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Your Place Can Shape Your Business Model Path

We often talk to people about business model “paths” i.e. divergent roads that entrepreneurs can choose to follow to achieve their business goals. Choosing one means saying no to another, at least initially, as each path has different scale requirements and requires different levels and sources of capitalization.

Part of that business model path decision is shaped by place and the scale that is possible in that place. In rural areas with low levels of population, it is especially hard to have food or beverage businesses locally produce their products for a purely local consumer base simply because there are not enough consumers to sustain the business. And, many people, funders and entrepreneurs alike, don’t necessarily know what it takes to make a rural business successful or what will work in a given rural area. This, combined with other factors, has unfortunately led to a dearth of capital for businesses based in rural areas.

At the end of the day, all businesses need enough market share of a large enough market to be financially sustainable for the long term. To make many rural businesses viable, there are two different over-arching paths to pursue to achieve this. One path is finding a way to bring enough people to the business’ physical location to achieve the necessary scale. Pick your own farms or on-farm wedding operations and other agri-tourism businesses are examples of this. Another path is getting the business’ products into regional or national distribution to reach more consumers through producing branded wholesale products that are defensibly unique in the category they are in.

It is important to remember: one path is not better than the other. Rather, each path has clear tradeoffs and business model requirements, like the number of people needed to buy the product. That path needs to align with the entrepreneur’s skills and goals as well as the realities of their community. It is our hope that understanding these tradeoffs will unlock more capital for rural businesses so they can grow and be financially viable for the long term.


And now, our roundup of the best food and beverage finance news, events and resources from around the web…

Food and Beverage Business Models

Business Model Insights

Raising Capital

Raising Capital

Grocery Store Shopping For National Wholesale Food Brands

CPG/National Brands

Grocery Store Produce Section

Market Trends

Old Grocerty Store in Small Town

Farming and Rural Life

Mergers and Acquisitions

Deals/M&A

Natural Products Expo East

Industry Events

Categories: Insights Newsletter