Make Mine a Million: Comparing Rural & Urban Biz Growth Rates

When a company achieves $1 million in revenues, that accomplishment is often a sign that the firm has real potential and could be poised for major growth and success.  In fact, many communities and economic development programs target these types of firms as priorities for support and investments.  For example, the Lowe Foundation refers to firms of this size as Stage 2, and many of its support programs target Stage 2 firms.

It’s tough to reach Stage 2, and few firms do it.  It may be especially tough for some rural ventures. A new JP Morgan Chase Institute study finds that rural firms are less likely to achieve $1 million in revenue when compared to their urban counterparts. Overall, about 8.6% of urban firms reached $1 million in sales within five years.  For rural firms, the comparable share was 6%.  These patterns persist across different regions and different sectors.  Rural firms also tend to start smaller and face lower levels of revenue growth in their early years of operation.  While the study shies away from making major policy-related conclusions, the analysts suggest that slowing population growth rates in rural areas are the primary cause behind these disparities.