They'll inevitably get people telling them that of course they can! They just don't know how to market to their customers! They need to go do a business plan! Go do this and that and your problem will be solved!
Well, in my humble opinion that's a load of crap. Small towns are often the weirdest places to own a business, because the dynamics that supposedly drive the free market don't stand a chance against the gestalt of the town itself. The smaller the town, the worse it is.
Check out this link of a song that comes to mind. The first part of this is what I'm talking about: http://www.youtube.com/watch?v=jbhnRuJBHLs
What economic theory doesn't take into account is that people are weird.
Small towns work under their own weird little rules. The thought of there being an even playing field as far as capitalism goes can just get thrown right out the window if you live in a small town. Many times the social pecking order has much more to do with the way that certain businesses can thrive and others fail. And if you do thrive, you may not be able to charge the prices that you need to in order to make your work worthwhile.
Sometimes people will be offended that you try to start a business in the first place. I know that it makes no sense, but it's true. For some reason one person will get it in their head that you're being uppity and think that you're better than everyone since you want to sell your cakes. Sometimes that's all it takes to get gossip going, and to shut down any customers who might have hired you.
Other times the problem is that there's nothing to compare to the cakes that you want to do price-wise, so when you're charging a reasonable rate it seems outrageous to people who have been paying grocery store prices. People won't pay $4 a serving for a cake if the norm for a "fancy" cake is $1.50, even if that same cake would sell for twice that much somewhere else. You can market yourself until you're blue in the face, but sometimes it just won't work.
If you live in a small town where people don't move in and out too often, the old-school mentality can hold sway over everything...I'm not saying that it's impossible to start a business in a small town, but it makes it more complicated. Some of the things that business theories say to do might be totally futile in your case.
So don't take it personally if someone on a cake forum tells you that you're just doing it wrong. They probably don't have a clue about the social environment where you are, and that might be the key to the whole thing.
If you have a business in a small town, what are some of the challenges that you've faced that people don't talk about?
Kara Buntin owns A Cake To Remember LLC in Richmond VA, and cake supplies online at www.acaketoremember.com and www.acaketoremember.etsy.com