One of the major hurdles to business development in rural communities is the base from which ownership and governance of those businesses can occur.

Provinces have enacted regulations allowing for the establishment of community development corporations, while the federal government supports creation and operation of community futures groups.

While these bodies generally are intended to help establish and foster business start-ups in the regions in which they operate, some also take active roles in creating business ideas and business opportunities. However, the municipal and county governments that sponsor or spearhead the groups (CDCs in particular) mostly are barred by provincial statute from direct tax relief or ownership of a for-profit business. Yet, those authorities also find creative ways around that barrier.

The role of for-profit business is, of course, to make a profit, and under our capitalist system, that is the job of entrepreneurs. Unfortunately, the “deep pockets” that spearhead urban large businesses are scarce in the countryside.

On the flip side, rural communities have an inherent advantage: they are comprised of people with common interest and a willingness to work together for mutual benefit, rather than compete at every turn. Since local government is made up of local residents, they, too, have a strong interest in working jointly with their neighbours to further the interests of the community.

This does not always mean growth, including commercial or industrial expansion. One community—the Village of Dunnottar, in Manitoba—bars commercial development without express authorization of the municipal council. They are a cottage area and do not wish to be infected with commercialism. Yet, although multiple family housing is deterred, construction of more homes, including year-round homes, is welcome.

Another municipality has resisted commercial hog and livestock operations, in order to protect its vast and pristine aquifer. But it endorsed a recent application to harvest that water commercially.

A third community, working jointly with other area municipalities and private business, is developing nuclear storage and mini-nuclear plant capabilities, with an eye to marketing these resources. It has absolutely no industrial capacity and a very limited retail presence, yet still is experiencing growth where other rural towns are declining.

And a fourth, almost two decades ago, decided it wanted to become a destination centre for the region, even though it was the fifth-largest centre in the area and on the farthest fringe of the catchment area. With its seniors housing and expanded medical services, it attracted nearby retirees, then worked on its retail segment, expanding it, and lured a major implement dealer to the area. Since the 1996 census, it has nearly doubled in size, while nearby towns, villages and municipalities have shrunk by as much as 40% in the same period.

The focus of these successes in creative management and ownership of various undertakings. The historical innovative spirit of farmers and country folk can overcome the disadvantages of size and location, and, actually provide advantages over urban development, through creative ownership models.

Incubators

A building block of rural business development and support is the business incubator. Successfully used in northern Europe and Australia, the incubator is under-utilized in North America. Partly, that is due to limited vision as to how to design and operate an incubator.

Many assume that incubators require a vast array of supports for business, including bricks-and-mortar and an arsenal of highly skilled professionals that rural areas usually lack. That vision is, to be trite, myopic. There are a variety of incubator designs that are inexpensive, yet effective. The key is, like the communities cited above, to be focused and responsive to the area needs.

One “remote” incubator design relies on the assorted business supports that are readily available in many towns: 1) free Internet access for research at the local library, with a trained staff member to guide users in searches, 2) photocopy facilities at the local pharmacy, 3) business supply and Amazon depot at the municipal office, 3) army of telephone answering services, office support staff, bookkeepers, Web developers, communications people, all operating in-home or small office businesses but who contract to the incubator to provide services at a discount.

Another converted an old retail building into a centre for start-up technology and online operations.

A third used a former grain elevator and adjoining warehouse to develop an array of equipment for local manufacturer start-ups to share.

The key to successful incubator operation is flexibility and adaptability in design and operation, coupled with tailoring its operation to focus on the vision that community leaders have for the area, along with the talents of local and lured-in entrepreneurs.

Keystone or Investment Corporation

In theory, investment corporations should not have specific projects as their objective prior to establishing. However, many housing initiatives started with an investment corporation. These corporations are supposed to be “friends and family” structures, which makes them ideally suited to rural settings where friends and family dominate. To avoid the more stringent oversight of large and public corporations, investors are limited to no more than 50 people or entities (a business can invest in a corporation).

Provinces have set up legislation that allows investment corporations to thrive in rural communities, including tax incentives. They operate a business in the same manner as any other legal entity, operating under established bylaws.

Cooperative

Cooperatives are governed by legislation specific to the concept, but all operate with a one person, one vote mandate. These are often used for food and supplies or credit union cooperatives in small towns (Red River Coop). In the northern USA, local cooperatives operate biofuels (ethanol and biodiesel) facilities, some operate wind and solar farms and a few are grower cooperatives.

Because the legislation governing cooperatives is very specific, the limits of what a business may do are governed by the province, as well as majority vote. The cooperatives are managed under the oversight of a cooperative board of directors, elected annually from members at large.

Recently, an urban idea—housing cooperatives—have been used to build affordable housing. Sometimes, these housing projects are a part of a larger project with private ownership, sharing infrastructure.

Blended or Hybrid Ownership

Blended ownership models, where feasible, offer great advantages for smaller communities. For instance, a local earthen bale greenhouse (see articles on this website) may be built on one farmer’s property, using materials (bales, timber) from another farm, fertilizers from another and biofuels from a third. These may be in-kind financing alternatives. The greenhouse may develop partnerships with other regional community greenhouses, have local government involvement and may be also partly owned by outside investors.

Using multiple investor strategies maximizes funds and expertise available.

Local housing projects, such as a co-housing project (see articles on this website), may involve government-funded affordable housing as one component, a cooperative as another, life lease through private ownership, and free-standing or condo developments, all sharing resources to reduce costs with each element operating in a relatively autonomous manner.

Participant-owned (not Coop)

This is the simplest business model, not unlike a sole proprietorship, partnership, or private corporation. Often, they arise as a result of community forums intended to explore the opportunities of specific projects. For instance, the Bifrost Biodiesel Ltd. facility in Manitoba was created by eighteen investors. While it originally had 22, several left because they disagreed with the operating philosophy of the majority.

Most of the owners were farmers who produced oilseed. However, other investors included local retailers and private persons with a penchant for environmentalism. Briefly, the local CDC examined ownership capabilities.

The business plan called for favourable treatment on the supply and distribution sides fore those participants, with different pricing structures for non-shareholders.

NPOs

Not-for-profit organizations serve the community, without the intent of generating a profit. They may be wholly governed by the local CDC, Community Futures, municipal authorities or local residents. Ideally, they work for housing initiatives, community recreation resources, transportation systems, seniors and health-limited citizens and environmental projects.

Planned Project

Planned project ownership usually is used to develop a string of ventures, one springing from the next as conditions warrant. Initial investors may have a short-term role then an opt-out condition, or may take ownership positions in the subsequent projects, at varying levels of commitment.

A beef feedlot, for instance, may plan to collocate with an ethanol facility to share the waste water and reduce overall costs. Then a sod business may be created to use the fertilizers effectively. A greenhouse may use the waste heat, some water and fertilizer. A trucking company may start up as part of the plan to move cattle and ethanol to blenders. A retail fuel station may result.

The list goes on, with the potential businesses often envisioned during start-up of the feedlot. At each stage, owners from the original and subsequent businesses may choose to participate in the next, or may opt out. This mechanism creates a ready baseline of investors for each of the following businesses.

Often, new businesses emerge, unrelated. Okno Manufacturing emerged from employees of Vidir Machine, north of Arborg. A machinist firm arose from employees of Okno. Employees of Vidir Machine built a local hardware store, and others set up personal warehouse storage facilities nearby.

From the planned project sequence, more than 150 jobs were created and more than a half dozen businesses, plus the three new businesses started by Vidir as part of the long0range planning. Each required original, plus new investors.

PPP

Public Private Partnerships have found a new popularity in urban centres. For instance, in Winnipeg, the Disraeli Freeway operates as a partnership between the builders (re-builders) and the city. It allows for log-term financing and planning.

Other PPPs may involve cement and asphalt plants for local communities, housing, Internet, heating resources (think biomass projects in landfills fueling public buildings or vehicles and private residences).

In-kind

In-kind operations require that owners/shareholders guarantee delivery of raw materials, supplies, equipment and other resources (sometimes for a set fee), and that other (or the same owners) guarantee a specific level of purchase of finished product or service. This can include biodiesel plants that produce oil from waste oilseed and which the farmer who supplied the oilseed commits to purchasing a specific amount of the finished product.

Such a concept allows for predictability in operations and a baseline, from which new and innovative products (e.g. biodiesel cleaning supplies, fuel pellets, natural pesticides, glycerine-based products, diesel conditioner, etc.) can emerge.

It minimizes the cash contribution needed by investors and provides them with both a market and a product source.

In addition to these business ownership models, various hybrids enable rural business and resource growth, limited only by regulation. opportunity and imagination.