In the face of impending fiscal disaster, the state of Alaska is partnering with regional economic development organizations and chambers of commerce to research the statewide business climate.
Economists have been examining ways to diversify the state’s economy as the price of oil continues to drop, taking the state’s budget with it. One way to shore up the economy is to promote local businesses, so the partners are hoping to find out more about what makes businesses stay in an area.
Models in the Lower 48 and Canada have shown that business retention benefits the local economy in more areas than just recruitment, said Rick Roeske, the executive director of the Kenai Peninsula Economic Development District.
“If you spend your money locally and you are hiring people locally, what they found over a period of decades is that if you can identify the key blocs of hiring local people, you get better returns on your local economy,” Roeske said.
The point of the program is to gather information from local businesses about their opinions on the economic climate of each area and work with them to expand their business and workforce. Most of the other states operate similar programs.
Alaska is one of the last states to get on board, said Stephen SueWing, a development specialist with the Alaska Department of Commerce, Community & Economic Development. The state originally began planning the venture in the spring of 2014 and started offering the training to local development organizations — beginning with the Kenai Peninsula Economic Development District — this October.
Statewide, the first step to engaging businesses is to offer a survey to gauge business owners’ feelings about the economic climate.
“It’s an engagement tool — it’s a program by which economic development organizations can engage with their businesses on a local level,” SueWing said. “The survey is part of the engagement process.”
The point of the program is to connect economic development organizations with their businesses beyond just when things are going wrong, SueWing said. The 48-question survey is a starting point to facilitate one-on-one conversations and gather feedback, beginning a two-way relationship. For example, the chambers of commerce can gather information about what services they are providing to local businesses, he said.
“It’s kind of like a living journal,” SueWing said. “It’s not only interactions, but also the services that have been given to that business.
The overarching principal of it is that keeping businesses in the community is much easier than attracting businesses.”
The Kenai Peninsula Economic Development District is working with the Soldotna and Kenai chambers of commerce to distribute a survey to all local businesses. There are actually two surveys, Roeske said — one tailored more to oil and gas and the other more general for any business owner.
Retail sales make up the biggest sector of the economy across the peninsula, followed closely by construction contracting. Promoting local businesses, especially in retail, could prevent some of those dollars from leaving the peninsula and going back to corporate headquarters elsewhere, Roeske said.
“Where we’re going with this is that in the current state of Alaska’s situation, we want to get some more data,” Roeske said. “No recession lasts forever, and when we come out on the other side, we want to be a little better off.”
The state plans to run the survey for two years to start, but the development district hopes to make it more long-term, like the Situations & Prospects report it does annually, Roeske said. Despite depressed oil prices and the possibility of taxes, Roeske said the Kenai Peninsula Economic Development District is still receiving inquiries about microloans for starting a business.
“Surprisingly, Americans are entrepreneurs, and they always know that they’ll come out the other side,” Roeske said. “Even though the price of oil continues down, the entrepreneurial spirit of Americans is not going away. Even in the face of less than ideal economic conditions, people are still planning for the future.”
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