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Small & Home-based Business

Stimulating Economies

"Entrepreneurship represents the best, if not the only hope for building stronger economies and communities in rural America." (Charles W. Fluharty, Director, the Rural Policy Research Institute)

In recent years, changing world markets and policies have had major effects on the U.S. economy. With the loss of significant numbers of manufacturing and agriculture-related jobs, many parts of rural America have suffered severe economic downturns, and communities are looking for new ways to expand economic opportunities. Research shows that fostering the growth of small and home-based businesses can be an important economic development strategy.

According to the Small Business Administration, there are approximately 24 million small businesses in the U.S. "In 1997, the U.S. economy created nearly 3 million new jobs, with 6 out of 10 of the industries adding new jobs being small-business-dominated industries. Small firms hire a larger proportion of employees who are younger workers, older workers, women, or workers who prefer to work part-time. Small businesses also provide 67 percent of workers with their first jobs and initial on-the-job training in basic skills."

Fostering small and home-based businesses is particularly important to rural communities, where small markets and limited availability of skilled labor may prevent the development of large-scale firms. Rural communities that promote new and innovative small enterprises can stimulate new employment opportunities and expand the local tax base, often contributing to each citizen's quality of life.

In collaboration with land-grant universities and other partners, NIFA is helping rural entrepreneurs capitalize on local opportunities in three specific ways:

  • Providing educational opportunities to improve business skills.,
  • Helping entrepreneurs acquire sufficient assets to invest in new enterprises.
  • Identifying, through research, specific areas where rural entrepreneurs need the most assistance.

Through NIFA's Community Resources and Economic Development base program, state extension specialists and county staff, often in collaboration with personnel from other support organizations, provide training and information to entrepreneurs across the U.S. Topics include business plan development, market and consumer preference surveys for local businesses, and development of cooperatives to enhance the value of agricultural production. The University of Maine's Small and Home-Based Business Education Program is a good example of this kind of partnership.

Traditional venture capital is often not readily available in rural areas. Start-up financing presents a major barrier for people hoping to initiate or expand a small or home-based business. Many prospective small business owners look to household assets as the foundation for funding. Across the country, educators help individuals and small groups of people develop and maintain savings plans. Examples include America Saves, a financial education program coordinated by the Consumer Federation of America in cooperation with NIFA.

The economic impact of small and home-based businesses in rural America has only recently been widely acknowledged and their importance is often misunderstood. NIFA supports research to expand the general understanding of these enterprises and highlight specific areas where small-scale entrepreneurs are most in need of assistance.

For example, 13 land-grant institutions participate in a multistate project called “Family Business Viability in Economically Vulnerable Communities.” This project has undertaken detailed studies of 794 family businesses since 1987. The project has also shown that more than 18 million U.S. households (almost 14 percent of the total) own at least one business and together represent about half of both the nation's gross domestic product and total wages. These studies evaluate not only the economic impact of family businesses, but also the relationships among the family, the business, and the community. The research continues to prove the worth of small and home-based businesses to their communities, tracking their social and economic values to the business owners and customers, as well as the entire population.


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