Note: This article was originally posted in February 2014. This updated article contains refreshed links and up-to-date information.
According to Statistics Canada, 28% of Canada’s small and medium-sized enterprises (SMEs) are rural-based. Running a small business can be challenging at the best of times, but rural entrepreneurs face additional hurdles: Industry changes, technology replacing human labour, and a steady trend of youth migrating away. Rural-based entrepreneurs, especially those in remote areas, can be challenged even more by lack of access to training (ahem – this is why we put our small business program 100% online!), and a greater distance from markets and business services. Compared to your urban counterparts, you may also be be affected more by the level of taxation, insurance rates, low profitability and government regulations.
Reducing your business’ dependence on one industry or income stream can help you mitigate these risks. Here are six ways to help you diversify your rural business.
- Engage existing customers. Know what they are buying from you and what they’re not. Keep track of the products and services you sell every day. Find out what customers love about your products and services, and what they wished you would offer. According to MIT professor Eric Von Hippel, 70% of new product ideas come from customers. If you don’t ask, how will you know what your customers want?
- Engage new customers. Take a close look at your product or service offerings. Are there customer segments who are not currently buying your products? Could you tempt them over to you with a little product tweaking? Oil Can Charlie’s is a North Battleford SK oil change shop, but owner Jay Bottomley also opened Betty Bubbles next door – a car and RV wash.
- Take stock of your company’s strengths. Can those strengths be turned into a new product and new market combination? Caterpillar leveraged their popularity in the heavy equipment industry with the launch of Caterpillar Apparel.
- Challenge your competitors. Scope out your competition. Visit them if you can – become a customer. This works best for retail businesses but your goal is to find out what they are offering, how and how well. Can you do better?
- Think ahead. Where is your market going? What are they doing? What are their likes and dislikes? Do an environmental analysis of trends that may impact you, your business or your customers in the future – and position your business accordingly. Look for emerging trends in society, technology, the economy, and politics.
- Investigate partnerships. Is there a business in your area that isn’t direct competition and could work well with your business? For example, a flower farming business could partner with a local country market to teach a flower arranging workshop, or rent out an unused building as a wedding venue (with the appeal of local flowers!).
Local economic development groups in your area, such as Community Futures, are great for suggesting diversification strategies that suit your business and local market.
Diversification can reduce your business risk and maximize your opportunities to grow business operations while leveraging your company’s resources, materials, talent and success so far. You’ve heard the expression, “Don’t put all your eggs in one basket!” That’s the best reason of all to pursue a diversified strategy.
It’s a new year, and you’re likely reviewing your small business’ goals for 2014 and the future. If you run a rural business, you might have wondered how you can diversify in order to give yourself extra income streams in case the going gets tough. It can help you grow your business in unique ways while ensuring your risk stays as low as possible.
According to Statistics Canada, 28% of Canada’s 1.4 million small and medium-sized enterprises (SMEs) are rural-based. Running a small business can be challenging at the best of times, but rural entrepreneurs and communities face a number of additional hurdles: Outdated industries, technology replacing human labour, and a steady trend of out-migration by youth. Rural-based entrepreneurs, particularly those in remote areas, can be challenged even more by access to education and training, increased distance to markets and business services. You may also be be affected more by the level of taxation, insurance rates, low profitability and government regulations than urban-based businesses.