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In an Uncertain Economy, Rural Small Businesses Adapt

Against the backdrop of a pandemic that has strained the nation, a recent report showed economic anxiety among rural business owners is higher than their urban counterparts. As small-town entrepreneurs navigate current conditions, some factors, like the services they offer and the prices they charge are within their control, and others, like broadband access and supply chain issues, are not. 

Tara Ritchie, owner of Waggin Tails Pet Resort in Whitesburg, Kentucky, saw her career reach a turning point during the pandemic. 

Tara Ritchie owner of Waggin Tails Pet Resort. (Photo via the Waggin Tails Pet Resort website.)

While the country was in lockdown, Ritchie saw an opportunity for her business, which at the time only offered grooming services, to expand. She knew that the moment the lockdown order was lifted, people would want to travel and would need a place to leave their pets. With this realization, Ritchie made plans to turn her business into a complete hotel/daycare for pets.

“That took us from just a small-town dog groomer to getting $200,000+ in sales last year,” Ritchie said.

Waggin Tails Pet Resort now has 2,000 human customers, and even more pets. However, part of making her business flourish included taking into account how inflation and economic strains have impacted her customers and her community.

“Here in a rural economy specifically, a lot of our population lives on a limited income,” Ritchie said. 

To account for this, Ritchie offers two types of pricing, including set pricing and an add-on menu. This add-on menu has allowed the business to gain more revenue while providing flexibility in consumer spending. For example, a full day at “Doggie Daycare” costs $25 at the pet resort, but if customers are willing and able to spend more, they can add smaller services like an extra bath before going back home or seasonal photos.

The limitations of consumer spending are not unique to Ritchie’s rural community.

SCORE, a mentoring organization for small businesses, released a report in September 2022 that examined the outlook of  urban and rural small businesses in the context of recent economic uncertainty. According to the report, slowing customer spending has been a challenge for small businesses in rural communities where 48.6% said they have faced lower customer spending in recent years. Very close behind rural businesses, 47.8% of non-rural businesses felt the same.

SCORE Vice President Betsy Dougert said that this slowed spending often makes a bigger impact on rural communities. She said since smaller towns have smaller populations, each consumer has a larger impact on an individual small business. Because of recent economic anxiety and inflation, many consumers are more hesitant to spend on non-essential items.

“[Businesses] are seeing fewer clients walking in their doors, fewer clients coming across their website. And when those customers do come in, they’re spending less money,” Dougert said.

Another big challenge for rural areas, according to the SCORE report, has been supply chain issues and higher expenses for running their businesses.

Teddi Maslowski, owner of Birch Creek Farmery in Burgettstown, Pennsylvania, said it has been difficult to keep costs down with supply chain issues. When Maslowski took over her family’s farm, she wanted to focus on sustainable and ethical farming practices. Her livestock are all heritage breeds and raised on the pasture.

Teddi Maslowski (left) owns and operates her family’s small farm. (Photo courtesy of Maslowski.)

Because of rising prices, while making grain recipes for livestock feed, Maslowski does research to find substitutes with lower costs and the same nutritional benefits.

“We usually use oats. For some reason those [prices] are outrageous, like four times the price [oats] normally are, and so we look at alternative things like wheat or barley,” Maslowski said.

Further, because of the pandemic, Maslowski said butcher appointments are harder to find and she has had to drive across the area to find butchers. Not only does this affect her business expenses, but limited appointments hinder the farm’s mission.

“The more meat we can sell, the more it replaces commercial meat. And so, right now we cannot get more butcher appointments than we have, and [they’re available for] just a fraction of the animals that we can raise,” Maslowski said. “So that immediately limits how much meat we can get out the door to replace commercial meat.”

A group of hogs on pasture at Birch Creek Farmery, in Burgettstown, Pennsylvania. (Photo courtesy of Teddi Maslowski.)

An improvement Maslowski is looking for is being able to do her own USDA-certified slaughter and processing, which she said will hopefully be possible by the end of the year. She said this development could allow her to help small farms around her sell to restaurants and have access to new opportunities too. 

SCORE’s report also delved into the need for talent and technology. The report found that population shifts have had a greater impact on rural communities, increasing the challenge of finding qualified workers. Further, a technology gap persists between rural and urban communities. 19.2% of rural entrepreneurs compared to 9% of non-rural entrepreneurs cited broadband and high-speed internet as a challenge.

Dougert said this technical gap is a problem when looking for solutions.

“A lot of the solutions fall back on technology,” Dougert said. “If the technological infrastructure is not there, if these business owners don’t have reliable, high-speed broadband access, then some of the solutions start to fall apart.”

Many rural small businesses, including Waggin Tails Pet Resort and Birch Creek Farmery have websites where customers can purchase products. However, slow internet or lack of broadband access can limit the accessibility and function of the website on both the business’ and consumers’ ends.

Matt Dunne, founder and executive director for the Center on Rural Innovation (CORI), helps create tech startups and opportunities in rural areas. He started CORI after the 2008 recession, when he said the economic divide between rural and urban areas widened. One thing that contributed to this was a decline in rural entrepreneurship for 30 years prior to the recession. Dunne said this lack of new businesses taking new approaches led to a slower recovery for rural communities.

Now, Dunne said, a silver lining of the pandemic is that people realize they can work from anywhere, including rural areas.

“There’s a lot of narrative-shift work that still needs to happen in order for folks in economic development and investors to realize that rural America can unlock incredible talent and new innovations that can transform economies,” Dunne said.

For her part, Dougert said that shopping small, voting with dollars and supporting rural small businesses in-person and online is important to uplift rural communities and economies.

“These rural businesses are creating jobs for members of the community, they are innovating, they are productive,” Dougert said. “So when these businesses are successful or not successful, I do think that ripples out into the local community and makes a significant impact, for better or worse. And so it’s in everyone’s best interest for these businesses to be successful and to thrive.”

The post In an Uncertain Economy, Rural Small Businesses Adapt appeared first on The Daily Yonder.

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