A new report released by the Alaska Small Business Development Center highlights a shift in the challenges and outlooks faced by small businesses across the state in the first quarter of 2025, driven largely by inflation, rising operating costs, and political uncertainty.
The findings stem from the SBDC’s 2025 Quick Pulse Survey, which followed up on an initial survey conducted at the end of 2024. Of the 958 businesses that participated in the earlier survey, 273 — nearly 29% — responded to the new round of 13 questions issued in April. The new round of questions was issued due to the center’s sense that business conditions had shifted and that the 2024 report might not reflect attitudes in 2025.
While the 2024 survey focused heavily on workforce challenges and client acquisition, the 2025 data shows a dramatic shift in business concerns. The top three challenges cited in the new survey were:
- Increase in the cost of goods/inflation
- Operating costs
- Political uncertainty
This marks the first time political uncertainty has cracked the top three challenges in the survey’s eight-year history, even during the height of the Covid-19 pandemic, it had never placed in the top 10, according to the SBDC.
The shift in concerns may indicate that Alaska’s small businesses are moving from a growth-focused mindset to one more centered on economic survival. Rising costs, often linked to volatile global marketplace, replaced prior concerns such as attracting customers and hiring qualified employees.
“The difference this year appears to be rooted in the nature of the disruption,” the report notes. “While the COVID-19 crisis was health-related, the current pressures stem from global economic policies and trade tensions.”
The financial outlook of business owners has also taken a sharp turn. After four consecutive years of increasing optimism, the percentage of businesses expecting their financial situation to be “good” or “very good” in the next 12 months dropped from 60% at the end of 2024 to just 46% in early 2025.
This was the lowest level of optimism since the manufactured Covid pandemic crisis in 2020.
One of the most telling changes was in how businesses are preparing for the year ahead. For the first time since 2021, there was a noticeable uptick in the number of businesses planning to seek outside capital, rising from 32% to 36%. However, unlike the pandemic-era surge, which was driven by federal relief programs and investment in growth, today’s interest in capital is viewed as a defensive move to help maintain operations in the face of mounting costs.
The SBDC noted that Alaska’s unique economic and geographic challenges, including remote location, small population, and labor shortages, continue to exacerbate broader economic issues. High shipping costs, already a longstanding issue, are now colliding with inflation and global trade disruptions, making it even harder for some small businesses to remain competitive.
“The 2024-2025 comparison reveals a significant shift toward uncertainty in Alaska’s small business outlook. Positive sentiment has declined sharply, with businesses reporting “Good” or “Very Good” conditions falling from 60% to 46%. Most notably, neutral responses (“Neither Good nor Poor”) jumped by 10 percentage points to reach 41%, indicating businesses are increasingly hesitant to make definitive forecasts. Negative sentiment nearly doubled from 8% to 14% in the first few months of 2025. This is the highest level of negative sentiment since the height of the COVID pandemic in 2020 and indicates that businesses are struggling to adjust to the new economic headwinds,” the report says.
Hiring qualified help remains a challenge. A substantial portion of businesses (22%) cite a lack of qualified applicants as the primary challenge, highlighting the need for skilled workers in Alaska’s small business sector. Another 15% struggle with compensation, noting that they cannot offer competitive pay to attract talent. Other challenges include seasonal issues (13%) and inconsistent workloads (14%), which create uncertainty and make long-term hiring decisions difficult.
“This is becoming a more pressing issue as Alaska’s population continues to decline in the 18-65 year old range, reducing an already limited population of potential workers,” the report says. One respondent lamented that “Everyone wants $30/hour but brings no experience to the table.”
We are hopeful, we just need the Democrats and RINOs to quit ruining our lives and taxing us into oblivion.
Closed our business in Fairbanks after 20 years, not worth the money. Unless it’s your hobby too, beware of business in Alaska, every year is different and it all depends on the weather.
And why wouldn’t small business in Alaska be worried? We have the increasingly leftist Alaska legislature writing checks it can’t cash to benefit their union buddies. Setting Alaska up for bankruptcy with pension plans for their union buddies (the kind of pensions that private sector employees could never hope for). Local, state and federal regulators continue their stranglehold on business making it more difficult to operate and make a profit. Unless there is some sanity injected into this legislative and regulatory environment, I remain bear-ish on small business.
Small businesses are feeling the effect of lack of good schools and homelessness and crime. I.e. potential employees are looking at Anchorage and they see failing schools, high crime and homelessness and they decide not to come here. Thank you LaFrance and Assembly.
Finding help that isn’t lazy and stupid is the #1 problem.
The entitlement generations want the pay without doing the work. We who busted our asses to build our infrastructure and businesses and feed our families are all retiring or dead. We have a very few to pass the tourch to. This is a result of a liberal education system.
Today for the first time in its history, Moodys has downgraded the credit rating of the United States from AAA to AA1. Great work Donald!
Actually Sebastian since that rating is the down fall from Joe Biden.
The nation elected a man who insists he’s a brilliant businessman. And after 116 days, his management of the economy destroyed the nation’s perfect credit rating, previously unscathed since 1917. The same man bankrupted 2 casinos. What is surprising about this fall from respect from the financial world?
Get help, Sebastian. Moody’s rating followed Fitch and Standard & Poor downgrades, which were in 2023 and 2011 respectively. This credit downgrade is well earned by a nation that is $37 trillion in debt, and Trump is trying to correct that.
The national debt was $27.75 trillion when Trump left office, and he owns some of that because it was $20 trillion when he came into office in 2017. In four years of Biden it has grown by nearly $9 trillion — that is over 30% growth in four years. Think about that. How are we going to dig out without doing things very, very differently.
Your TDS is getting pretty severe, dude. Is there a doctor in the house?
You are radiantly brilliant, Sebastian. Go harder.
Bash,
Let me guess.
You took the Covid shot and boosters.
You believe there are more than 2 genders.
You support the Ukraine war.
You believe in mutilating the genitals of minor children and mutilating unborn babies.
You believe animals have rights.
And you believe an ecological apocalypse is coming.
You voted for Biden twice – sharp as a tack.
And you voted for Kamala.
But we’re the dummies…
R.E.L.E.V.A.N.T.
LOOK IT UP!!!
This post is a textbook example of a “knee-jerk” reaction and shows no critical thinking whatsoever. My suggestion is the poster should turn off CNN and the other garbage news media.
If only we had Kamala right?
Please take your Covid booster shot.
Thanks
I know you love old pedo joe, and his blanket pardons. The blanket pardons say it all. How about those bozo corrupt prosecutors that were going after Trump. Life long bureaucrats who have accomplished nothing but to run down our amazing country. Joe Biden is an absolute blight to civilization.
I want to start up a business in Anchorage, however, watching how the current regime is raising taxes, passing policies that allow violent criminals run free makes me think this town will turn into another Democrat shit hole like Seattle, Portland, San Francisco or Los Angeles.