Platforms connect buyers and sellers in rural America to share expensive equipment.
Rural America is suffering. The economic recovery from the Great Recession has largely missed rural America. A “sharing” business model, epitomized by urban companies like Lyft and AirBnb, could be adapted to empower rural entrepreneurs and communities, without reliance on external assistance.
Prior recoveries saw broad economic growth across the United States, driven by manufacturing and geographically dispersed services. Not this time. Urban areas alive with innovative new technology companies and professional jobs drove the most recent recovery, with less economic activity flowing to the small towns scattered across the country, according to economists at the Economic Innovation Group. This dearth both emanated from and exacerbated rural “brain drain,” when ambitious, smart young people permanently migrate to cities. Research from the MacArthur Foundation reports that those who stay back, often to work in agriculture, face declining income as family farms succumb to the economies of scale harnessed by the large agribusiness conglomerates.
A flurry of government initiatives intended to address this problem. From reinvigorated vocational training to incentives for emigrants to return, like college debt forgiveness, these plans have been slow to make an impact. They stretch already-shrinking public budgets. And they rely on the political will of conservative state legislatures that philosophically distrust governmental intervention.
A better solution is available that avoids public investment and empowers local businesses and entrepreneurs: the sharing business model. A sharing company connects people who have idle assets with those who seek to temporarily and inexpensively rent those assets, for which the company charges a commission. AirBnb employs this model to help travelers find homeowners with a spare room at lower costs and higher availability than hotels. Lyft and Uber do the same for cars. TaskRabbit (bought by IKEA in 2017) uses this model for semi-skilled construction labor. These examples began and have thrived in urban environments, but they could be applied to rural areas as well. Indeed, they would thrive in rural America without some of the negative side-effects that they have brought to urban areas.
The sharing business model can garner similar benefits for its users as it migrates to rural communities. Sharing can be applied to many items and services that rural inhabitants could provide to others for a fee.
Consider various farm tools, such as an auger, a six-foot tall drill that attaches to the back of a tractor in order to quickly dig large, deep holes in rocky soil, into which a rancher inserts a fence post. This piece of equipment sits idle in a corner of the barn for most of the year, making it ideal for sharing with neighbors that might need it.
The key to starting any type of sharing business is the time it takes to develop interest and trust among consumers. In cities, the trust in the sharing venture develops incrementally over many repetitions. A Lyft neophyte takes her first ride, perhaps leaving a little early just in case the car is late, and discovers that the service is convenient, inexpensive, and timely. The car is clean; the driver is friendly. She rates her experience positively. Other potential riders see this rating and develop trust for the drivers, the process, and the company that hosts it. These ratings are proxies for trust among people who do not otherwise know each other.
In rural areas, trust is similarly developed, and perhaps even faster than in urban areas. A rancher who needs an augur rents one from another rancher. If the auger doesn’t work during or after the exchange, word will travel quickly that the sharing service does not deliver on its promise. Early transactions depend on the widespread reputation of the person managing the sharing service. The issue of trust is actually improved in small towns in rural America, as they are usually very tight in their community connections. Everyone will know the manager, her parents, her children, her neighbors, and even her first-grade teacher. These connections foster trust, which in turn augments mutual respect. Fraud or negligence are unlikely in small towns, because reputations quickly and transparently degrade.
The economics of sharing reinforce the company’s local connections. Because many of these pieces of equipment are large, they are expensive to transport over long distances. Local networks have an advantage over distant suppliers. In addition to employing local entrepreneurs, the sharing venture lowers the cost of operating a rural business, providing vital profits to businesses that have seen their customer base emigrate away.
Don’t get me wrong. The sharing economy’s business model will not make rural Americans instantly wealthy. But it will reverse stagnant wages and generate returns for otherwise idle assets.
Of course, sharing is not new to rural residents. Their desire for self-reliance extends throughout their community and they instinctively help their neighbors. They may wonder: Shouldn’t sharing be free? But what is new and counter-intuitive about a sharing business is the commission to the sharing service. This fee pays for extra value: alerting renters and owners about inventory supplies and requests; coordinating schedules and expectations; transporting and insuring equipment; and finalizing payment for satisfactory exchanges. The injection of a profit motive into the traditional act of sharing does not diminish its practice. To the contrary, it accelerates the number and types of products that can be made available for sharing. And it accomplished this feat without interference from governments or outsiders.
The best argument for steering local entrepreneurs in rural America towards the sharing business model is its inevitability. Just as sharing companies disrupted transportation, lodging, media, and labor in urban areas, so too will they change the way that many rural businesses operate. If introduced to small communities by outsiders, these sharing services will likely accelerate too slowly. Moreover, if outsider-owned sharing companies are finally adopted on a wide scale, the commissions will exit the local economy. But if introduced by local entrepreneurs, sharing companies might accelerate more rapidly, bringing their benefits to local businesses more quickly, keeping entrepreneurs and commissions inside of the local economy, and reinvigorating rural America.
