The rural revolution

Rural Britain has an image problem. The perception is that there are no jobs; locals can't afford houses; young people are leaving to find work in cities; villages are losing their shops and services; public transport is scant and farming is on its knees. The countryside is seen as being dominated by farming, with a scattering of quaint olde tea shoppes, chintzy bed and breakfasts, and ropey visitor attractions. In short, hardly the sort of place you would expect to be a hotbed of enterprise and innovative business.

Rural Britain has an image problem. The perception is that there are no jobs; locals can't afford houses; young people are leaving to find work in cities; villages are losing their shops and services; public transport is scant and farming is on its knees. The countryside is seen as being dominated by farming, with a scattering of quaint olde tea shoppes, chintzy bed and breakfasts, and ropey visitor attractions. In short, hardly the sort of place you would expect to be a hotbed of enterprise and innovative business.

But rural businesses make a surprisingly healthy contribution to the overall performance of the UK economy. Between 1999 and 2003, the average growth in turnover of rural businesses was higher than urban businesses, growing by four per cent, compared to an overall fall in the turnover of urban business. Moreover, there are more businesses per head of population in rural areas than in urban areas and rural self-employment rates are higher at 14.5 per cent of the workforce as opposed to 11.8 per cent of the urban workforce.

Roger Turner, economies programme manager at the Countryside Agency, believes the discrepancy between perception and reality can be largely explained, "by what people define as rural business. If you take the historic view of rural business as focused around farming, then there are clearly weaknesses and significant problems, but if you take a broader view to include all the types of businesses that you get in rural communities, the picture is very different."

That's not to say that there aren't significant challenges facing rural enterprises. The negative stories that regularly fill the newspapers, whether it is farming crises, lack of affordable housing or the migration of young people to towns and cities, are very real hurdles. If present success rates are to be sustained, the needs of rural enterprises have to be better addressed

Issues such as the regulatory burden on small businesses, obtaining financial support, recruiting suitably experienced staff and getting products to market are not unique to rural businesses, but they are given an extra dimension when applied to rural locations.

Red tape, for example, is widely reported as one of the main headaches for most small businesses wherever they are based, increasing costs, miring key personnel in bureaucracy and acting as a disincentive to growth.

But for a rural business, the problem is exacerbated due to a lack of readily available guidance and support about new regulations and their practical implications. The local business groups and support networks routinely available in towns and cities, whether formal or informal, do not have the same coverage in rural areas, which by definition are more remote and less populated.

"Rural businesses need improvements in the information and advice available to them, to help them understand how particular regulations impact their business. But who do they turn to? The relative level of penetration of the Business Link network in rural areas, for example, is much lower. At the same time, the local Chamber of Commerce might be several miles away and not particularly convenient," says Turner.

Its even worse with recruitment. All businesses highlight the difficulty in obtaining suitably educated and experienced staff. When the business is in a rural location, with a small pool of potential labour, the problem is much greater. Rather than finding people with the right experience or qualifications, the problem may be one of finding any people at all, regardless of experience. Coupled with poor public transport services to bring employees to and from the workplace, recruiting high quality staff can be a huge problem, and one that only gets worse as the business grows and the pool of readily available suitable talent gets smaller.

Alex Albone, a farmer and managing director of Pipers Crisps, based in Brigg, north Lincolnshire, is only too familiar with the problems faced by rural businesses, but he believes innovation and enterprise is the only way to keep rural communities alive. "You can be rurally based and still be a successful business," he says. "Farming, the traditional glue of rural life, is under enormous pressure. We have to recognise that if we are going to have vibrant rural communities, we have got to find other ways of supporting and managing the rural economy."

"Rural enterprise often means converting some farm buildings into office space, but there isn't a huge demand for office space in north Lincolnshire. For us, being arable farmers, doing something with potatoes was an obvious step," says Albone.

He set up Pipers Crisps 12 months ago along with two other local farmers. The company uses locally grown potatoes - including those grown on Albone's and his fellow directors' farms - to produce hand-cooked crisps, naturally flavoured with ingredients from small-scale artisan producers, such as sea salt from Anglesey, cider vinegar from Somerset, cheddar from the West Country and black pepper from India.

The company already employs 10 people and clients include GNER, Harvey Nichols, Kew Gardens and the Hilton Group. From its first batch of 20 boxes of crisps produced last April, it now produces 25,000 bags a week and turnover has reached £350,000.

But even a growing success story such as Pipers faces problems wholly related to its rural location, such as creating market awareness.

Rural businesses tend to lack the market profile of their urban peers. Urban businesses are closer and better connected to the relevant organisations and industry groups, in terms of geography if nothing else.

"It's true that many rural enterprises aren't getting the support they should because they are not visible. They are perhaps the only company in their sector in that area and they are not picked up, either by potential customers, or by the support agencies or professional advisors. They are not an obvious target, in the way that the five companies in the town 30 miles away that are also in their sector are a target," says Turner.

But the situation is improving. At a national level, the Countryside Agency and the Department for Food, the Environment and Rural Affairs (Defra) manage a series of initiatives and financial support programmes aimed at supporting rural enterprise. At a local level, most of the regional development agencies have specific rural development strategies.

"There's always been an awareness about the plight of businesses in rural areas and the need for them not to be disadvantaged, we have just got smarter about how we approach it," says Andy Tordoff, head of rural renaissance and tourism at Yorkshire Forward, the regional development agency for Yorkshire.

And rural businesses, too, are getting better at thinking strategically and making their needs heard. Tordoff tells of a local business group meeting he attended five years ago in a small rural market town. Fifteen local businesses attended, each paying £10 annual membership, and spent two hours discussing the council's proposal to paint yellow lines in the market square.

Today, he says the business group has well over 100 members, paying £75 for annual membership and they have stopped talking about yellow lines. Now the talk is about what they as a group can do collectively to enhance their offering; what strategic changes would make a difference to their businesses.

"There is a more cohesive approach emerging, not just from the support agencies, but among rural businesses themselves, about what is needed for them to continue to be successful. I don't think there has ever been a better time to think about running a rural business," he says.

And many people seem to agree with him. Nearly 33 per cent of all VAT-registered businesses are now found in the countryside. Not bad for only 23 per cent of the population.

'We may be rurally based but we have a national outlook'

Inspiration for new business ideas can come from anywhere. For Christine Armstrong, founder of Second Nature UK, it came from staring out of the kitchen window.

Refurbishing a 17th-century farmhouse in the Lake District with her partner David, a sheep farmer, Armstrong was struggling to find an appropriate insulation material for the roof. She looked out of the window on to a landscape dotted with sheep and hit upon the idea of using wool for an environmentally friendly version.

"I was determined to refurbish the building authentically and went to great lengths to research things like lime mortars and plasters based on horsehair, so I wasn't prepared to bung a load of fibre glass insulation in the roof. I found a sustainable alternative which was made in New Zealand, but there was nothing in this country. I looked at all the sheep outside and using local wool seemed such an obvious idea," says Christine.

She had lived in and around the Cumbrian farming community all her working life and had already established an interior accessories business. It gave her the confidence to research her idea more thoroughly, which meant over two years researching its manufacturing and the market.

The product - Thermafleece - was launched in May 2001. It is made from wool from British hill sheep farmed throughout the UK, including breeds such as Herdwick and Swaledale, which have coarser fleeces.

Armstrong was ambitious from the outset. She set up a limited company - Second Nature UK - to produce and market Thermafleece and implemented a deliberate strategy to avoid being restricted by any "rural industry" label.

"I was aware that being based in a village in the Lake District we might get dismissed as a cottage industry," she says. "It was a deliberate decision to build a strong brand and identity, with professional literature, website and marketing material, to pre-empt that. And we got all the industry accreditations to prove that we are serious."

By the end of 2001, Second Nature had taken on two part-time employees. It now employs five full-time staff at its headquarters outside Penrith and turnover for 2005 will be around £450,000.

Customers of the company include individual home builders and property developers, housing associations and local councils. It is also used by the National Trust as a sympathetic insulation material for its historic properties.

"It is fulfilling being able to use local resources to make a sustainable, pioneering product. We might be rurally based, but we have a national outlook and are proud that, even in a small way, we are making a difference," says Christine.