Rural Entrepreneurs on the Rise

June 20, 2010— -- Five years ago, Katrina Frey wanted to make a little extra money, so she started cooking up homemade gourmet jellies and syrups. Then she sold them out of the back of her van at a farmer's market in western Nebraska. She made $5,000 in her first year of business.

Today, after taking her venture online and moving to a building on Main Street in the small town of Stapleton, the mother of three whose husband is a farmer now grosses $50,000 a year.

John Marquis started his entrepreneurial journey four years ago in the basement of his Ogallala, Neb., home, recreating a vintage men's fragrance. Today, six online vendors sell his Ogallala Bay Rum aftershave and cologne to customers in 50 states and 31 countries.

Marquis and Frey are rural entrepreneurs who have created thriving businesses despite the bleak economy and their out-of-the-way locations. They're not the only ones. From 2008 to 2009, the number of self-employed Americans increased by 200,000 to 8.9 million, according to Challenger Gray & Christmas, a Chicago outplacement firm.

In 2009, business startups in the U.S. reached their highest level in 14 years, according to the Ewing Marion Kauffman Foundation, a Kansas City organization that helps entrepreneurs. E.J. Reedy, a manager in research and policy at the Kauffman Foundation, said small businesses are up, and entrepreneurship in rural areas has been spiking too.

"Places like Nebraska, Iowa ... there's a lot of growth in that area," he told ABCNews.com.

For rural entrepreneurs, one of the biggest barriers to success is the sheer distance from buyers and suppliers. But that is no longer an issue because they can reach customers online anywhere in the world.

"The Internet has expanded my borders," Frey said. "It's made it so I can be in a little town of 300 and still operate a business beyond those borders. It's made it so I'm just not limited to those county lines."

But while the Internet has opened the doors for many rural entrepreneurs, it also has created a very competitive marketplace, said Janell Anderson Ehrke, founder and CEO of Grow Nebraska, a non-profit educational organization that helps startup business owners in the state. That's why her group, which is funded by grants from the U.S. Department of Agriculture and others, spends most of its time educating businesses about the fine points of online marketing.