Time for a new generation of homesteaders?

Delore Zimmerman

Published July 1, 1996  | July 1996 issue

Agricultural homesteading in the late 1800s and early 1900s was all about people filled with dreams, dedicated to using their abilities and energies to create economic opportunities. The thousands of farms that were homesteaded created a strong foundation for the economy of the Great Plains.

That same entrepreneurial spirit is alive today.

Could it be tapped to start manufacturing and service companies and help rebuild the economies of rural communities? If so, what tools and incentives should be put in place to recruit entrepreneurs to rural areas and assist them in building successful businesses? In an economy founded on innovation and change, the key to prosperity is the ability to bring ideas and technology to the marketplace rather than low wages and the availability of raw materials, which have traditionally been the hallmarks of competitive advantage in rural economies.

Enterprise homesteading involves communities recruiting people with the managerial and marketing skills that are needed to build and operate a business. The business may be based on a product or service that the management and marketing entrepreneur or team brings with it, or it may spring from a market idea already identified by the community. Either way, communities become real partners with "enterprisers" to create the climate for success.

Today, many rural areas generate too few businesses to yield job growth. Recruiting established companies, which frequently receives a lot of attention, is an expensive and often fruitless strategy for both small and large communities. Since small- and medium-sized enterprises are the most important source of new economic activity and jobs, it is essential that rural areas cultivate new ventures.

Previous studies show that businesses are frequently started by people who are 30 to 49 years old, with varied business experience—often gained as employees in several companies. This is especially true for firms in the manufacturing and information technology sectors. Young people 18 to 29 years of age are now thought to be the most entrepreneurial American generation ever.

After decades of exporting their youth, however, few rural areas have a large pool of mid-career or young adults with the managerial and technical experience that is well-suited to the enterprise formation process. The "graying" of the population in the Midwest shown in the latest census reports points to the continued exodus of home-grown talent from rural areas.

Recruiting people with particular talents and know-how is common throughout history. For many of us, our family histories include two instances where recruitment resulted in moving to take advantage of economic opportunities.

Catherine the Great of Russia recruited skilled farmers from Germany with the promise of land. Later generations of these same families settled the farmlands and communities of the Midwest, drawn by the promise of free land and easy access to rail transport. Today, several Asian countries have implemented repatriation efforts aimed at former residents in scientific, engineering and technical fields.

Enterprise homesteading holds similar promise, given that many people now living in large cities—some formerly from rural areas—would prefer to live in small towns. Many large companies and the government are downsizing, creating a huge pool of available, talented people.

For many of these men and women, small communities hold the appeal of a safer, cleaner, less hectic lifestyle for their families. At the same time, new technologies are making it possible for entrepreneurs to be located virtually any place where the right mix of resources and tools is available. But without some certainty of the means for making a living or knowing what the opportunities are, these preferences do not translate into a move to the country.

Are rural areas willing to encourage new enterprisers and undertake the challenges of starting businesses? Today's economic landscape is far different from that which the earlier homesteaders confronted. Land was the basic productive resource that brought the first homesteaders. But now ideas, information and skills are the resources that give companies a competitive edge.

Capital—the catalyst in any entrepreneurial process—must be available to invest in people as well as the hard assets that have traditionally received debt financing. Combining the factors of talent, know-how, ideas and capital will be the key to economic growth in tomorrow's economy.

The conditions for success are favorable. Telecommunications networks—the new pathways to markets and technical know-how—are emerging as the highways of tomorrow. At the same time, communities have resources to help start businesses and are eager to do so, particularly in industries in which they feel their community has a distinct advantage based on such things as the available work force, opportunities for networking with existing industries or know-how from local colleges and universities.

A strong rate of business formation is essential to any healthy, growing economy, providing the primary sources of innovation and new job creation. So it is now more important than ever that the communities and states in the Great Plains provide the infrastructure, resources and quality of life that appeal to those choosing entrepreneurial career paths. For entrepreneurial communities, the new enterprisers could play an important part in meeting the challenges of building a new economy.