Alaskanomics

May Unemployment at 7.2; down slightly from first four months of 2018

The Department of Labor and Workforce development released the May employment numbers in mid-June. Employment was down by 2,000 jobs in May, which is 0.6 percent from May 2017. Retail and state government had the largest decreases in job with -800 and -500, respectively. Three other sectors lost 400 jobs each over the year. Those sectors were oil and gas, financial activities, and professional and business services. Health care continues to add jobs and added 1,000 jobs. Construction continued to be flat, which is encouraging since it had taken a major hit during the recent recession in Alaska.

The seasonally adjusted unemployment rate dropped one-tenth of a percent to 7.2 percent. It had been steady at 7.3 percent for the first four months of 2018. The national average was 3.8 percent, which is the lowest that it has been since the late 1960s.

As expected, the not-seasonally adjusted rate fell in most of the state. This happens most years because of an increase in tourism. 2018 is predicted to be a great year for tourism around the state and employers are gearing up for the influx of business in the summer. Fishing and construction help boost employment numbers around the state each summer.

For charts and data on May’s employment numbers, please visit the Department of Labor.

What All Business Owners Need To Know About Exit Planning

Guest post by: Christian Muntean

Alaska’s Baby Boomers stand on the threshold of what will be, for many, the largest opportunity in their careers.

But most of them don’t see it. Or just aren’t ready for it.

The few that do are positioned to win big.

According to the U.S. Small Business Administration:

• 99% of all Alaskan employers are small businesses.
• 75% of all Alaskan businesses are owned by someone 55 years old or older.

According to national research compiled by the Exit Planning Institute:

• 50% of business owners hope to exit within 5 years.
• 80% of these business owners have 90% of their net worth tied up in their business.
• 83% of these owners have no exit strategy.

When I talk to Boomer business owners, they have similar things on their minds:

• They are ready to move on to “what’s next.” (But they usually don’t know what that is.)
• They want to make sure their employees are well taken care of after their exit.
• Their future hopes are based on the perceived value of their business.

Despite these hopes, many aren’t prepared. Too many don’t plan their exit until they feel emotionally “done” with their business.

Unfortunately, at that point, they discover that they don’t have much to sell because of one or two common mistakes:

• Their business is still intrinsically dependent on their individual knowledge, skills, customer base or networks.
• They’ve organized their business around their current lifestyle as opposed to building an investment vehicle (which supports a future lifestyle).

Resultingly, a high number of Alaskan business owners are surprised to experience an unnecessary loss of wealth. 

Fortunately, with a little preparation, many of these owners are able to not only line up a lucrative sale, but they are also able to pass on their business legacy in a way that is financially sustainable, continues to provide value, and supports their employees and family.

The Three Threads of Your Exit Strategy

All business owners will exit at some point. No one lives or does business forever.

Here is what is needed for a smooth and lucrative exit on favorable terms:

1. Create a Clear Vision for Your Future: While many business owners are ready to move on, most don’t know what (or where) they want to move on to. Creating a clear vision or sense of “why” is imperative when it comes to exit planning.

The reality is that preparing for your future is important, but it’s not urgent. Yet, the attention of many business owners is often drawn to the urgent. Resultingly, they don’t prepare for exit opportunities. This also increases the likelihood of an undervalued exit under duress: Burnout, family challenges, health issues or financial challenges. On the other hand, having a strong “why” pulls you forward and helps you focus more on the important and less on the urgent.

2. Craft a Personal, Specific Financial Plan: Most business owners’ core desire is financial freedom. This entails the ability to pursue what they want without worrying about their quality of life.

Clarify what you want your life to look like and the numbers needed to create and sustain it. Work with a trusted financial advisor if needed. Create goals that your exit plan can help you accomplish.

3. Make a Plan to Maximize Your Company’s Value: In my experience, most business owners overestimate the value of their business. Sometimes dramatically.

At the same time, they underestimate the potential growth in their business. Most small businesses can quickly increase their value by a minimum of 20% (sometimes much more) just by a combination of improving management systems and tightening cost controls.

Other methods of improving value include:

• Strengthening your market position.
• Building reliable systems and management.
• Increasing current revenues – as compared to primary competition.
• Positioning for future business.
• Improving your margins.

Just like with your home, if you sell your business as a “fixer-upper,” you are almost always leaving easy money on the table.

Time Frame for Exit Planning

Most of the same principles for a solid exit are the same as those for building a robust and scalable business, which means that you can begin at any time without fear of wasted effort.

However, if your exit is within your 5-year horizon, you should begin planning now.

If your exit is the beginning of your next chapter, approach it with a similar focus as your start-up years.

This time, you’ll be smarter and won’t need to work as hard – but you’ll want to invest the same sense intentionality and purpose into your planning.

A good exit takes care of you, your family, your employees and your customers. Don’t leave it to chance.

 

Download a free Business Exit Planning Checklist here.

Christian Muntean works with successful leaders and teams to help them grow their companies. His clients include Fortune 500 companies, Alaska Native Corporations and Non-profits as well as small and medium sized businesses. He is the author of Conflict and Leadership: How to Harness Conflict to Create Better Leaders and Build Thriving Teams. He can be reached at [email protected]

The Share of Alaska Workers over 55 is Growing

With data gathered by Alaska’s Department of Labor and Workforce Development, it is clear that the percentage of Alaskan workers over the age of 55 is growing. Alaska doesn’t have as many senior citizens as other states, but the population of 65-plus is growing faster than any other part of the nation.

Between 2010 and 2016 the 65-plus age group grew by 44 percent. This is important because people are staying in the workforce longer. This is not only in Alaska, but throughout the nation. In 2002, only 10 percent of the workforce was over 55 years old. It was 20 percent in 2017. One reason for this is that most everyone in the baby boomer generation has reached the age of 55 and many are still working. This generation is so large that it has shifted the overall age profile in Alaska.

Older workers also tend to make more than younger workers. Wages do start to drop off after age 65, but those between 55 and 64 are the highest-earning age group in nearly every occupation.

As noted above, workers over 55 years old or older made up 20 percent of the workforce in 2017, but took home 23 percent of the wages in Alaska. This makes sense as the occupations with the highest percentages of older workers tend to be higher-paying jobs that take years of experience to obtain. This includes top executive positions, postsecondary teachers, and business operations specialists to name a few.

There is also a significant gender pay gap among older workers. It is wider in older generations than it is in younger generations. The industry with the closest wage between men and women is in local government. Older women earn 84 cents to their male counterparts’ dollar. Older women are more likely to hold government jobs and represent 59 percent of older workers in state and local governments. Some traditionally female positions such as teachers and nurses are in the public sector.

As Alaska’s population continues to age and more workers put off retirement, these trends will continue. It will be interesting to watch if the older generation begins to retire as the state eases its way out of the recession. During the recession in the 1980’s, the population was much younger and many left at the start of the recession. There has not been the outmigration in time around that there was 30 years ago. The population has remained much more stable through this recession.

For detailed employment statistics, please visit the Department of Labor & Workforce Development website.

April Employment Numbers

April unemployment numbers were released by the Alaska Department of Labor and Workforce Development and are unchanged from the prior month. Preliminary numbers show that employment was down 1,200 jobs, which is about 0.4 percent.

The three industries with the largest declines in April were retail (-600), oil and gas (-500) and local government (-500). Health care and manufacturing added jobs with 1,000 and 400 respectively. A potential good sign is that construction had the same amount of jobs in April 2017 as it did in 2018, which may signal future growth. Construction has seen big losses in the recent past, and this might be the start of a turnaround.

Even with the good news in construction, April 2018 was the 31^st consecutive month that Alaska has lost jobs. This is six months longer than the job loss during the 1980’s recession. Even though this recession has had a longer period of job loss, the losses were deeper in the 1980s.

The seasonally adjusted unemployment rate for April was 7.3, which is where it has been for the past four months. The rate is only slightly higher than the 10 year average of 7.2 percent, but is well above the national average which is 3.9 percent, which is the lowest it has been in 18 years.

There have not been any significant or surprising changes to the not-seasonally adjusted numbers. Tourism and fishing has brought increases to the usual boroughs and census areas. For detailed statistics, please visit the State of Alaska.