Why do some communities have twice the average number of businesses? Two Oklahoma scholars see several avenues to business creation.
Several recent Yonder articles have highlighted the virtues of rural entrepreneurs: we’ve had stories of Alabama residents adapting their textile skills to provide customized clothing, heard about the resiliency of flea markets to the recession, and listened to some policy ideas about promoting individual entrepreneurs. Timothy Collins even shared a brief history of entrepreneurial development in rural areas, indicating that entrepreneurship has been a “bootstrap approach” to income and jobs for residents with few other alternatives. Collins also suggests that a strong entrepreneurial base is a precursor to attracting larger firms or businesses.
There is no doubt that entrepreneurs are important for rural areas. But there is more to successful entrepreneurship than just a person with a good idea and a sound work ethic. An encouraging and understanding community is also crucial. Without some type of support system or help to get them started, many potential business owners would not even consider the entrepreneurial path.
So what can communities do to help entrepreneurs succeed?
Taking a look at some case studies from a relatively rural state like Oklahoma is a good place to start searching for the answer.
There are several rural communities in Oklahoma that are widely recognized as successful cultivators of entrepreneurial efforts.* Available data backs this up (Table 1): compared with all other communities in the state with populations under 40,000, each of the five communities listed has a significantly higher than average number of small (5 – 19 employee) business establishments. Of these five communities, three have more than double the rate of micro (1-4 employee) business establishments. All have thriving retail sectors, with “Pull Factors” above 1.0, indicating that each area is attracting shoppers from localities. By comparison, the average pull factor of other Oklahoma communities with pop. less than 40,000 is only 0.72, which implies that residents in these communities are leaving to shop elsewhere.
Why have these communities been so successful at engaging entrepreneurs? To be sure, some of their success has been driven by geography and the presence of natural amenities. However, the five towns shown in Table 1 are located in four very diverse geographical regions of the state with different levels and types of amenities. They therefore offer an opportunity to look at several different approaches to becoming an “entrepreneurial community.”
Here are a variety of approaches these communities have taken to foster entrepreneurship.
1) A Heavy Emphasis on Main Street
Cordell, in southwest Oklahoma, has historically been an agricultural community that was dependent on oil and gas. However, the oil industry decline of the 1980s took a heavy toll. Cordell also lost a large curtain manufacturing plant and all three of its three family-owned banks during that decade.
The emergence of a strong Main Street Program in the 1990s had an impact on the downtown business scene, as many building fronts were restored and sidewalks revitalized. The Main Street Program, which focuses on designing, promoting, and reinvigorating downtown areas, is organized by the Oklahoma Department of Commerce and typically involves both businesses and interested citizens. Communities are selected on a year-to-year basis based on their need, a work plan and the establishment of a paid position for a local program manager. Although Cordell is not still a Main Street member, the impact of this program has been lasting.
Dennis Krueger and Debbie Wede, who both live and work in Cordell, point out, “Main Street was a catalyst after the oil bust, bank closures and business loss.” The results of the Main Street Program are still evident today, as members continue to complete training and offer words of wisdom for those interested in starting their own businesses. Cordell has emphasized its history and proudly promotes its unique courthouse, while also looking to the future; now there are high-speed fiber optic lines in place for businesses requiring them. There are now seven banks in the community that are actively financing local small business projects. There’s neither a Wal-Mart nor a McDonalds in all of Washita County, but Cordell, the county seat, has managed to grow during the 2000s while most of western Oklahoma has been losing population.
2) Putting Aside Your Differences
Sulphur and Davis, located only five miles apart in southern Oklahoma, have historically been competitors, suffering from the “Friday Night Football” rivalry that plague many rural neighbors. However, the communities have recently pushed past these differences and are now working together as a county to promote their advantages. The turning point came when key individuals from both communities applied for and received an “Initiative for the Future of Rural Oklahoma” grant that helped them think about their shared goals and walk through the issues they had.
Known for their natural resources (including falls and springs) and a national park, both towns have set up beautification committees that cross over between municipalities to ensure that visitors want to return to the area. The chambers of commerce in both towns combine events such as banquets and auctions, and actively promote businesses within both communities. As residents in both communities note, “What’s good for Sulphur is good for Davis, and what’s good for Davis is good for Sulphur.”
3) Focus on Your Assets
Pryor, in northeast Oklahoma, is home to the Mid America Industrial Park, the largest rural industrial park in the United States. Established in the 1960s, the park has been continuously updated with renovations and improvements over the years. With over 4,800 employees in 78 industries, the industrial park includes several small and medium-sized businesses and also supports numerous mom-and-pop establishments across the community that cater to industry-specific needs. The park houses several ready-to-go buildings and electricity costs are quite low: an inviting setting for potential entrepreneurs. A business incubator is available within the industrial park. Further, a workforce development program at the high school level provides different types of certifications that the local businesses require and focuses on service-oriented careers that accommodate those industries. The community as a whole takes a great deal of pride in the industrial park and hosts a full-day informational session at the park for emerging local leaders.
4) Diversify yourself
In northwest Oklahoma, Woodward takes advantage of its central location to attract shoppers from Kansas and Texas. The arrival of Wal-Mart has prompted small business owners to find niche markets that complement the big-box retailer, such as creating customized versions of clothing or materials, or specializing in older, vintage retail. Numerous restaurants in the area cater to the needs of hungry shoppers.
However, Woodward is much more than just a shopping destination. Local leaders recognized the need to diversify as far back as the mid 1980s, when they gathered regularly to talk about business opportunities in their town. As Lavern Phillips of the Woodward Industrial Foundation recalls, “Bankers, business owners, and concerned individuals in Woodward met in the hospital cafeteria every Wednesday evening and Saturday to discuss diversification of our economy.”
Today, the local High Plains Technology Center offers courses in many service-oriented careers such as horticulture, child care, or automotive repair, as well as training in welding and construction. Many graduates go on to work in small businesses or start their own. Recent trends towards alternative energy sources have been taken to heart in Woodward. The powerful winds that blow year round have stimulated the building of windmills for energy production. Several active wind farms now exist in the area, along with small firms specializing in servicing them.
The four approaches listed here are not the only reasons these communities have been successful entrepreneurially. Many other factors are important in each case, including the personalities involved, historical industries, and nearby natural amenities. There is no single “best” approach that any rural community can simply take that will automatically encourage entrepreneurship. As any economist will tell you, the answers will vary based on the comparative advantage that an area can put forth. The ability to recognize and build on that advantage is crucial both for the individual entrepreneur and for the community where business minded people live. Economic development committees and interested citizens who understand how existing resources (amenities, proximity to highways, infrastructure, etc.) strengthen or weaken potential strategies can best foster entrepreneurship.
*These communities were also highlighted during “listening sessions” on entrepreneurship held by the Southern Rural Development Center in 2005. Additional information on these sessions can be found here.
Brian Whitacre is an assistant professor in the department of Agricultural Economics at Oklahoma State University. Lara Brooks is an Extension State Specialist focusing on rural health care, rural entrepreneurship, and retail sales analysis.