2026 Do Small Businesses and Start-Ups Succeed More in Rural Areas (Escanaba's Downtown)

You may want to review this 2026 Small Business Rural and Urban Firms release from the Federal Reserve. It compares rural and urban environments, and I like to think about it in terms of an example such as Escanaba, Michigan, or Delta County versus a larger city due to its coastal nature embedded small city lifestyle (i.e. around 10K a blend of community based small emerging smart city feel.) 

(Illustrative Only)
Where nature and 
opportunity shake
hands for
a shared future. 

What we're finding in a place like this is that they may become increasingy attractive to investment. There may be more interest in having small businesses downtown, more startups, and increased tourism that can pair with existing achor businesses and infrastructure. A number of things seem to be moving in a positive direction. The report also suggests that rural small firms can experience stronger growth and outcomes, both financially and non-financially.

Is it worth it to invest and launch your start-up in a rural place like Escanaba or Gladstone?

It depends on your goals and the way you want to live your life.

So, just thinking about it when we look at the publication below employment and profitability is somewhat higher among rural firms, and many of these businesses obtain financing from local banks, that keeps more of the money circulating locally. Higher opportunities for success could create an incentive for businesses to consider moving to rural communities.

Take Delta County, for example. There's a quality-of-life advantage, a downtown that is beginning to reemerge and thrive, a port, rail, recreational opportunities, and other assets. So it makes sense to consider how small, medium, and large businesses could contribute to that development. There are already a couple of anchor businesses, but how might we attract more small businesses—especially entrepreneurs who are launching new ideas?

The nice thing about entrepreneurs is that they don't simply launch and either fail or succeed. They often launch, fail, try again, and try again. That keeps revenue circulating locally. And when they do succeed, they usually don't stop. They grow, expand, and add new things because entrepreneurship is a way of looking at the world.

These are the types of people you want to attract if you're trying to bring back downtowns and strengthen a community's economic base.

Does the release below resolve the issue of small business success in rural locations? No, but it leans in the direction that small business and rural communities may be overlooked for start-ups and investment.

2026 Small Business: Rural vs. Urban Firms

• Revenue: Rural firms were somewhat more likely to report increased revenue, while urban firms had a slightly higher share reporting decreased revenue.
• Employment: Rural firms were more likely to report increased employment (25% vs. 18% for urban firms), while urban firms were more likely to report no change.
• Profitability: Rural firms showed a higher share operating at a profit (48% vs. 34% urban), while urban firms had a larger share operating at a loss.
• Financial condition: Rural firms were more likely to describe their condition as good or very good, while urban firms had a somewhat larger share reporting fair or poor conditions.
• Major challenges: Both groups faced rising costs, staffing difficulties, weak sales, supply-chain problems, and regulatory pressures.
• Financing: About 60% of both rural and urban firms applied for financing, showing similar overall demand for credit.
• Credit outcomes: Rural firms had a somewhat lower approval rate and higher denial rate than urban firms.
• AI adoption: AI use was emerging in both groups, with firms primarily using it for writing/marketing, productivity, planning, and analysis.

Federal Reserve Banks. (2026). 2026 Firms in Focus: Chartbook on rural and urban firms: Findings from the 2025 Small Business Credit Survey. https://fedsmallbusiness.org.