CRITICAL PROBLEMS OF RURAL SMALL BUSINESSES: A COMPARISON OF AFRICAN-AMERICAN AND WHITE-OWNED...

1. Introduction

Small businesses play a critical role in the success of the national economy. Some of the benefits associated with small businesses include job growth, technological innovation, economic diversity, and increased local spending (Luke, Ventriss, Reed and Reed, 1988). Recent research on small businesses by the Small Business Administration (SBA) Office of Advocacy shows that more than 99 percent of all current employers are classified as small businesses and they employ 51 percent of private-sector workers (Small Business Administration Office of Advocacy, 2002). The Office of Advocacy estimates that approximately two-thirds to three-quarters of new jobs are expected to come from small businesses.

A typical small business was described in a 2001 report produced by the Small Business and Technology Development Center. According to the report, State of Small Business, the average small business in the United States has three employees and generates between $ 150,000 and $200,000 in annual revenue. These businesses account for 51 percent of private sector output, represent 96 percent of all exporters of goods, and employ 38 percent of high-tech workers. White males own the majority of small businesses (53.4 percent), but the number of minority-owned businesses continues to grow (Small Business and Technology Development Center, 2001).

While there is no denying the importance of small businesses, owners are often faced with many obstacles that limit long-term survival. According to the SBA, approximately 66 percent of small businesses survive their first two years of existence. The survival rate drops to only 39.5 percent after six years of operation (Small Business Administration Office of Advocacy, 2002). These statistics serve only to confirm that starting and maintaining a successful small business is difficult at best. However, within the classification of small businesses, there is a subset of small businesses that has an even greater failure rate. According to the SBA, of the African American businesses with employees and positive payrolls that started in 1992, only 34.7 percent survived after four years of operation (Small Business Administration Office of Advocacy, 2001b). In addition, for the time period 1992 to 1997, all minority classifications except African American-owned businesses surpassed the gross receipts growth rate of all U.S. small businesses (Minority Business Development Agency, 2001). Two contributing factors that generally lead to higher failure rates for African American-owned small businesses are less access to capital and a need for better management and technical training (Thompson, 1991).

Research points out that small businesses are more likely to be located in rural areas with less access to resources (Headd, 2000). A weak infrastructure often makes it difficult for business owners to take full advantage of economic opportunities. As indicated in a 2003 report from the Kellogg Foundation, Mapping Rural Entrepreneur ship, some of the obstacles in rural regions include limited networks, financial constraints, low demand levels, unskilled labor, and cultural barriers. As outlined in the report, the keys to improving entrepreneurial activity in rural communities are to promote entrepreneurship education, provide greater access to capital, and offer high-quality business assistance. Entrepreneurship can become a substantial component of rural economic development if the business climate is improved in these areas. Eastern North Carolina, like many other rural areas, is faced with a high business failure rate and a low business startup rate (North Carolina Community College System, 2001).

2. Literature Review

The purpose of this study is to determine the types of critical problems encountered by rural businesses that use Small Business Centers (SBC) for counseling and the relationship between these problems and the owner's race and the firm's developmental stage. This study focuses on businesses in the formation and early growth stages of development. The majority of clients that use the counseling service of SBCs are new or young businesses (North Carolina Community College System, 2000).

Much of the past research on small business assistance programs has focused on Small Business Development Centers (Chrisman, Nelson, Roy and Robinson, 1985; Chrisman 1999; Chrisman and McMullan, 2000) and Small Business Institutes (Wu and Young, 2002). Because of the ability of community colleges to reach rural regions in North Carolina, the program of focus for this study is the Small Business Center. There is a dearth of information regarding critical business problems in rural areas, and as suggested by Wu and Young (2002), it is important to gather regional data. Each of North Carolina's 58 community college campuses houses its own SBC, forming one of the largest state sponsored small business assistance systems in the country. The goal of these centers is to increase the success rate and the number of viable small businesses by providing personalized business counseling to prospective and existing small business owners (North Carolina Community College System, 2001). To accomplish this objective, each SBC offers workshops on business topics for emerging entrepreneurs and provides free confidential business counseling for existing business owners. Approximately 58,000 clients received confidential counseling from SBCs from 1995 to 2000, with the majority of these clients in the formation and early growth stages of development (North Carolina Community College System, 2000).

Research by Chrisman (1999) demonstrated that outside assistance had a positive influence on the likelihood that individuals with entrepreneurial intentions actually start a new business venture. Once formed, Chrisman (1999) found that small business owners received two "start-up advantages" from the assistance offered by these small business programs. First, the interaction with experienced business professionals increased the owner's general knowledge of how to effectively operate a business. Second, seeking assistance demonstrated that a business owner understood the commitment, especially in the areas of time and resources, needed to establish a sustainable business.

The welfare and success of minority-owned small businesses is very important, especially in rural areas such as eastern North Carolina. Interestingly, based on our sample, a surprisingly high percentage (45.2 percent) of the business owners that sought assistance was African American. The health and growth of African American-owned small businesses often serves as a strong barometer for the overall progress made by minorities in the U.S. (Feldman, Koberg and Dean, 1991; Thompson, 1991). Acs, Tarpley, and Phillips (1998) suggested that one of the main contributions small businesses make is to allow millions of people, especially minority groups, to enter the economic and social mainstream of American society.

Minority groups, however, are faced with several different limitations that may inhibit their success. Access to appropriate levels of startup capital is a frequently cited reason used to explain the high failure rate of minority ventures. According to Minorities in Business, this is especially true for African American small business owners. For the most recently reported period, 1990-2000, African American-owned businesses accounted for only 2.8 percent of the 7(a) loans granted by the Small Business Administration (Small Business Administration Office of Advocacy, 2001b). The only reported minority population that received a smaller amount by dollar value was the Native American subgroup.

Another challenge facing African American entrepreneurs may be a lack of formal training or education. Kourilsky and Esfandiari (1997) noted that although African American youth reported they would like to explore the opportunity of starting their own business, they do not have a strong understanding of basic entrepreneurial knowledge. Similarly, while the U.S. labor force is on average well educated, only 44 percent of the African American labor force has a college degree or higher degree compared to 53 percent of the White labor force. Although a college degree is not required to be a successful small business owner, it does often provide one with the general skills and understanding needed to plan and operate a small business.

Finally, Heilman and Chen (2003) remarked on the general lack of mentors and mentoring opportunities for minorities. It is presumed that a strong support network and a positive relationship with a mentor helps future small business owners learn the skills needed to successfully operate and manage a small business. Minorities may have fewer opportunities to engage in professional relationships with mentors because of cross cultural differences or the unwillingness of other minority leaders to participate in mentoring relationships (Heilman and Chen, 2003). Any one of the aforementioned issues may present additional challenges to African American businesses beyond the difficulties faced by White small businesses.

While all businesses, both large and small, are faced with critical issues, small businesses are especially susceptible to closure because owners often lack all the necessary skills and resources to ensure long-term survival. In addition, these firms often lack a solid base of employees from which to draw complementary skills (Hornsby and Kuratko, 2003). Hornsby and Kuratko (2003) found that the availability of quality workers for small firms has not improved much over the past decade. They suggest that small business assistance programs offer more specialized counseling to help small businesses improve their human resource practices in order to attract employees with a diverse skill set.

Prior research has offered mixed results as to the primary problems faced by small business owners. According to some research, managerial incompetence and the inability to obtain adequate financial resources are two of the most significant challenges facing all small business owners (Dun & Bradstreet, 1981; Robinson, 1982; Bruno, Liedecker and Harder, 1987; Luke, Ventriss, Reed and Reed, 1988; Zimmerer and Scarborough, 1998; Monk, 2000). Other research has indicated that clients of small business assistance programs need help in the areas of marketing (Nahavandi and Chesteen, 1988; Kuratko and Hodgetts, 1989; Wu and Young, 2002) or business operations (Hoy, 1982; Khan and Rocha, 1982; Solomon and Weaver, 1983; Chrisman and Leslie, 1989; Chrisman and McMullan, 2000). In a study by Wu and Young (2002), approximately 82 percent of the 213 firms in their sample faced marketing problems, followed by issues in the areas of accounting (30.5 percent) and human resources (24 percent). They found these problems to be especially prevalent in the retail and service industries. Wu and Young (2002) also found that small firms were vulnerable to liquidity, collections and credit, inventory, and legal problems.

Aspiring entrepreneurs and existing small business owners use the services offered by small business assistance programs for a variety of reasons. Prior research has also shown that these programs have been effective in helping small business owners solve their problems (Krentzman and Samaras, 1960; Robinson, 1982; Roitman, Emshoff and Robinson, 1984; Chrisman, Nelson, Hoy and Robinson, 1985; Luke, Ventriss, Reed and Reed, 1988; Chrisman, 1999; Chrisman and McMullan, 2000). In addition, research has shown that entrepreneurs who participated in these programs typically gained advantages over those who did not (Chrisman, 1999), and that outside assistance had a positive influence on a business' long-term ability to "survive, grow, and innovate" (Chrisman and McMullan, 2000).

In order to be effective, small business assistance programs must develop a proper match between the needs of their clients and their program offerings (Nahavandi and Chesteen, 1988; Chrisman, 1999). As pointed out by Chrisman and Leslie (1989), a better understanding of the problems faced by small business owners leads to more effective outside assistance that can have a direct impact on the management practices of these firms. Rice and Matthews (1995) noted that business counselors must understand the developmental stage of their clients in order to effectively identify and serve their most critical needs. Prior research by Olson (1987), Kuratko and Hodgetts (1989), and Dodge and Robbins (1992) examined the types of problems most prevalent in the different developmental stages of a small business. Olson (1987) proposed that a start-up business is more likely to encounter problems related to product creation and development. Kuratko and Hodgetts (1989) and Dodge and Robbins (1992) found that problems in the areas of marketing, finance, and capital acquisition are the most prevalent in the startup phase of a small business.

Later, as a business enters its growth and maturity stages, Olson (1987) and Kuratko and Hodgetts (1989) found that administrative and managerial problems were more prevalent. Dodge and Robbins (1992) suggested that external problems became less important and internal problems increased as a small business moved through its developmental cycle. However, Dodge and Robbins warned that problems might carry over from stage to stage if they are not properly resolved. A more thorough understanding of the types of problems encountered by African American-owned businesses, and in which stage they are encountered, may help increase their ability to develop and position their firms for long-term success.

The organizational development framework used in the study was adapted from prior research by Dodge and Robbins (1992), Kuratko and Hodgetts (1989), and Olson (1987). The four stages in the model include: (1) formation, (2) early growth, (3) later growth, and (4) stability (see Table 1).

In the formation stage, business owners develop a business plan and attract financial support to allow their ideas to become a reality. Although a high level of uncertainty is still present, the early growth stage is often characterized by steadily increasing sales and business owners are keenly aware of customer demands. During the later growth stage, sales begin to level out, often due to new competition and the narrowing of the gap between the active market and the total potential market. During this stage, business owners are generally faced with the crucial decision of whether or not they should expand their operations. In the stability stage, Dodge and Robbins suggested that a business operates like a small bureaucracy. In this stage, business owners are typically searching for ways to regain their early momentum.

3. Classification of Problems

Chrisman and Leslie's (1989) integrative system was designed to analyze the problems faced by small business owners. They used three distinct categories to classify small business problems: (1) administrative, (2) operating, and (3) strategic (see Figure 1).

The employment of a classification model is important because it allows for an increased focus on the larger picture of issues facing small businesses. In addition, aggregation of common business problems allows for better empirical analysis.

This system is based on prior research by Ansoff (1965). Ansoff developed a framework to classify the types of decisions needed to start and maintain a successful business. Chrisman and Leslie (1989) adapted Ansoff's classification scheme and used it to analyze the most critical problems facing small business owners. Administrative problems center on the organizational structure of a business and its ability to acquire and develop its resources (Chrisman and Leslie, 1989). These problems generally include accounting, finance, personnel, and general management issues. The key administrative decisions are based on the ability of a business to arrange its resources to create an environment that encourages optimal performance. Operating problems are more common in the functional areas of a business and deal more with the allocation of resources in a manner that promotes efficiency and productivity. Examples of operating problems include marketing, production, operations, and inventory control issues (Chrisman and Leslie, 1989).

Strategic problems involve the ability of small business owners to match their product or service offering with the demands of the external environment. This requires that business owners understand organizational objectives and the nature of their business and the needs of their target market. Business owners with strategic issues often need assistance with a feasibility study, business plan, pro-forma financial analysis, or market research (Chrisman and Leslie, 1989).

4. Hypotheses

Given the striking differences in African American success rates, and the limited access African American small business owners have to startup capital and formal mentoring relationships, the following hypotheses have been derived to increase our understanding of any differences in the problems experienced by owners receiving assistance from SBCs as a result of race and organizational development.

Because African Americans have been reported to have less access to both financial and social capital, we believe that African American-owned firms may be less prepared to start a business. Less preparation in enterprise development may lead to more strategic problems.

H1a: Rural African American-owned firms will report a significantly greater percentage of strategic problems than rural White-owned firms.

Similarly, African Americans have fewer opportunities in higher education and formal mentoring relationships. Without formal education and mentoring, it can be difficult to develop the administrative skills needed to manage a growing venture.

H1b: Rural African American-owned firms will report a significantly greater percentage of administrative problems than rural White-owned firms.

Prior research has shown that startup firms must be prepared to deal with the strategic issues associated with a complex business environment. Firms that engage in strategic planning in the startup stage are more likely to experience higher growth and success rates than firms that plan less. As a firm starts to grow, owners are forced to deal with more administrative and managerial problems. Based on these prior findings, we posit:

H2a: Rural firms in the formation stage will report a significantly greater percentage of strategic problems than do rural early growth firms.

H2b: Rural firms in the early growth stage will report a significantly greater percentage of administrative problems than do rural formation firms.

As previously stated, African Americans often have less of an entrepreneurial foundation than Whites, and they may spend less time in strategic planning. This may result in a greater number of strategic problems, which continue to be experienced in the early growth stage. Therefore, we propose the following hypothesis:

H3: Rural African American-owned firms in the early growth stage will report a significantly greater percentage of strategic problems than do rural White-owned firms in the early growth stage.

5. Methodology

The data used in the study were taken from the counseling request forms of clients that received confidential counseling between 2001 and 2003. A simple random sampling technique was used to select the 250 participating small businesses from the approximately 1500 clients served by eight rural eastern North Carolina SBCs between 2001 and 2003.The sample included 97 (38.8 percent) retail firms and 153 (61.2 percent) service firms. Of these 250 businesses, 149 (59.6 percent) were in the formation stage and 101 (40.4 percent) were in the early growth stage (see Table 2).

African Americans owned 113 (45.2 percent) of these firms and Whites owned 137 (54.8 percent) firms. Seventy-five (30.0 percent) of the businesses were African Americanowned and in the formation stage and 74 (29.6 percent) were White-owned in the formation stage. Thirty-eight (15.2 percent) early growth businesses had African American owners and 63 (25.2 percent) were White-owned. Females owned 54 percent of the businesses in the sample and males owned 46 percent. Additional information on the firm, such as years in business, number of employees, and legal form, was unavailable due to the confidential nature of the clients' files.

SBC directors are oriented and trained to analyze various aspects of a small business and offer effective counseling. This includes an understanding of development stages and how to identify dominant business problems. The counseling offered is based on the client's needs as determined from information provided to the directors by each small business owner. To ensure consistency, each center uses the same "Request for Counseling" form and methodology to classify problems. The problem areas identified on the request form included the following 19 categories: (1) accounting and records, (2) business feasibility, (3) business liquidation/sale, (4) business plan development, (5) computer systems, (6) credit and collections, (7) engineering and R&D, (8) estimating and bidding, (9) financial analysis and financial controls, (10) government procurement, (11) inventory control, (12) international trade, (13) legal needs, (14) management and supervision, (15) market research, (16) marketing and sales, (17) personnel, (18) patents and trademarks, and (19) sources of capital.

In order to ensure a consistent fit between the 19 types of problems identified on the "Request for Counseling" form and the 3 categories developed by Chrisman and Leslie (1989), a panel of professionals with experience in working with small businesses was consulted. The panel consisted of representatives from the community college and university systems. Based on the panel's recommendations, the problems from the request forms were categorized based on the Chrisman and Leslie system. The following problems were classified as administrative in nature: accounting & records, collections & credit, financial analysis & cost control, government procurement, legal needs, management & supervision, personnel, and sources of capital. Operating problems included the areas of computer systems, engineering and R&D, estimating & bidding, inventory control, and marketing & sales. The areas of business feasibility, business liquidation/sale, business plan development, international trade, market research, patents & trademarks were classified as strategic problems.

6. Results

Frequency cross-tabulation counts were used to determine the most critical problems. Once the problems were identified, Pearson's chi-square was used to determine whether or not a relationship existed between the study variables. If a significant relationship was found, lambda was used to determine the strength of the relationship.

The frequency counts indicated the types of problems encountered by the 250 small businesses in the sample, based on the owner's race and the firm's developmental stage. Strategic problems (55.6 percent) were the most critical problems faced by small business owners in the sample, regardless of race or developmental stage. The second most critical problem was administrative (33.6 percent), while the least critical problems were in the area of operations (10.8 percent).

The results indicated that Hypotheses 1a and 1b were not supported. As seen in Table 3, the distribution of problems encountered by African American-owned and White-owned firms was very consistent. Of the 113 businesses that were African American-owned, 64 (56.6 percent) firms experienced strategic problems, 39 (34.5 percent) firms experienced administrative problems, and 10 (8.9 percent) firms experienced operating problems. The problems encountered by the 137 White-owned firms included 75 (54.7 percent) firms with strategic problems, 45 (32.9 percent) firms with administrative problems, and 17 (12.4 percent) firms with operating problems.

Both Hypotheses 2a and 2b were supported (p < .001; ? = .153). The distribution of problems encountered by formation and early growth businesses varied according to their developmental stage (see Table 4).

Whereas the most critical problems encountered by businesses in the formation stage (71.8 percent) were strategic, early growth businesses (48.5 percent) more often faced administrative problems. In addition, 19.8 percent of early growth businesses experienced operating problems, while only 4.7 percent of businesses in the formation stage experienced these types of problems. Overall, the distribution of problems for early growth businesses was much more evenly distributed than with businesses in the formation stage, which overwhelming faced problems that were strategic in nature. Lambda indicated that a moderate association existed between the types of problems encountered by small businesses and their developmental stage. Businesses in the formation stage were more likely to need assistance with strategic problems, whereas early growth firms were more likely to need administrative assistance.

Hypothesis 3 was not supported. A cross-tabulation between type of problems and the owner's race and firm's developmental stage was calculated to uncover any patterns when the variables were examined in conjunction with each other (see Table 5).

The most critical type of problem facing African American-owned firms in the formation stage was strategic (69.3 percent), while the African American-owned early growth firms most often encountered administrative problems (50 percent). Similarly, strategic problems (74.3 percent) were the most critical for White-owned businesses in the formation stage and administrative problems (47.6 percent) were more critical for White-owned business in the early growth stage.

Regardless of race, the most critical type of problems encountered by firms in the formation stage was strategic (71.8 percent) and the most critical type of problem facing early growth firms was administrative (48.5 percent). The least critical type of problems for firms, regardless of race or developmental stage, was operating problems. Early growth firms, however, experienced the greatest number of operating problems. Approximately 20 percent of the White-owned early growth businesses and 18.4 percent of the African American-owned early growth firms encountered operating problems.

Given the lack of significant findings based on racial subgroup differences, additional analyses were conducted to determine if there were significant differences in the types of critical problems experienced that could be attributed to gender (see Table 6). No significant differences were discovered in the types of problems encountered by gender. The most frequently cited problems, regardless of gender, in descending order were strategic, administrative and operating.

7. Conclusions and Implications

The findings of this study indicate that the majority of small business owners with firms in the formation stage relied on counseling to help them resolve strategic issues that are core to the development of a successful enterprise. Conversely, owners of businesses in the early growth stage were more likely to seek counseling for administrative problems. Whereas both African American and White owners of early growth businesses searched for ways to improve administrative tasks and reduce expenses, most owners of businesses in the formation stage, regardless of race, needed help establishing a solid foundation for their business.

This conclusion is consistent with prior findings that indicated planning and capital acquisition are critical components of starting a business, while managerial and administrative issues become more dominant as an organization grows and matures (Kuratko and Hodgetts, 1989; Dodge and Robbins, 1992; Terpstra and Olson, 1993; Wu and Young, 2002). Specifically, Dodge and Robbins (1992) found that external problems become less important and internal problems increase as a small business moves through its developmental cycle. Small business owners are often hesitant to make changes in the internal areas of their business early on in their existence, waiting until sales level off in the later stages to make the necessary adjustments to the internal operations (Dodge and Robbins, 1992). A successful venture requires that owners develop a versatile array of skills in the startup phase to provide owners with a better understanding of potential risks and problems as the business grows and matures (Wu and Young, 2002).

Although the findings of this study do not help explain the lagging performance of African American-owned small businesses, it does help us better understand the needs of small business owners in the formation and early growth stages. There are some potential reasons that may help explain why significant racial subgroup differences were not found. Several of the reasons frequently cited for African American small business failure may well be experienced by all subgroups in rural areas. Advancing Rural America (Small Business Administration Office of Advocacy, 200Ia) noted that rural small businesses have greater difficulty securing startup capital, technology and other business services necessary to succeed in a competitive business environment. Similarly, educational levels and mentoring relationships with successful small business owners may be more limited in rural areas.

A better understanding of the types of problems prevalent in the various developmental stages allows business counselors to offer more effective assistance that can have a direct impact on the success of their clients (Rice and Matthews, 1995; Wu and Young, 2002). Strategic assistance at the onset of an entrepreneurial venture is paramount. As noted by Greenfield (1987) and Rue and Ibrahim (1998), many new small business owners are very competent in their chosen profession, but lack the managerial or technical skills necessary for strategic planning. Small business owners that engage in planning typically provide a clearer direction for the business and improve their decision making ability, which can lead to higher growth rates (Rue and Ibrahim, 1998).

Interestingly, in a prior study on business counseling, Chrisman and Leslie (1989) suggested that clients should rely primarily on small business assistance programs for help with administrative and operating problems. They concluded that these programs are better able to provide assistance that allows businesses owners to reduce their costs, rather than help with strategic issues such as business planning or market analysis. The results from Chrisman and Leslie point out the difficulty in serving the needs of a diverse target audience. One possible alternative is for SBCs to develop a more coordinated process in which the various centers specialize in certain areas.

SBCs may consider concentrating on counseling owners of newly formed businesses with workshops and programs that address strategic issues, allowing other programs to focus on serving the needs of firms in the growth stages of development. As indicated in Mapping Rural Entrepreneurship (Corporation for Enterprise Development, 2003), many states do not focus on the needs of business owners during the startup stage of business development. SBCs can serve as one of the primary vehicles in rural North Carolina for helping emerging business owners develop a strong foundation for their enterprises, thereby improving their chances for long-term survival. As the SBCs continue to develop their programs, the current research indicates that although African American-owned businesses have a much faster and greater failure rate than White-owned businesses in rural settings, the training and education needs of African Americans and Whites may be quite similar. The knowledge gained from this study can provide small business assistance program directors with the information needed to tailor their counseling services around the most critical needs of small business owners within the rural community.

8. Future Research

There are limitations we believe future research should address. First, the present study was unable to compare the problems encountered by businesses from other minority classifications and business development stages. No other minority class or developmental stage was sufficiently represented in our sample data. Future research should include other minority classifications and developmental stages when available. Next, our sample was limited to retail and service organizations because of a lack of representation from other business sectors. Involving different business classifications can only add to our understanding of the types of problems encountered by rural small business owners. Third, because the data was archival and did not include information about the availability of startup capital, we were unable to investigate how capital may have affected the different subgroups. Minorities often have more difficulty acquiring startup capital but we were unable to investigate actual differences in startup capital between subgroups and how that may have affected the different ventures.

The confidential nature of the data also limited our ability to analyze other variables such as the firm's age, number of employees or owners' work history. In addition, we were unable to investigate the economy's impact on the various ventures. Although the economy may play a role in the types of problems experienced by the different ventures, because the data was collected from businesses operating during the same period of time in eastern North Carolina it is presumed that the ventures were subjected to similar economic forces. Future research may investigate the impact of the economy on the problems encountered by small businesses with longitudinal studies. Also, while it is possible that each venture may have faced multiple problems, this research was based on the most critical problems as determined by the SBC directors after a thorough review of each client's situation. Future research may investigate the ability of small business assistance programs to properly assess their clients' most critical needs.

Finally, because the respondents for the current study were all small business owners that sought assistance from SBCs in eastern North Carolina, the findings may not be representative when generalizing to other rural areas. It is, however, a generally accepted principle that small businesses in rural areas have difficulty accessing adequate financing, labor, technology and a host of other factors that make it difficult for them to compete with other small and large urban businesses (Small Business Administration Office of Advocacy, 200Ia). Although the degree that different rural areas may lack financing, labor and access to essential infrastructure may vary, our belief is that the challenges faced by rural small business owners are sufficiently similar that the results from this study may be applied to rural areas outside of eastern North Carolina.