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Entrepreneurs: Are there Differences Across Rural and Urban Kentucky?

By Lucas Taulbee, CEDIK Graduate Research Assistant

CEDIK, in collaboration with other research colleagues, conducted the Kentucky Entrepreneurship Survey in 2013. The goal of the survey was to learn more about entrepreneurship in Kentucky and to fill gaps in the entrepreneurship literature. The survey allows us to explore the differences between rural and urban entrepreneurs and their views on the resources available when starting a business. We defined urban counties as counties with a population of 50,000 or greater as of the most recent U.S. Census estimate. Boyd, Franklin, Scott, and Jessamine counties were also included among the urban counties due to their classification as such by USDA Rural-Urban Continuum Codes. The rest of the counties were considered rural.

chart1

There were a total of 1,450 respondents, 657 of whom started their own business or non-profit. Of these 657, 59% (386) were from urban counties and 41% (271) were from rural counties. The two groups (urban and rural) differ little with regard to gender make-up and age. However, as Figure 1 illustrates, they did differ greatly in education, employment status, and migration (i.e., moving to a different county to start a business).

Beyond distinguishing between the characteristics of the two groups, it is interesting to see the perspective of the respondents when it comes to the effectiveness of local resources.  Overall, regardless if the respondents opened a business or not and if the county is rural or urban, between 70% and 73% of respondents stated that they think their county is supportive of entrepreneurs.  When looking specifically at the respondents who had started a business or worked towards starting one in the last 10 years (2003-2013), different perspectives between urban and rural entrepreneurs need to be highlighted.

For example, respondents were asked about the challenges of starting a business as well as the available resources for overcoming those challenges.  Among the challenges were: finding information on how to start a business, writing a business plan, recruiting qualified workers, acquiring start-up funds, dealing with government regulations, developing a supply-chain, and finding potential markets.  Overall, rural respondents seemed to have greater difficulty with about every challenge, with substantial differences in perspective towards finding information, recruiting qualified workers, developing a supply-chain, and finding potential markets.  Figure 2 illustrates the percentage of respondents who found each challenge to be a problem.

chart2

chart3In regards to the effectiveness of available resources in helping the respondent to overcome challenges, on average, respondents from both rural and urban counties see the resources as ineffective or neutral (Figure 3).  As Figure 3 suggests, more than 78% of the rural entrepreneurs and over 72% of urban ones see the resources available as being anywhere from very ineffective to neutral.

These findings allow local policy makers and economic development professionals to understand the challenges that entrepreneurs face in rural versus urban counties and to revise resources offered in order to provide greater assistance to Kentuckians wishing to start a business.  Further study could allow us to determine if the differences in perception of difficulty in overcoming challenges are due to demographic differences between the two groups (example: education) or if they are due to some limitations of public institutions and organizations.

For additional information on the survey methodology and major findings, see: Determinants of Entrepreneurship from the Kentucky Entrepreneurship Survey

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