From the October 1997 issue of Entrepreneur

As entrepreneurship grows in America, finding the cities that offer the best opportunities for small business can give you a great head start. But many entrepreneurs are escaping city life in search of greener pastures--literally. They've done the city scene, either growing a business there or living there long enough to know they want to start their own business in a smaller town. And now that technology, such as the Internet, e-mail and fax machines, allows businesspeople to operate from their cars, hotel rooms and even campsites, many Americans are seizing the chance to indulge in a better way of life while still fulfilling their dreams of owning a business.

Before you head for the hills, however, ask yourself: Are you ready for the country? If you're nodding your head enthusiastically--and you've put in many hours of research--then sell the house, pack the bags, gather the spouse and kids, and head for someplace like Fairfield, Iowa. Dubbed "Silicorn Valley," this town of approximately 10,000 boasts several software firms, an oil brokerage, a tofu maker, a telecommunications business and a chimney supplies wholesaler--all founded by entrepreneurs seeking a simpler way of life.

One of those entrepreneurs is Ed Malloy, a member of the Fairfield City Council and president of Danaher Oil Co., an oil brokerage with $1.5 million in revenues last year. Like many other Fairfield newcomers, Malloy was attracted to the town because of its Maharishi University of Management, which focuses on the study of transcendental meditation.

"[This is] a very charming town with a manufacturing and agricultural base but virtually no jobs available for the kinds of people who were moving here," Malloy says. He believes the primary reason so many people relocated to Fairfield--the pursuit of a more spiritual life--engendered creativity and drive. Thus was born a successful base of self-starters.

Small-business owners who switch to a more rural existence often have something more secular in mind than Maharishi devotees do, such as financial well-being. For these entrepreneurs, hurdles litter the track. They must absorb the shock of adjusting to rural culture, navigate the difficulties of keeping family together, and discover new business practices necessitated by an out-of-the-way location. For many businesspeople relocating to an area that offers a less hurried way of life, finding the "om" that those Fairfield residents value may prove less helpful than putting a little "oomph" into their businesses.

Where The Buffalo Roam

The rural life has its advantages. Many small towns in states such as Iowa and Indiana are crying out for new businesses. Dependent for generations on sagging agricultural or manufacturing economies, these towns need entrepreneurs and the jobs they supply to stay economically viable. In exchange, they offer lower overhead costs and fewer of the agonies of city life, such as crime and pollution.

"I think people are getting fed up with where they are," says Jon Bard, who left the New York City public relations company he founded to become a consultant and newsletter writer in Fairplay, Colorado. His audiotape series and courses at Colorado Free University teach entrepreneurs how to succeed in rural communities.

Still, the decision to move to a rural location is not without its problems. Many who leave the city do so too quickly, before they've put together a business plan or even explored the region or town to which they plan to move. This lack of foresight often portends failure, Bard warns.

Jeff Raim left behind 18 years of running various businesses in the Tucson, Arizona, area so he could, as he puts it, "have a life." A lifelong entrepreneur, Raim, 42, set out on a two-year search, trekking through towns like Bountiful, Utah, and Bozeman, Montana, until he came upon the village of Angel Fire, New Mexico, a ski resort community with just 400 permanent residents. After moving there in 1995, he started a mangement consulting firm, Empowered Management Inc. Consulting with clients by phone, fax and the Internet, Raim generated close to $250,000 in sales last year and has nearly 40 clients nationwide.

But it wasn't easy getting started. Raim discovered, as do many entrepreneurs who leave the city, that even the most basic services found in the city are hard to come by in smaller communities. Until recently, for example, Angel Fire had no local access number for the Internet service Raim uses, forcing him to pay long-distance charges to access the Net.

"You [rely on] things like Federal Express," he says. "Well, overnight service to remote places is usually not overnight." Post office boxes are not always accessible, he says, and service industries work at their own pace. Raim has also had to deal with an unreliable electric service, which has often forced him to rely on backup batteries and generators to keep his business up and running.

Wake-Up Call

Small towns may also lack a ready infrastructure or a steady pool of qualified workers, says Tom Mason, an economics professor at Rose-Hulman Institute of Technology in Terre Haute, Indiana, who has studied entrepreneurship for more than 15 years. "You might like living on the side of a mountain," Mason says, "but if your business starts growing and you need a couple of people to grow it with, where are [you going to find them]?"

For Elwood, Indiana, business owner Ed Escallon, the answer lies hours away. Many of his employees live in large cities, while Escallon's small manufacturing company, Terronics Development Corp., remains rooted on a farm in the town of 15,000.

"We were looking for a place outside the smokestacks," he says, referring to General Motors' dominance of Indiana's landscape and economy. Escallon, 53, left a job in industrial Muncie, Indiana, 13 years ago to build his 14-person company, which now reaps more than $1 million yearly.

The struggle to find employees constitutes one concern for rural entrepreneurs; getting along with the neighbors is yet another. While the added tax dollars and employment opportunities a new company provides a small town are quite welcome, the success a firm might bring can also have some undesirable effects. A successful company may supersede existing firms in importance and influence, taking away employees and even driving up home prices. Towns sometimes offer economic incentives to lure new business owners--money local companies might view as ill-spent.

"It could go both ways," says Terry Besser, a sociology professor at Iowa State University in Ames, who has conducted a study of how firms do business in 30 small towns across Iowa. "It could be that the town is so happy to see [the new business], they welcome this person with open arms and provide all kinds of assistance and knowledge of the local market." On the other hand, she says, outsiders sometimes start operating in a town without a firm knowledge of the way business is done there. They might find navigating their new home's social world difficult as well: Small towns can often prove cliquish.

When Bob Wersen moved his electronic components manufacturing firm, Panel Components Corp., to Oskaloosa, Iowa, from Santa Rosa, California, in 1993, he went out of his way to get involved.

Despite more than one hometown businessman expressing disdain for the newcomer, Wersen plunged into daily life. "I went out of my way to meet people in town on their terms," he says. "I reached out to people whenever I had the opportunity. I maintained a very visible presence. We made every attempt to communicate publicly with the community about [our business] and the hiring process."

Wersen relocated to Oskaloosa as a matter of business survival. "We needed to be in a different facility to lower our cost structure," says Wersen, 55. "Since I was going to have to make some changes anyhow, it looked like a good time to relocate."

A chance 1991 meeting at a plastics convention with the executive vice president of the Oskaloosa Chamber of Commerce led Wersen to the town, which offered a friendlier regulatory and political climate than Santa Rosa, as well as a better cost structure. In addition, Oskaloosa and the State of Iowa offered Wersen forgivable loans totaling $275,000 and 100 percent financing on a new building.

After Wersen made his decision and returned to Santa Rosa to give his employees the news, he faced a new obstacle: No one wanted to move with him. And yet, Wersen says, between the outgoing employees in Santa Rosa and the new team he developed in Iowa, his customers were never aware the company had relocated.

Packing Up

Preparation is the key to a successful move to the hinterlands. Location, available work force, proximity to transportation, local attitudes and culture shock are all factors to consider. Two kinds of people generally make the move, says Bard: One takes the time to explore and visit; the other just drops everything and leaves. Guess who ends up being more successful? "Preparation can solve a lot of problems, both culturally and business-wise," Bard says.

While small-town life is not for everyone, it has been a successful move for Wersen. After cutting costs by more than $600,000, he has doubled his staff and reached sales of approximately $13 million. In the past, he has worked on the town's Economic Development Committee as well as with the Chamber of Commerce. He has also purchased some outlying land for development, a solution to the housing shortage the town now faces because of Wersen's growing company and several other businesses, which are all attracting more residents. "[My wife and I] both wonder aloud `When is it going to slow down?' " Wersen says. "I can't say I've had any time so far to really kick back and relax."

Contact Sources

Ed Malloy, (515) 472-8421, danaher@lisco.com

Jeff Raim, (800) 437-0764, jeff@spiritcoach.com

Panel Components Corp., P.O. Box 115, Oskaloosa, IA 52577, (515) 673-5000

Terronics Development Corp., 7565 W. 900 N., Elwood, IN 46036-8907, (765) 552-0808

Two Mile High Press, (719) 836-0394, jonbard@aol.com

Brian Steinberg is a freelance writer in New York City whose work has appeared in such publications as The New York Times and The Washington Post.