Sustainable Business Practices in Areas with Low Population Density

Around a decade ago, I recall having a conversation with one of my colleagues about the state of the economy in his hometown. I asked him whether his town of 800 people had a tavern or any decent restaurants. He jokingly admitted that the community didn’t have any of those things, but it did at least have a gas station and convenient store. More recently, he begrudgingly stated that he can no longer even joke about this, because the gas station and convenience store both closed down.

sustainable business
Shutterstock Licensed Photo – By NicoElNino

Of course, his anecdote isn’t the reality for all rural businesses. His hometown is tiny even by the spectrum of most rural communities. Nonetheless, his story still highlights some of the challenges that rural business owners face these days.

It is certainly possible to create a profitable, sustainable business in a rural community. However, it requires a certain strategy that urban entrepreneurs don’t need to think about so much. Gemma Roe, the founder of an eco-friendly manufacturing business in the UK, has shared some insights on The Guardian.

Know how to recruit from a limited labor market

Finding talented employees is a challenge for almost all new businesses these days. It is even more difficult for companies located in rural areas. They have a smaller pool of potential people to hire. The workers they intend to hire also tend to have a narrower range of skill sets, such as experience in the agricultural, drilling or mining industries. Entrepreneurs looking to hire workers that don’t need highly specialized skills should be able to get by fine. Companies in the technology, logistics or professional services industries are going to have more difficulty.

This doesn’t mean that it is hopeless for professional services and technology companies to find talented workers they need to thrive. However, they are going to need to be strategic about tapping the limited labor pool. Here are some ideas they should consider:

  • Reach out to colleges and local training centers to get entry-level workers. The lack of competitors in your area can help make up for the limited labor pool. Since new graduates and other desperate employees have fewer options, you shouldn’t have trouble convincing them to work for your company, as long as the wages and benefits are reasonable.
  • Reach out to people that are commuting. They may have to take a pay cut from the large company that pays them in the large city they work out. However, they will be able save a lot of money on fuel and minimize the stress and time away from their family. This can make it worth the change.
  • Consider outsourcing certain functions outside your area. We live in a global world now, so you don’t need to confine yourself to hiring local employees.

It will still take time to find a good employee, but things will go much more smoothly if you follow these tips.

Keep costs low

Keeping costs low is important for any business owner. It is even more important in rural communities, because you will have a lower cash flow.

This is one of the reasons that the previous owner of the gas station in my friend’s home town survived for so long. He had a very frugal way of doing business, which included a pos system for gas station. The guy that owned it after him had a tougher time, because he spent too much money on renovations and other nonessential things.

Focus on building long-term relationships with customers

There are a number of challenges that you will face running a business in a small community. The good news is that there are also some strengths. Part of developing a sustainable business model as a rural company is understanding these benefits and using them to their full potential.

Two of the biggest benefits of running a company in a rural area are:

  • There is less competition.
  • People have a much stronger sense of community loyalty.

Both of these factors make it easier to forge long-term relationships with customers. However, you need to make sure that you provide real value to those customers and have a strong presence in the community to foster that loyalty.

Avoid highly niche markets

When I visit Boston and New York City, I am often very surprised by the types of businesses that are able to survive there. They are often very specialized, such as stores that exclusively sell antique comic books.

You may have your heart set on creating one of these businesses, but unfortunately they are not sustainable in a small community. You have a small pool of potential customers, which means that you are going to need to develop a business model that appeals to the masses.