Good news for Rural Entrepreneurs

What is the largest industry in rural regions? (Hint: the answer to that question is not meth)  If you can’t quickly answer, you are new to this blog and you are not looking out the window.

The correct answer is agricultural products, but it used to be “food.”

Either way, if you are raising a commodity food product: corn, wheat, soybeans, etc., or something on a smaller scale, the future might be brighter. For you.

That means good news for you, because the world might be heading into a famine. Some economists are predicting food shortages. Heat waves and floods in Russia, Pakistan, Philippines…. Commodity prices are already climbing.

Remember in 2007 when we had plenty of food, but government announcements in some countries caused citizenry to panic, resulting in rice riots? This year the shortages might be for real.

The Nauvoo Commuter does not relish human suffering. We don’t rejoice at starvation or other tribulation. But maybe this time the system (agricultural industrial complex) will change. We’ll stop putting all the corn into our gas tanks, and start growing food again.

From your own Little House on the Prairie you might not be able to build iPods or big screen TVs, but you can grow food and distribute it. This time you can’t use a “down market” as an excuse.

Why this Forum is Different

Whenever I hear people give professional advice to would-be rural entrepreneurs, they usually advise two things:

- "This is how you set up your office, arrange a legal corporate structure, and hire an accountant."

- "You gotta have a business plan."

The Nauvoo Commuter disagrees with that advice. These are attempts to put the cart before the horse. 

You need to see if your business idea is viable before you bother with issues incidental to early success. And the way you learn if the idea is viable is to try. Our advice: minimize the time spent on prep, and instead spend that upfront effort on producing and selling. 

Few successful businesses stick to their original business plan. If you need bank money to start a shop, a model used for hundreds of years, then write the business plan. But what if you borrow the money, set up the shop, and then learn that no one wants to buy the kind of stuff you sell? 

Again, our advice: eat beans and rice until you can bootstrap the business yourself. If you succeed, the banks, lawyers, accountants, ergonomic chair salespeople, and inventory control software dealers will contact you.

Purpose of the Blog

The purpose is to share knowledge and encouragement about rural entrepreneurship with potential entrepreneurs, policy makers, and the local town governments who work so hard to create economically conducive environments.

But we hope it will be more than the Nauvoo Commuter sharing thoughts. We want the community of struggling rural areas, now tied to us, to support each other.

Who is your customer?

In certain industries that question is more difficult, such as medicine and education. In other words, if I am the doctor's customer, why does he treat me like a naughty four year old? And why am I trying to please the biology professor, if I'm her customer? The teacher evaluation survey at semester end doesn't solve the problem. 

But even in other industries, the answer can be evasive. 

As I tell my marketing students, you have two types of customers: current and potential. But maybe we should consider them to be the same. Particularly for those in rural areas, you should answer the question the same way that the New Testament answers the question "who is my neighbor?"  You customer is anyone who can easily contact you and can access your product. For services such as computer repair and for cumbersome products such as hay bales, the circle is much smaller than for something you can easily promote on the web and ship via USPS. 

The better you treat your customer, the wider the circle. Our own Nauvoo Quilt and Textile Co. ships fabric to every country on the planet, some of them the textile powerhouses. Their role is to mediate between the textile manufacturers who do business the same way as when the industry started in the 1840s, and customers, who want speedy responses and individual caring. If you live in a remote area, you can do the same thing, as long as you have a post office. 

Culinary Disconnect

Another lesson I’ve learned while here back in the big city: people, in general, are not at all connected to their food. They eat products at a restaurant or purchase processed food at a grocery store. The ambitious actually buy ingredients, such as flour and baking powder or tomatoes and lettuce, and combine them into meals. But fewer and fewer people know the sources of that food.

Whether you have always lived in the country or moved there as an adult, you are more likely to have watched a plant grow, and perhaps you have even touched soil.

During the fifth century, St. Ambrose was considered to be a super genius because he could read without moving his lips. The first Conquistadores were supermen because they possessed primitive muskets. And perhaps people who can grow food will someday be the geniuses of their world. Someone who can plant a seed and nourish it will be the one-eyed person in the kingdom of the blind. Sound crazy? Just follow the trends out to a logical, though unlikely, conclusion.  

Creativity vs. Simplicity

Today the Nauvoo Commuter is back in the world’s largest city (hint: it is not NYC and not even in the Western Hemisphere.) I will reiterate what I’ve written in these logs before: large cities spawn creativity better than small cities, and far better than agrarian regions.

But here is the good news: large cities also spawn distraction. Living in Urbania and Suburbania, they are jostled and busied to death. They struggle to make time to get substantive things done. On the prairie we don't have any more time, but less minutia. We can focus better. 

Better than India

People in Bangalore need employment just like people in Brussels and Beloit. And the $50 billion going to India through outsourcers helps them out.

But what about the people in Beloit, or Farmington, or any other struggling small town?

They can take back part of the IT outsourcing market. Because they have probably only taken back less than $100 million, a lot of potential exists. Workers in America's heartland are paid more than workers in Mumbai, but the two options are similar in overall cost.

The fascinating details are found in this BusinessWeek article:

Rural Outsourcers

Why do people shop at Walmart?

Everyone hates Walmart. Customers, local governments, and competitors all loathe them. Suppliers especially hate Walmart.

So why do people shop there? Let's make the question multiple choice:

a) sado-masochism: they like being abused by appalling customer service
b) they think the company's business practices are unethical, so supporting them makes us feel naughty (and being naughty makes us more attractive)
c) because it is so easy

The correct answer is (c). Maybe you have abundant leisure time to shop and afterwards site in a sidewalk cafe' with your friends chatting about fashion trends. But most people in America are tired a strung out. They don't want to think about where to get the best deal. They have to buy groceries and school supplies and vitamins and cheap clothing, all between 10:00pm and 10:45pm after getting off of work. Driving 40 minutes to a mall (that is already closed anyway) is an unattractive option.

We're returning to our hunter/gatherer roots. We have to quickly forage. And Walmart helps us do it.

As a competitor, you have a few choices.

- Out-convenience Walmart.
-  Ignore the masses and focus on winning customers who relish shopping in between sitting in cafe' parlors.
- Sell a niche product, but to all the people all over the country who love that particular product.

Try the first option, and you'll probably be clobbered. Walmart has made simplicity into an art form.

Your Community Leaders Don't Care

...or your town would be flourishing. Or it might just be that they are doing the wrong things. They might be fighting against gravity. Some trends are so powerful that fighting them is silly. Examples:

- In the U.S., population is shifting from the Northeast to the Southwest.
- Globally, people are moving from the countryside to cities.

So we can try to keep people by spending what remains in the coffers on bribing a company to locate a factory to our town. Or begging for a government grant to fix up the main street and make it cute again. But people are leaving, and those who remain don't want to shop on main street.

So what can communities do?

- They can rely on entrepreneurs to create compelling businesses that overcome the above immutable trends.
- They can make their towns more efficient, or even better, completely reinvent the way they operate: change the traffic direction, shift to congregate in new ways, etc.

Hancock County Fare

Last week our group established Hancock County Fare TM, a co-op for local farmers to sell organic and naturally grown produce.

Wholesalers and institutional buyers need large volume, but small-scale farming is the best way to naturally grow produce. So we've combined our energies.

The Unlived Life

The Nauvoo Commuter is busy preparing for a business trip to Asia, so failed to post yesterday.

I agree with Steven Pressfield that we all have two lives: the life we live, and the unlived life within us. We yearn to achieve our dream, but it lies dormant. It remains an unlived life.

The ratio varies between person, and the size of the dream varies between person. But starting on that project, even in a small way, gives you more personal power.

Bad News

The first Niketown opened at the corner of Salmon and Sixth streets in Portland, Oregon. Not in Lomax, Illinois.

That makes sense, because Bowerman and Knight started Nike in the Portland area. And that makes sense, because there they had a university with a lot of fast people who needed to run even faster.  The Nike founders were exposed to new ideas in an environment full of vibrant, emergent people. Lomax has no university.

In the tiny town where you live, you may not be exposed to a lot of unique situations that will help you innovate.

So you have two choices. The first is to do a traditional, boring business in an excellent way. All you need to do is delight your customers, today, so that they eventually bring their friends to your door.  You may not need an extreme innovation.

The second choice is to sell outside your region, over the internet. In that case, you can be in a remote area because the internet exposes you to valuable, diverse thoughts.

Business Plans from the Edge

When you want to start a business, start with identifying a need customers have. This is a great way to start, if you're writing a business plan for a class taught by someone who has been away from the business world for a long time.

Customers don't know their needs. "If Henry Ford has asked his customers what they need, they would have responded "faster horses,'" Ford is supposed to have said. 

Back on Planet Reality, you can't often identify customer needs. Instead, try identifying general human anxieties:

- weight loss

- taxes

- public speaking

- rejection in love

- unemployment

- being sued

- child rearing

- family time

- infertility

- companionship

- uncomfortable confrontations with neighbors

- growing influence of foreign governments

- yard work

- flatulence

- food safety (Look at the expiration date on this milk carton. Is it safe?) 

Next, try to solve the problems causing those anxieties. Or easier still, alleviate the symptoms of those anxieties. Whenever they drink alcohol, eat MSG-laden tortilla chips, or watch television, aren't they just trying to forget their problems? Come up with more substantive blocks for pain, and you will create, then dominate, a huge market. 

Clarification

We've received requests for clarification on yesterday's posting.

Fast money seeks to invest in a the next big thing, such as a dotcom, and earn a 10,000 percent return in less than one year. Slow money invests in sustainable agriculture and buying local. The returns will come, but not quickly.

As Tasch said, what if we 50 percent of all our expenditures were within 50 miles of our homes? Just think what might happen.

Financing that Venture

If you're waiting for a venture capitalist to spot your idea, you're waiting to win the lottery.

Rural entrepreneurs need to think about financing in new ways. Perhaps everyone needs to think differently about financing.

We call it Slow Money, and it might be the future. The Nauvoo Commuter has been reading about Woody Tasch and his work in evangelizing Slow Money. For a list of relevant financiers, check out SlowMoney.org Investors on their site.

Patience, young Skywalker

Building a business takes a long, long time. You have to do things better than your competitors, and then wait them out. For years.

If you dedicate 10,000 hours to just improving your ability, the time required by Malcolm Gladwell's hypothesis to reach proficiency (see Outliers: The Story of Success), you're looking at about four years of full-time work on top of the time you currently spend delivering to customers as you should.

If you live in a rural area, add an additional year or two. The market is smaller, so usually takes longer to build.

The point: just because your "idea" hasn't taken off, and just because venture capitalists are not pounding on your door, doesn't mean your concept is wrong. It might just need to simmer for a bit longer. Keep delighting your customers as best you can each day, and wait.

About this Blog

If you live in a large urban center, you may not be interested in reading this blog. If you want to work for someone else because you like other people to take responsibility, you might not find many interesting threads to read here. 

But if you are building a business or want to build one, or if you want to support others that will bring economic life to your region, then please keep reading. Pull up a chair. 

Having a Tough Time Getting Started?

That might mean you are on the right track.

"The more important a call or action is to our soul's evolution, the more Resistance we will feel toward pursuing it." So says Steven Pressfield. That is the same for your lifelong dream of learning to play the trombone as it is for starting a business.

If you don't know what "the Resistance" means, you MUST read his book The War of Art. You can order it from Amazon for about $9.00, or you can read the Kindle version on your computer for $4.00. It might change your life. (The War of Art: Break Through the Blocks and Win Your Inner Creative Battles)

I know where you live

The Nauvoo Commuter knows where you live. Let me describe what I see in your small town:

- different factions of people, some who want progress, and some who are trying to stop it
- at least one empty, boarded up building from a failed business
- roads with more chuckholes per mile compared to 10 years ago
- a few people with a plan to increase tourism into the town
- at least one feature of unique beauty, and peaceful evenings, both of which keep people happy to continue living in your town

Am I at least mostly accurate? I don't really know exactly where you live, dear reader, and I'm not peering into your windows. But I've seen so many towns that they are starting to look similar. So don't think your situation is unique. The same excuses are common.

Start with the factions. Every town has them. New comers vs. old timers, Catholics vs. Baptists, retirees vs. young families... towns naturally divide into groups of opposing parties. If not, if everyone in your town agrees on everything and they all live in continual harmony, you are required (by federal law) to contact your county administrator who will send one or more discontents to live in your town. That's not really true, but the problem is so universal that it might as well be a federal law. A branch of economics is devoted to the study of special interest groups, and the phenomena of their size and divisions (but that is getting off topic.)

So start doing something today. Right where you are. People are waiting for you to make the first move. Some may oppose you, but maybe you need some feedback. Don't let it stop you.

I can't think of any business ideas

Before you give up and apply for a job at Dollar General, step back for a moment.

Take a deep breath.

California provides 1/3 of America's agricultural output. They can create dotcom companies and still have space left to farm? And they are more productive than EVERYWHERE else?

Do you think your cost to grow a cucumber might be less than the cost to grow a tomato in California after adding shipping across the country to your grocery store?