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Small business combat.

IN ALASKA, SMALL BUSINESSES constitute more than 97 percent of the businesses currently operating. Small business also represents an important part of the nation's economy.

But most small businesses have a difficult time surviving. National figures indicate that 80 percent of all small businesses fail within five years. Although many factors such as inflation, economic recession, and high interest rates contribute to this depressing statistic, most small businesses fail because of poor management.

From the University of Alaska Small Business Development Center's contact with the small-business community, the staff has inferred that the failure rate of small businesses is significantly less than 80 percent here in Alaska. Statistical informational gathering on small businesses in Alaska is limited, however. Many recent national studies indicate that the failure figures are closer to 60 percent in the first five years. These studies tend to take into consideration a more comprehensive database and seem to correspond to our Alaskan figures.

Although not new or startling facts for those of us involved with the small-business community, we tend to operate under the often-stated misconception that our small-business problems are different from those experienced in the Lower 48. This simply is not true.

The goal of the 1989 Governor's Conference on Small Business, which concluded with a September statewide meeting, was to clearly define and to seek solutions for the top 20 economic impediments faced by small-business entrepreneurs in 12 categories: economic policy, education/training, environment/waste, finance, government competition, insurance/bonding, international trade, payroll costs/benefits, procurement, regulation/paperwork, taxation and transportation/marketing.

Through its regional gatherings and subsequent statewide conference, the Governor's Conference on Small Business identified several issues of concern for small businesses throughout the state. But it found that Alaska small businesses have the same problems with different twists - as those of small businesses in the Lower 48. Some examples follow.

Small business opposes the practice of state-contracted services and/or products being purchased out of state. It supports legislation requiring state-funded purchases of products and or services to be awarded to in-state business. This concern came out at each of the individual regional small-business conferences conducted in Alaska and is identical to one identified in the Washington State Conference on Small Business. The state purchasing issue was rated among the top 20 problems identified in Washington by the small-business community.

Another example of the commonality of small-business problems is the need for state and federal legislation to limit/or restrict government agency competition with small business. This concern surfaces in nearly all of the 49th state's small-business meetings and conferences and has been clearly identified here in Alaska, where state involvement touches everything from agriculture to transportation.

You cannot have avoided noticing that gasoline stations have been undergoing major excavations this past year. Although the digging up of underground tanks have presented problems in businesses throughout the nation, the problem is magnified greatly in Alaska. The governor's conference identified hazardous-waste disposal, identification of what it is and how to eliminate it as one of the top 20 concerns of small businesses in Alaska.

Payroll costs and benefits are a national, as well as state, problem. The small-business person cannot compete with big businesses or the public sector when it comes to salaries or benefits. Historically, small businesses are the training ground for employees. Once trained, personnel tend to move on to positions that can offer a perceived greater opportunity for advancement and improved benefits.

Insurance and bonding are problems nationwide and truly are a chief concern in Alaska. Risk-pooling legislation, mandated insurance and benefits coverage, tort reform and bond requirements all impact the cost and risk of doing business.

Regulatory agencies need to streamline the means of complying with the regulation process. Oftentimes the small-business person does not know which regulation applies and must work with several agencies regarding regulations. This concern about the permitting process is not unique to Alaska.

Financing expansion and growth of small business is an ongoing concern in Alaska. One reason the problem is so visible's the state's preponderance of service businesses. Their expansion often is more difficult to fund because lending institutions need assurance they will be repaid; service businesses usually have limited collateral to offer.

Education and the delivery of information important to the small-business community continues to be recognized as a shortcoming for those businesses. To survive, small businesses must avail themselves of opportunities for education and training. It is important that this education be made available to the greatest number of small businesses at the lowest possible cost.

In Alaska, the small-business community has an excellent support system through its educational agencies. The Alaska State Department of Education's Office of Adult and Vocational Education recognizes the importance of entrepreneurship education and has developed several programs throughout the state to encourage youth to consider opportunities available to them in business ownership and operation. Funding also is available to provide adult training and technical assistance in business ownership.

A couple of specific programs operated by the University of Alaska that support the educational and technical assistance needs of the business community are the Alaska Center for International Business located at the University of Alaska Anchorage and the University of Alaska Small Business Development Center. SBDC is administered through the University of Alaska Anchorage, but also has offices in Fairbanks and Sitka. These programs serve as a focal point for university outreach to the business community.

Small-business communities throughout the United States have continually identified the need for the states to have a sound economic development policy. The small-business community in Alaska also has identified the need for such policy. People responsible for the development of the economic policies of the state should remember that small business is big business in Alaska.

The major difference between small-business concerns in Alaska and elsewhere in the nation is magnified intensity of issues created by the vast size of our state, our isolation and our limited population base. The small-business community can look to other states for solutions to our problems, and because of the factors that make us unique, we can take the opportunity to participate in solutions.

The key to small-business success is the ability to adapt and change with the environment. To be effective in accomplishing this goal, the small-business community must have access to-and tap - current information, training, resources and services.
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No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1990 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Celebrating Small Business; Alaska
Author:Nye, Janet
Publication:Alaska Business Monthly
Date:May 1, 1990
Words:1057
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