High-Tech Firms Get Small-Town Benefits

DataFutures Inc., of Harlan, Ky., operates its business from two former residences at Browning Acres, as seen Wednesday, Aug. 23, 2006. This is the headquarters for DataFutures Inc., a $5 million company that competes nationally in the school finance and lunch monitoring software market, but chooses to operate in 2,050-population Harlan. (AP Photo/Debbie Caldwell) (Debbie Caldwell - AP)

"There's a new generation of entrepreneurs who have really tight relationships virtually," said Cornelia Flora, distinguished professor of sociology at Iowa State University and director of the North Central Regional Center for Rural Development.

Flora said networking face-to-face in populous cities used to be the only way to establish valuable business contacts. However, the Internet and video-conferencing today allows business chiefs to meet potential clients from any office _ from a high-rise in Manhattan to a mountain home in Appalachia.

Mike Mallet, founder and CEO of Corporate Research International, said his turning point came one day in Washington, D.C., when the market researcher sat in traffic for three hours. He decided to move his family and his ideas to his hometown of Findlay, Ohio _ population 39,000.

Mallet said businesses in rural areas have a main advantage: lower costs.

"The business sector has changed completely," said Mallett, whose mystery shopping company plants undercover consumers to evaluate retail services for his some 200 clients nationwide, including Foot Locker Inc., Darden Restaurants Inc.'s Hardee's chain and Dunkin' Donuts. "The Wal-Mart mentality has changed the world. It's all about cost now."

Entrepreneurs like Combs and Mallett enjoy office space that comes at a fraction of the leasing costs in big cities. The cost of living is less, so wages are lower, yet still appealing to their employees. And, with hardly any traffic, there's less money wasted on high gas prices and less stress among employees.

Smith, whose clients include billionaire Bill Bartmann and actor Burt Reynolds, said his biggest selling point clients are more concerned with his getting the same level of publicity they would with slick, big-city firms at a fifth of the cost.

Since their costs are lower, they can offer the same services at a cheaper rate than companies in big cities.

"Because our overhead is so low, our prices reflect that," said Robert Smith, head of RSA Public Relations, based in Rockton, Ill. _ a town of 5,500 about 95 miles northwest of Chicago.

But operating out of the rural areas has its challenges, too, namely accessible airports.

"The biggest challenge for us is travel," said Combs, whose Harlan, Ky.-based company is three hours from the nearest major airport and two hours from an interstate. If the client is 10 hours or less away, Comb's sales representative drive.

She and the other business chiefs interviewed said they rely heavily on Webcasts, teleconferencing and videoconferencing to make routine presentations to clients. They try to keep long-distance travel at a minimum, usually for business pitches and semiannual or quarterly visits.