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The Prince of Hamlets

It took Jack Schultz moving back to his hometown of rural Effingham, Ill., to launch his career in industrial development -- this despite the benefits of a Harvard MBA and years of experience running a farm-and-seed operation in Brazil.

And even then, it happened more by chance than anything else -- several big-name companies decided to jump Effingham's small-town ship, threatening 3,000 jobs (in a town of 10,000 people).

POPULATION SURGE. That's when a group of determined townsfolk, including Schultz, got together and decided they could no longer let their community be held hostage by a handful of megacorporations. It took nearly five years of concentrated effort to lure the first business, but since then, a steady stream of new arrivals has flowed into Effingham.

Last year, Site Selection Magazine ranked the town -- which lies 200 miles south of Chicago and now has a population of slightly more than 12,000 -- as one of the best locations in the country in terms of job creation and producing opportunities within the community.

In the process, Schultz has carved out a niche, bringing manufacturing and high-tech firms to small towns across America. In the past 10 years, his company, the Effingham-based Agracel, has grown from a total of 4 employees to 50 and has helped facilitate the creation of 5,500 jobs nationwide.

ENTREPRENEURS THINKING SMALL. Spurred by what he sees as a coming revolution out of the suburbs and into the "agurbs" (a term he invented to refer to growing small communities that have some tie to agriculture), Schultz recently penned his first book, Boomtown USA: The 7 1/2 Keys to Big Success in Small Towns.

BusinessWeek Online intern Michelle Dammon Loyalka recently spoke with Schultz, who shared his ideas on the makings of a successful small town and the forces that have pushed more American entrepreneurs to start thinking rural.

Q: What do you see as the key to success in helping a small town thrive?

A: The first key, and probably the most important one, is for a community to adopt a can-do attitude. People need to realize that they can do some things to turn their community around if they work together and put their minds together.

They can really find some things that will differentiate them and really make them an attractive place in which to live. All over the country, there are just wonderful stories of what people can do if they really set their mind to it.

Q: Why are more and more companies moving into smaller communities?

A: They're looking at their best option for expansion, and what we can typically show them is that there's a tremendous cost savings from locating in a more rural environment as opposed to a big city. A small town offers a much lower cost of operation and a workforce that's generally more stable and much more productive.

Q: In addition to an influx of companies expanding in small towns, do you also see a rise in small-town entrepreneurship?

A: I sure do. We see hometown entrepreneurs as a new paradigm shift in economic development. What I see happening is that we in industrial development are going to spend less time out hunting for what I call the elephant companies, or the big, big companies, and we're going to spend more time nurturing and planting seeds of entrepreneurship in our communities.

We're seeing a lot of amazing things happening in communities that are becoming a lot more entrepreneurial in nature.

Q: But will these small communities really be able to provide the resources that many small businesses rely on?

A: That, I think, is the challenge for a lot of smaller towns. So we're seeing smaller communities banding together to try to be able to offer those types of resources. It's not something that you can do just as an island, so we're seeing a move toward a more regional approach to entrepreneurship, with communities working together rather than fighting each other.

Q: Can you describe what you see as America's three migrations?

A: The first migration was from the farms to the urban areas, and it was lead by technologies like the railroad and electricity where centralization was the key. People had to live right next to where they were.

The second was from the urban area out to the suburbs, and that was led by things like the telephone and the automobile -- no longer did people have to congregate right around where their work was, but they could be more dispersed.

And the third wave, which I think is taking place right now, is that people are moving from the suburbs out to what I call the agurbs.

Q: The agurbs?

A: Yes, an agurb is a growing small community, with some tie to agriculture, that's showing good growth in a number of areas, like population, jobs, and household income, and then also has a wonderful quality of life and a sense of place about the community that's a magnet for people who want to get away from the rat race of the big cities.

Q: What's fueling this move to the agurbs?

A: Quality of life is a key, key driver. But I think it's also led by technology. For example, broadband means that you can work from really anywhere if you're doing things over the Internet.

And with the new very light jets that are being developed and the coming air-taxi industry, no longer will people have to live next to Dallas/Ft. Worth Airport or Chicago O'Hare just because they travel a lot -- they'll be able to live where they want to live and where they want to raise a family.

Q: But can people make enough money to make a small town work?

A: We're able to operate at a much lower cost in the agurbs as compared to the big cities. We did a study, for example, that [revealed] if you made $100,000 and lived in Chicago or New York or Silicon Valley, you could live in one of our 397 agurbs and make $45,000 and have the same quality of life as you would living in one of those big cities.

Q: So you see more and more agurbs popping up?

A: I do. I see some real interesting things happening in terms of how communities are differentiating themselves and really setting themselves up to attract these people who are looking for a more tranquil place to develop.


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