Why supporting small, rural businesses is key to local economic growth

Small and medium-sized enterprises play a significant role in economies, representing 90% of global business and over 50% of employment worldwide. In the United States, small businesses are an economic engine — making up 99% of businesses across the country and accounting for two out of every three new jobs.

Yet smaller businesses, especially in rural areas, face numerous challenges in accessing financial support, getting set up, and scaling, explained Ross DeVol, chair and CEO of Heartland Forward, a U.S.-based think-and-do tank that promotes regional innovation and entrepreneurial ecosystems for states and local communities in the American heartland — a region comprising 20 states in the middle of the country.

Rather than importing external companies, governments need to understand that “local entrepreneurs are critical to their economic future.”

“A change of mindset needs to happen,” DeVol told Devex. “Smaller communities and their leaders need to think about the assets that companies are looking for, and then do what they can to create a system that provides right entrepreneurial support to those companies.”

This ethos doesn’t only apply to rural America, though. It’s also applicable in communities and geographies where small businesses often face hurdles in establishing themselves and scaling. These include a lack of access to capital, networks, and expertise, and even the internet, explained DeVol. “You simply cannot reach broader markets unless you have high-speed internet access,” he shared, explaining that this is a prevalent issue for businesses in the heartland, where nearly 25% of rural Americans lack high-speed internet access.

Tackling these barriers and providing rural businesses — regardless of location — with the tangible support they need creates career opportunities, generates economic growth, and builds resilience in a community, explained DeVol.

Sitting down with Devex, he shared ways entrepreneurs can be supported and how lessons from Heartland Forward can inform and encourage similar approaches in communities around the world.

This conversation has been edited for length and clarity.

In April, you attended the 2025 Global Inclusive Growth Summit, hosted by the Mastercard Center for Inclusive Growth, where you said officials and mayors undervalue the importance of starting and scaling firms. Why do you think that is?

At Heartland Forward, we’ve done a good deal of research documenting the importance of not only being able to start companies but being able to scale them locally. It's something that hasn't really been communicated: The importance of smaller towns, communities, and rural areas that have tended to rely on more traditional means of [attracting] companies — whether it's manufacturing companies, logistics, or supply chains.

Many times, financial incentives are used to entice companies to set up operations — and in the short term, that can work. The challenge comes when somebody else can offer a larger incentive in the future, and companies that tend to respond to those are going to move fairly quickly; they've already demonstrated that. So, their stickiness, or attachment, to that rural economy is not as strong.

How can underdigitized, undercapitalized, and underskilled communities and small businesses be better integrated into the global economy?

You have to think proactively. You need to have an economic development strategy for your community, for your county.

One action that many local leaders need to take, especially in rural America, [is to create] entrepreneurial support organizations, or ESOs. These can be run by a chamber of commerce or be government-based. They could also be [run by] some other quasi-business group, but they're there to try to connect and offer mentorship opportunities, to be able to learn from other entrepreneurs about some of the challenges they faced and how they overcame them.

Of course, the elephant in the room is access to risk capital, not just venture capital. It's important to think about finding local investor groups, people that may have high net worth, [who] can serve as an investment vehicle for many of these communities and fill some of those capital gaps.

[We also need to think] about the connections to local metropolitan areas that have venture capital or angel networks. It's being able to tie into assets that are close by to fill some of the gaps locally.

What work is Heartland Forward doing to support smaller local businesses, entrepreneurship, and innovation?

We decided early on that one of the gaps that was missing in the very early stages of entrepreneurship is when somebody has an idea — just an idea, but they don't know whether or not it could become an actual business, let alone whether it’s scalable — meaning building a growth plan, adding employees, adding locations, and amplifying the brand so people know what they are doing and selling.

So we partnered with an organization called Builders + Backers in bringing their entrepreneurial training programs in the very early stages — the Idea Accelerator provides an early-stage curriculum for would-be, early-stage entrepreneurs to test whether or not their idea makes sense. In addition, we provide them a $5,000 pebble grant to execute their experiment.

So far, over 1,000 “builders” have gone through the program, many of them in rural or semi-rural America. A number of entrepreneurs have grown into small businesses that are now hiring people. [For example], there's a company that converts bicycles into electric bikes … and another that has developed a feeding tube for premature babies when they're taken home.  

We've also been advocating to mayors [and] economic development officials to focus on providing critical support services to entrepreneurs so that they can scale up. Because if you look at the long term, you find that those communities that are constantly starting new companies [and] scaling them are more vibrant and dynamic and tend to have higher rates of job creation.

One of the other things we've focused on is a federal program called the State Small Business Credit Initiative, which provides funding from the federal government to states to support small businesses by providing credit. Sometimes they'll partner with local banks [to] provide early access to financing that many of these businesses otherwise wouldn’t have access to.

Are there lessons that you’ve learned from these different programs that could be applied to other countries where small businesses may encounter similar challenges to those in rural America?

It comes down to having local officials who understand that if they want to have vibrant communities, they need to be able to support entrepreneurs and provide them with the tools and training necessary — helping with connections and having different mentoring groups that provide knowledge and education about what worked for them and what didn't. Having state governments or provincial governments that recognize they have a role to play in helping entrepreneurs register their businesses — such as a sole proprietorship, LLC [limited liability company], or corporation — [is key]. Keep red tape to a minimum.

What is your call to action when it comes to rural small businesses in the digital economy?

Access to high-speed internet is absolutely essential. Whether you’re delivering services or goods, you cannot scale to the extent that you otherwise could [without high-speed internet]. It’s critical that rural entrepreneurs and businesses — small businesses, especially — are connected to the modern economy.

And we must think differently about how to [make businesses ready] for investment. In fact, Heartland Forward is launching a new Center for Investment Readiness, which looks through the lens of investors who might want to locate a business in your community or support someone by financing their business. It is important to help understand what investors are looking for in communities to make your community “investment ready.”

The Mastercard Center for Inclusive Growth is supporting Heartland Forward with the development of the Pulse of the Heartland, a first-of-its-kind platform designed to equip policymakers, journalists, and community leaders with real-time data, curated news, and in-depth analysis of economic trends across 20 heartland states.