Newcastle University

Rural businesses are playing on strengths such as financial independence and local customer loyalty to weather the economic downturn. 

A study by Newcastle University has revealed that despite the current global economy, rural business owners in the North East remain confident about their enterprise’s future, with many planning growth and new business ventures in the near future.

Today (June 28) the University’s Centre for Rural Economy (CRE) is releasing its report into rural businesses in the North East, looking at how they have changed over the last ten years.

It shows that many people (44 per cent) running today’s rural businesses are either returning to the region or relocating, emphasising the important role in-migrants play in the rural economy.

However, as only one third said they actually moved with the intention of starting their business within a couple of years, these results suggest that relocating to a rural environment actually inspires many people to become their own boss.

The main motivation given for starting a rural business was the need to generate a main or secondary income, but life/work balance, taking on a new challenge and exploiting a market opportunity were also key drivers.

“Improvements in IT, particularly broadband provision, have enabled many more people to work from home. This shows the importance of high quality communications infrastructure for future business development,” said Dr Jane Atterton, who carried out the research with her colleague Arthur Affleck. “Surveys like this are critical to improving our understanding of the key changes taking place in the rural economy.”

Good communications, a beautiful environment and close proximity to customers and suppliers were seen as plus points by the respondents, while others cited inadequate transport and poor communications as a serious disadvantage.

Eighty eight percent of those who responded to the survey were sole traders or ran micro businesses, predominately working in accommodation, retail, information, communication or professional activities.

There is also evidence of increasing diversification among rural businesses, with 44 percent of those questioned having a secondary activity running alongside their main business.

This has been partially stimulated by successive EU rural development programmes and the report’s authors stress that future support needs to recognise that these inter-related and mutually supporting activities have a positive effect on individuals, households, supply chains and rural communities.

The survey, which was part-funded by One NorthEast, the Northern Rock Foundation and Newcastle University, also highlighted the older age profile of rural business owners, as more than 60 percent of the respondents were over 50 years old.

“Planning and economic development policies and programmes need to encourage and enable younger people to live in the countryside and create new businesses,” said Dr Atterton.  “But at the same time it’s essential that the right level of support is available for those older people who choose to remain in the workforce for longer as they have a great deal to contribute to rural economies in terms of skills, knowledge, experience and financial capital.

“We hope this survey will contribute to important debates about how best to support the sustainability and growth of rural business in the future.”

It’s not all a bed of roses for rural business owners, however, with 20 percent saying they regularly work more than 61 hours a week and about half enlist their partner – often unpaid – to help out.

But rural businesses in the region have a strong legacy of success, with over a third of the respondents running their business for 20 years or more