I live in a small town near the Great Smoky Mountains in North Carolina, and work for a software company here. There are two challenges I've seen here:

1- Finding qualified developers who want to move here (although I can't understand why they wouldn't want to) when you're hiring.

2- Finding reliable internet access for home when you have to support the business off-hours. Most homes here in the mountains are off the beaten path, and your options for internet are limited.

Nevertheless, I still love living here; it's laid back, quiet, and simply beautiful.