According to current US Census data, Alaska’s population is the fourth lowest in the country. Despite the low population, relative infancy of its statehood, and cold climate, the proportion of small enterprises to the population is quite remarkable.
The state’s economic stability and influence have grown dramatically in recent years. Alaska has gradually become an appealing state for business as a result of the government’s pro-business strategy, a trained workforce, low and competitive tax incentives, a high rate of gross migration, and an exceptional quality of life.
Below is a list of small business statistics from the Last Frontier that will help any would-be entrepreneur understand the state’s small business climate.
Quick Alaska Small Business Statistics for Entrepreneurs
- There are 73,981 small businesses in Alaska, from Adak to Utqiagvik.
- Small business employees account for 52% of all Alaska employees.
- Veterans make up 9.8% of workers and own 11.4% of small businesses.
- Women own 43.1% of all small businesses in Alaska.
- Racial minorities own 12.4% of all small businesses.
- Women entrepreneurs from Alaska have access to grants of $4,000.
- Operational expenditures, especially shipping prices, are cited as a key hurdle for 25% of Alaskan small business owners.
- Only 53% of all small businesses in Alaska received the Paycheck Protection Program (PPP) loans from the federal government during the COVID-19 pandemic.
- A shortage of qualified employees was recognized as the most significant hurdle by the majority of small company owners (53%).
- For most small business owners in Alaska, lending from friends and family was the preferred method of gaining capital.
Alaska Small Business Statistics
1. What is considered a small business in Alaska?
A small business is a privately held company, partnership, or sole proprietorship with fewer workers and yearly income than a corporation or a regular-sized firm. According to the US Small Business Administration (SBA), a small business is generally an independently owned for-profit enterprise that employs 500 or fewer persons.
There are 73,981 small businesses in Alaska and they represent 99.1% of all businesses in the state.
In 2019, 783 recognized enterprises exported items worth $4.7 billion from Alaska. Of those exporters, 583 (or 74.5%) were small businesses.
2. How many Alaskans are employed by small businesses?
There are 136,455 small business employees in Alaska, representing 52.3% of all employees in the state.
According to Alaska state laws, an employer must pay each employee a minimum wage for hours worked. Beginning on January 1, 2021, every employer in the state is mandated to pay each employee a minimum wage of $10.34 per hour. If the employer decides to put an employee on overtime, the rate of compensation is calculated at one and one-half times the regular rate of pay.
3. Alaska small business statistics by industry
The agriculture, forestry, fishing, and hunting sectors account for 9,033 of all 73,981 small businesses in Alaska, making them the largest industries in the state. A total of 8,564 small businesses in these sectors have no employees, 465 employ 19 or fewer individuals, while only four employ between 20–499 workers.
Meanwhile, there are only 80 small businesses in the management of companies and enterprises sector. This is the smallest industry in the state.
4. Alaska small business ownership by ethnicity
According to data released by the US Census Bureau, Alaska has a population of 732,673 people. White/Caucasian Americans make up 65% of the entire population followed by American Indians and Alaskan Natives who account for 15.6% of all Alaskans. Hispanic Americans make up 7.3%, and Native Hawaiians and other Pacific Islanders account for 1.6%.
Below is a breakdown of how small business ownership is distributed among various ethnic groups in the state:
- White/Caucasian — 61,535
- American Indian and Alaska Native — 3,755
- Asian — 3,375
- Hispanic — 2,792
- Black or African American — 1,412
- Native Hawaiian and Other Pacific Islander — 272
5. Alaska small business ownership by gender
According to the American Community Survey of 2018, there are 26,391 small businesses in Alaska that are women-owned. Men, on the other hand, own 40,073 small businesses. The remaining 1,700 are owned by both men and women.
6. How COVID-19 has affected small businesses across Alaska
On May 19, 2021, the Alaska Small Business Development Center (Alaska SBDC) released initial data from its COVID-19 impact survey on small businesses across the state.
Below are highlights of the organization’s findings:
- 43% of respondents stated they got PPP (Paycheck Protection Program) assistance, and 37% said they used the money to keep employees they would have fired or laid off. A further 31% indicated they would have closed if not for the PPP, but 38% stated they needed additional funding for payroll, demonstrating the devastating impact of COVID-19 on small enterprises.
- Since the onset of COVID-19, 31% of respondents have reduced personnel levels, while 38% have maintained workforce levels.
- Food service/accommodation, retail, agriculture/fishing, and arts/recreation are the top four industries experiencing hiring difficulties as a direct impact of the pandemic.
7. Alaska small business financing
A women’s organization called WomensNet founded the Amber Grant for Women in 1998. Named after 19-year-old Amber Wigdahl, who passed away before realizing her business dreams, the grant provides funding to women-owned businesses through monthly competitions. A monthly winner is awarded a $10,000 grant, and at the end of the year one of the winners is chosen to receive a $25,000 Amber Grant.
Small businesses in Alaska can also receive financing from the State of Alaska Loan Programs (Division of Economic Development), Alaska Industrial Development and Export Authority Loan Participation Program, and Loans in Southeast Alaska (Juneau Economic Development Council).
8. Small business failure statistics
The data below shows how long it takes for small businesses in Alaska to fail:
- 27% of small businesses fail during the first year of operation.
- 35% fail during the first two years.
- 42% fail during the first three years.
- 47% fail during the first four years.
- 52% fail during the first five years.
9. What challenges plague small businesses in Alaska?
According to the Alaska Small Business Administration, the top three challenges that limit small business growth are operating costs, finding capital, and finding employees.
To find out how you can safeguard your business in Alaska from these challenges, and also how to stay in compliance with the Alaska Secretary of State, read my review of the best registered agent services in Alaska.
The Final Word
To establish a business entity in Alaska, every aspiring entrepreneur needs to understand the state’s business landscape, and I hope these small business statistics will help you to achieve just that.
- Alaska Small Business Development Center
- Center for Economic Development
- US Census Bureau
- Alaska Department of Labor and Workforce Development
- US SBA Small Business Profiles