Jack Schultz: A Man with 7 1/2 Keys to Small Town Success (cont.)

The town of Leavenworth, Washington, reinvented itself from a declining sawmill and lumber town to a Bavarian village that now attracts over 1.5 million tourists per year. The inset photo shows dancers at one of the town’s festivals.

Entrepreneurship

As Schultz’s research on small town success continues, he has come to a greater understanding of the importance of entrepreneurship. One of the reasons entrepreneurship is key, he says, is that only about 200 major projects (those with over 200 employees) are done on an annual basis in the U.S. Any more, “It’s a needle in a haystack when you’re going after these big companies,” Schultz says.

The Internet and the ease of communication play big roles in fostering entrepreneurship in small towns. Schultz cites a statistic that nearly three-quarters of a million people make some or all of their living on eBay.

“In virtually every town I go into I’m seeing businesses being developed on the Internet. It doesn’t matter the size of the town. Take an Amish town of 2,200 people, where a guy is selling Amish buggies over the Internet and propane refrigerators. There are other people who have a need for that – hunting lodges, that kind of thing. If the Amish are understanding the importance of the Internet, that’s what I would call a tipping point,” he says.

Another business that has expanded dramatically over the Internet, says Schultz, is Dakota Cabin Quilts in Hettinger, North Dakota. At a population of 1,300 people, Hettinger is the largest town for 40 miles around. A town of that size would not be able to support a quilting store, but Dakota Cabin Quilts sells its products all over the world via the Internet and now has six employees.

Yet another business he cites started in Effingham: Mid America Designs began selling Corvette patches, jackets, shirts, glasses and owners manuals at auto events and through a simple catalog; the company since expanded its line and now does $50 million in sales per year.

Schultz sees these businesses as the next generation of mail order catalogs – many of which started in very small towns – but with much more accessible markets. Coldwater Creek, a purveyor of women’s clothes and accessories, was started as a catalogue business in isolated Sandpoint, Idaho, by two former New Yorkers who never wanted to find themselves caught in the Holland Tunnel again. It now has over 4,000 employees.

He also sees promise in the trends of telecommuting and “homesourcing,” in which workers such as JetBlue’s call center reps do their work from home.

But what about the potential for sectors with great growth potential and high wages, such as manufacturing and technology, in small towns?

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