Rural areas lack a sufficient customer base for many business to be able to specialize. They are required to generalize and provide a more broad-range of services than they'd have to in a metro area. But there is an up-side too!

In general, small rural towns have fewer resources. They do not have a large enough customer base to support certain specialized services, but they DO have enough to support generalized ones. And it is also often much easier to break into a new market, if the niche is unoccupied, in a small town, than it is in a larger one. If your niche is already occupied though, it may be difficult, unless half the town is dissatisfied with the current provider (often happens!).

The competition may be much less - of course you are competing with nearby towns, or sometimes even distant ones. But overall, you may have an opportunity to do things in a small town that you would not have where more competition exists.

Diversification can take many forms. Some people operate two separate business lines. Others operate one broad based business - for example, you may not be able to survive if you own a business building custom computers - but you might if you offer a full range of computer services, including repairs, house calls, training, internet setups, etc. In even smaller towns, you might have to look further afield to gain enough work to sustain a business.

We have learned also, that a business may evolve in unexpected ways. If you advertise that you can do one thing, people may consider you for other jobs that they cannot find someone to do. If you can do it competently, it is wise to take the business, even if it isn't what you thought you'd be doing. People in a small town may have few choices about whom they go to for help with services, and if you can bail them out of a problem, they'll remember and help your reputation grow.

Your other option is to market outside the community. There are a number of ways you can do this, but for some kinds of businesses, it will always be harder to market to the faceless crowd than to your own back yard. Diversification can help you keep your business closer to home.