Our friends over at the Rural Enterprise Assistance Project (REAP) have release quite an interesting survey of Nebraska rural small businesses, identifying some specific needs of the rural business community. The results aren’t much different than urban counterparts with respect to the current financial meltdown: access to capital. I’d like to say at Valley County Economic Development, we’ve tackled many of these issues with programs established here years ago, along with the fact we’ve promoted social media use now for two years going strong. I don’t want to boast, but it’s no surprise that our program reflects what REAP’s report has found – principled micro and small business finance, with technical assistance, grows local economies. We’ve seen ten years of proof in Valley County.
Have a look at the release published by REAP below:
Survey: Need for financing, training in business knowledge and planning chief concerns for Nebraska’s rural small business
A new survey suggests lack of sufficient capital and taking on more debt remains a concern for Nebraska’s rural small businesses.
That was one of many findings from the 2010 Small Business Needs Assessment, a biennial survey administered from February to April by the Center for Rural Affairs, sampling opinions of nearly 250 small business owners, 100 lenders and 36 business technical service providers in rural Nebraska. The results were released during a business roundtable discussion hosted by Rep. Adrian Smith (R-Neb.) in Grand Island Aug. 25.
The purpose of the survey was to gather information from both business owners and the people that serve them. The data and the survey findings also will assist the Center for Rural Affairs, and its Rural Enterprise Assistance Project (REAP), as well as partners such as the U.S. Small Business Administration, to help better tailor programs to fit the needs of Nebraska’s rural small business climate.
“The ultimate goal of any business development initiative or program should be to help build sustainable businesses in communities and neighborhoods,” said Jon M. Bailey, Rural Research and Analysis Director for the Center for Rural Affairs. “The survey results show significant challenges to meet this goal, but we know better where to target our resources to do the most good.”
While access to capital for rural small businesses may reflect the current economic climate, it also represents a critical and seemingly ongoing challenge for rural small businesses and the overall economy. According to a March survey by the U.S. Small Business Administration’s Office of Advocacy, over a recent 15-year period, small businesses created a conservative estimate of 65 percent of net new private sector jobs.
Most rural small businesses in Nebraska lack large revenue streams. Nearly 60 percent of business owner respondents reported their business made less than $100,000 in gross sales in the most recent business year, and the largest number reported sales of less than $25,000.
Financial challenges found by respondents in the gross sales categories below $100,000 raise warning signs for these businesses and their rural communities.
“The need for working capital is a natural response for start-up or less experienced businesses, but for capital issues to remain after a business is established is both a reflection of the current economy and the nature of operating a small business in a rural place,” Bailey said. “How businesses respond to these financial challenges, with the assistance of business development programs and public policy, is critical for the rural economy. If established businesses are facing these challenges, we have to find solutions to keep them in business in their communities, and find incentives for start-up businesses in similar communities that may face identical challenges.”
Business knowledge and planning and financial issues are the primary difficulties faced by start-up businesses; nearly 70 percent of survey respondents claimed a lack of start-up cash as a chief difficulty faced in starting a business. Financial issues were the top-ranked difficulties for agriculture, online and construction small businesses. Business knowledge and planning issues were the top-ranked difficulties for service, retail and manufacturing small businesses in rural Nebraska.
Marketing and advertising were by far the most popular choice for training and assistance that would improve small businesses. Business plan development, legal issues, succession planning, and intermediate bookkeeping followed in popularity.
While business knowledge and planning issues were major challenges for rural small businesses in the start-up phase, these challenges continued even as a small business grows and matures. Throughout the survey, whether by business age, business type or amount of sales, rural small business owners expressed a need for training and assistance on business knowledge and planning issues, indicating many start a small business with little planning or business knowledge. Even rural small business owners who are successful to a degree recognize the need for such training and assistance if the business is to grow and be more financially stable.
Nearly 80 percent of rural small businesses with employees who answered the survey do not offer employee health insurance benefits; cost is the primary reason, although many did not offer such plans because employees were covered by other health plans.
Moreover, the survey found 15 percent of small business owners were not covered by health insurance. Those that do enjoy health coverage often are covered on a group plan through another member of the household, such as a spouse, or by purchasing an individual health insurance plan.
Social networking technology, including sites such as Facebook and Twitter, has a surprisingly large usage among rural small businesses. These technologies likely will continue to grow in popularity, making it wise for small business development initiatives to incorporate them into their dealings with their small business clientele.
“We have a challenge to balance the needs of most of our business owners who prefer traditional face-to-face and one-on-one assistance with new technology that enables our program to reach a greater number of people,” said Monica Braun, REAP Women’s Business Center Director.
Finally, while only 11 percent of rural small business owners said they were within 10 years of exiting their business, double that number claimed succession planning as the current greatest need of their small business, and nearly a third of respondents chose succession planning as a subject of needed training.