler Ventures

Many aspiring entrepreneurs fear starting up businesses in small towns because they feel there is no room to grow or be profitable. We discuss the benefits of starting up your business in a small community and offer advice on what to be careful of when starting a business in a small town.

Starting a business in a small town?

Some entrepreneurs are hesitant to start a company in a small town because they think their opportunity to grow will be limited.

This can be true if you cannot adequately meet the needs of members of the community. But, there have been many who are able to thrive in smaller communities and rural areas because they understand their market and are able to meet the needs and wants of the people who live there.

Drawbacks and Things to Watch Out For

Be aware that your market is much more restricted. You are now in a rural area, and the target markets and niches you want to attract will be much smaller than what they would be in a larger city.

Consider this as an opportunity to provide more specialized service. Not only will this be appreciated, but people who enjoy the convenience of having your store in their town versus having to travel an extensive amount will most likely not mind paying a little more for what you offer.

First impression can mean everything. Get to know the community and let them get to know you. In small towns, socializing within the community at events and functions are a must. People want to know who you are and what you do.

Being able to put a personal feel to a product is a key factor to getting people to visit your business. Otherwise, if you choose to keep to yourself and they know nothing about your background, they may be turned off and choose to shop elsewhere to someone they know.

Benefits of Forming a Business in a Small Town

Having a small or local business can be beneficial in certain ways.

Personalized Service

Large national chains and department stores are not able to offer the personalized and custom services that you as a smaller business can.

First, this is because it is not lucrative or cost-effective for the larger businesses to expand into smaller communities. Their proven way of doing things often does not transfer to more remote locations. And secondly, their best practices often do not include a more personalized touch- which is often appreciated by residents of smaller communities.

Limited Competition

It is easy to become an industry expert in a smaller town. Competition in smaller communities is greatly reduced -- if you are not the only person in your field, you are probably one of only a few who are focused on your industry.

Take advantage of this opportunity along with your personal service that you provide to establish yourself as an expert. People may approach you outside of business hours and ask for your advice or opinion. Not only do they respect your knowledge on the subject, but also, because they are approaching you as a member of the community, it means they have respect for what you do and the service you provide.

Easy to Reach Your Market

Advertising and marketing efforts can be more cost-effective in a small town. Because you are targeting a much smaller area and number of people, it is easier to get the most bang for your buck.

Small towns may be a niche market within themselves, so it is easier to specifically pick out features of your product/service to advertise because you know more about what your customer values. Also, word-of-mouth is a valuable marketing tool. In small, close-knit communities, one good experience can be communicated very quickly. But beware- this is just as true for bad experiences.

Lower Costs

Unlike being in a larger city or metropolitan area, small towns guarantee lower rent, building costs, and standard of living in general. So, as a start-up business, it may be a little easier to initially get your feet off of the ground because it will require a smaller investment and/or loan.

Amy Bax is interested in providing innovative informational resources to entrepreneurs. She is currently an MBA student at the University of Missouri - Columbia.

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