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.

The Rural Business Boom

Grow Nebraska started with 51 charter members in 1998, and that number has grown to 307 in 2009. Ehrke said the goal for the program is to have 400 members by the end of this year, and 700 by 2013. She even thinks that they could end up expanding into other states such as Iowa, South Dakota or Wyoming.

And according to Ehrke, it's all thanks to a boom in rural businesses.

"With the economy, entrepreneurs have to expand their service area to survive," she said. "Basically, these small companies need and want marketing help. We're there for that, and a lot of it is web-based. Whether it's help making websites, help with social media or how to go forward with e-commerce, that's our role, and we're happy to do it."

Only a handful of similar programs like Grow Nebraska exist in the country, Ehrke said. The Nebraska program was modeled after a program in Kentucky, and they look to other similar companies in New Mexico, Ohio and New Hampshire.

Back in Nebraska, Marquis and Frey credit Grow Nebraska's expertise for helping them be competitive and develop their businesses. The conferences and Internet workshops Grow Nebraska offers have been valuable in helping them explore online opportunities, and they agreed that the $300 fee Grow Nebraska charges participants was a good investment.

"I tap into all of their training, all of their workshops, all their website critiques every year. I just want to make sure I'm always changing in a positive direction," she told ABCNews.com. "When I first started, I thought I would just sell across Nebraska. I really didn't think I would go beyond that. But through Grow, it made me realize I'm not just a Nebraska product; there are people all over who like my products."

Marquis made the same discovery.

"I started Ogallala Bay Rum because really I could never find Bay Rum that smelled like I thought it used to back in the barber shop," he said. "When I did, I figured I had to have other means of marketing and distribution in place, and the Internet simply eliminates most of the barriers to enter the market. I really don't think there's a single downside to utilizing business tools on the Internet.

"Honestly without it, our businesses really would not exist."

Marquis' first endeavor on the web was an eBay-powered store, which he still uses today. Frey and Marquis both use a variety of online tools to boost their sales, including Facebook and Twitter.

"It's where the consumers are," Frey said. "More people are shopping online than ever before. If I didn't have it, I would be reduced to simply a rep shopping my product around to vendors."

For Marquis and Frey, starting a small business has changed their lives. Marquis, whose company's sales have increased 10-fold in four years, plans to quit his job as program director of three Ogallala radio stations next month to sell his products full time.

Meanwhile, Frey is busy cooking in her new commercial kitchen and developing strategies to keep her online sales strong.

"Getting involved on the Internet is a little bit of everything. You can't be afraid to take a chance or think outside the box," she said. "Whether you are rural or in big cities, you can be a little guy and still look like a big guy."