Rural Small Business Development

Editor's Note: While this article focuses on Extension opportunities with rural entrepreneurs, the framework provided and issues raised apply to thinking about and planning for any new or expanded programming or client group.

Extension can and should take better advantage of the "untapped audience" represented by small rural business. Rural entrepreneurs have particular education and information needs that aren't being met. A number of organizations have programs for small businesses, but most don't reach effectively into rural areas. Extension is an experienced provider of management programs for some rural businesses and has an existing delivery system. Providing this help to rural businesses would support "the stability of the local economy, the quality of life in the area, and the availability of off-farm employment for farmers and ranchers."

The economy-wide interest in small business and entrepreneurial support may be at an all-time high, and we can be optimistic that the level of financial support for these programs from federal and, in some many cases, state sources is rising. Furthermore, Extension is undergoing pressure to become more relevant, to address broader societal issues, and to become more cost effective. Certainly, Extension needs something like a small business program, as much as small business needs something like Extension.

From the rural community's perspective, the role of small rural business (SRBs) will be determined by the availability and quality of certain fundamental ingredients including innovation, entrepreneurship, the pool of business skills, leadership, infrastructure, and financing. Extension can play a key role in each of these areas.

Recent research points out the special needs of small rural businesses:

1. Few small rural entrepreneurs have a good objective picture of the financial condition of their businesses.

2. The managerial sophistication of small rural businesspeople varies considerably among firms.

3. "There is...a critical need to develop a financial management information system that is relevant to small businesses and useful for training."2

The pool of business skills (including management, finance, and marketing) among small rural businesses is clearly expandable through educational programs. Furthermore, the incidence and success of entrepreneurial activities could also be influenced through appropriate programs.

To evaluate the potential for an expanded role for Extension in small business and entrepreneurship education, we must address the following questions:

1. What's the potential demand for entrepreneurship education, and how do we get the attention of small businesses?

2. How much educational material exists, how much must be adapted, and how much must be developed?

3. Is the material in the right form (length, appearance, format, media, cost) to be effective for this audience?

4. Who are potential collaborators and competitors in this process?

5. What obstacles must be overcome to be effective- institutional rigidity within the university and/or at the local level, resistance from agricultural organizations, turf battles with other institutions?

6. What kind of support will be needed from the teaching and research components of our departments and universities?

7. What resources (human and financial) will be needed and where do we get them-from new sources or from reallocations from existing programs?

8. When reallocating human resources, how do we make any necessary career shifts attractive?

9. What kinds of programs (inservice training, study leaves) are needed to expedite the transition?

The number of small businesses is large and growing rapidly, and while larger firms have professional managers, small firms are usually managed by the owner who's rarely trained in all aspects of management. Thus, a need for this education exists. Whether this is an effective demand for the services of Extension depends on our ability to get the attention of rural entrepreneurs and business managers. Like farmers, businesspeople are diverse. Some seek management education, but others shun it. Many look only to themselves to solve problems.

Research with a sample of rural Texas businesses suggests an additional barrier to an effective demand for education and information. Hoy found a high percentage of rural business owners/managers believe their problems are caused by conditions they have little or no control over. Thus, effective demand can be generated only after businesspeople become convinced their challenges can indeed be managed.3

Furthermore, this demand can be captured by Extension only if businesspeople identify Extension as a source of help with their problems. First, our image is likely to discourage some potential clients since it's often assumed we only work with farms. Second, some potential clients will be discouraged if we don't have relevant programs and materials for them.

In considering Extension's opportunity to respond to the perceived gap in rural business education, we would argue that the subject matter is not new, just the audience. The availability of material isn't a major problem. The management concepts developed for farms and ranches, nurseries, marine businesses, agribusiness firms, and food distribution businesses can be effectively taught to SRBs. Additionally, an ample supply of management materials has been developed by other organizations for small businesses in urban areas.

We must, however, make our materials and concepts palatable to this new clientele. The programs must be perceived as addressing a need of the businessperson. Also, we must develop our programs to recognize the diversity of businesses, whether they're existing businesses or potential entrepreneurs, and whether they're looking for a primary source of employment or for a supplementary source of income. The programs must be the appropriate length, look professional, and capitalize on "hot" topics.

Any venture into new areas increases the chances of "turf battles," even when clear gaps exist. This is particularly ironic because the job is so big, there's more than enough for everyone to do. These potential competitors will be excellent collaborators. One clear competitor in this arena is the private sector educators who, in the last few years, have developed a large selection of workshops, training programs, and how-to books on small business and entrepreneurship in response to the growing interest in small business development. The entire franchise area is based on selling good ideas and the training needed to ensure success. Another source of competition could come from across campus in the business school.

Banks and their state and national associations, the Small Business Administration, state and local departments of economic development, and others will appreciate the help Extension gives them if they're given their due recognition. Collaboration with others offers several advantages:

1. It minimizes the stress for change that would be placed on Extension staff.

2. It reduces the need for Extension budget realloca- tion.

3. It develops a group of nontraditional allies.

4. It minimizes turf battle concerns.

Working with a cadre of allies will be complementary to any other strategies used to develop Extension programming in this area.

Support from within the university and Extension itself will be essential. It's important we increase awareness of the need for such programs. Another approach is to gain the support of groups most influential within the administration-agricultural organizations, local Extension boards, state and local governments, and field staff. Agricultural organizations may see new thrusts in business and entrepreneurship education as an erosion of resources devoted to their clientele. They must be convinced it will strengthen rural economies.

Another general strategy is to create new sources of support. Small businesses represent an ideal type of support for an Extension program-they're numerous, ubiquitous, conspicuous, and influential with state and local governments.

The addition of new claims on existing resources forces some tough choices. These choices assure that essentially everyone becomes involved in this decision. It's human nature to feel that the areas you have invested human capital in are important and already undersupported. It's natural to have strong opposition to change.

In this case, what's required is a reorientation of many positions, if not individuals. It's unrealistic to expect individuals to simply add this area to their lists of responsibilities. It will almost always require a change in priorities and a change in subject matter, clientele, support, and delivery approach. Some agents and specialists will make the transition more easily than others. Home economics and 4-H/youth and community development agents and specialists accustomed to working with a diversity of clients may find it easier to work with small businesses. However, it's the agricultural agents and specialists-particularly those in management, marketing, and finance-who are most familiar with the subject-matter areas needed for this audience.

Extension must maintain or increase its relevance to society if it's to expect continued support. Growing evi-dence shows members of society are weighing Exten-sion's relevance with more scrutiny. Small business and entrepreneurship programming represents an opportunity to substantially increase our relevance and support. In the end, this may enhance our ability to provide better programming. We must decide how to overcome the obstacles and take full advantage of the opportunities in this area.

1. Dennis U. Fisher, "The Business Audience-Extension's Untapped Opportunity," in Proceedings: CRD Leaders Workshop- Community Issues and Opportunities (Logan: Utah State University, September 24-27, 1985).

2. C. H. Gladwin and others, "Rural Entrepreneurship: One Key to Rural Revitalization," American Journal of Agricultural Economics, LXXI (December 1989), 1305-1314.

3. Francis S. Hoy, "Managers' Problem-Solving Styles and Organizational Effectiveness of Small Business" (Ph.D. dissertation, Texas A&M University, College Station, 1979).