Making rural micro-businesses work

These last few years have been challenging for many businesses, not least those in rural communities. In our final year, and with the government giving priority to restoring growth in the economy, the Commission for Rural Communities set out to identify why some rural businesses have continued to prosper despite the downturn.

Micro-businesses make up the large bulk of the rural economy, itself worth 20% of the national total, and so it was these businesses that we focussed on. Our report, Rural Micro-businesses: what makes them thrive in a challenging economic climate?’ identified a number of recommendations for government and other decision-makers.

The most important contributor to the success of any business is its owner or manager. I have met many many impressive rural businesspeople in this role, all possessing a real enthusiasm for their business and the skills to ensure that it does well. From talking to these people, we have identified a number of issues that their businesses tend to have in common. They include:

• A willingness to diversify, to try something new. Many farmers, for example, have converted disused agricultural buildings into offices or holiday accommodation, and have generated new and sustainable income streams
• An ability to identify a niche in the market, in their area, and to fill it. One rural company we spoke to had begun to sell caravans and had shifted 37 units in their first five months, in an area where there had been no supplier previously
• A deep understanding of their local market. One local shop, fearing the consequences of a new large supermarket nearby, had asked customers what they hoped the shop would supply and had moved upmarket and continued to be profitable
• Keenness to work together. One company which trains canoeists had teamed up with local hotels and restaurants to offer good value package holidays, whilst remaining small and independent
• Cost awareness. Transport costs can be higher in rural areas, but they can be offset by lower rent, rates and parking charges.

Of course, there are always things which government and others can do to help small businesses in rural areas. I have been pleased to see the government has introduced Rural Growth Networks in five areas, which aim to help business to network, to find good, reasonably priced accommodation, and to have access to broadband. I am also glad that increasing the coverage of rural broadband has been given priority within Defra. However, there are still a number of changes which our report calls for:

• We have come across rural areas which have no access to broadband, or where it is very slow and call on Defra, BIS and CLG to make a clear, costed commitment, beyond existing commitments, to introduce high speed broadband (at least 24mbps) to all rural areas within five years.
• Many businesses we spoke to had experienced slow and obstructive planning applications, which had limited their opportunity to expand.
• Micro-businesses often do well without any advice, but many said to us that they would benefit from access to support from more experienced businesspeople. We believe that local enterprise partnerships should draw on the energy and potential of voluntary business support organisations to encourage an increase in the number and diversity of mentoring programmes available to rural small businesses.

Despite the recession, our research has shown that many rural micro-businesses have continued to thrive. Amongst the specific issues facing rural businesses, the need for high-speed broadband to be available on a comparable basis to that in urban areas stands out as an issue which puts some rural micro-businesses at a competitive disadvantage, and one which needs to be addressed. Nonetheless, well-run rural micro-businesses which are conscious of the opportunities open to them, prepared to be flexible with the products and services they offer, and open to collaboration with other businesses, can be very well placed to succeed in the current challenging economic climate.