Small businesses always face challenges, considering how many of them are closing after only a few years of operation. While some common reasons for failure include ineffective marketing and poor management, sometimes uncontrollable external factors play a part in a fiasco.
The truth is that governments often don’t support smaller businesses to stay on top of the competition, even though they greatly benefit the local economy. Indeed, opportunities for opening a small business are everywhere, but ensuring long-term assistance to mitigate economic turmoil is rarely an option.
Not even the US, which is the best place to open a firm, has figured things out. States like Hawaii, DC, and Kansas have the lowest performance when it comes to small businesses, but other states like Arizona aren’t far behind. Between 2021 and 2022, 16,778 small enterprises closed, while 246,102 jobs were lost.
Sadly, many small businesses fail due to a lack of access to capital. However, this new regulation will soon change that.
How the Arizona Loan Guarantee Program will support small businesses
In Arizona, access to capital was one of the biggest challenges for small enterprises. The Kauffman Foundation found that 83% of entrepreneurs don’t even have the necessary information to access sources of capital. In addition, their lack of revenue or assets hinders them from qualifying for a loan.
Therefore, the Arizona Commerce Center developed the Loan Guarantee Program for businesses to partner with lenders that can offer them up to 50% of the principal loan. Small companies could seek financial help for startup costs, equipment, construction, or other uses. For example, healthcare companies could provide superior services with the help of a loan, so the program is beneficial in this industry. In addition, the Technical Assistance program will help leaders improve their financial literacy.
Of course, regardless of these efforts, small businesses must learn how to market themselves in order for the target customer audience to become loyal. Support with market research would also be helpful, but specialized agencies are more accustomed to offering the right guidance toward reaching a sustainable brand image.
What are small businesses like in Arizona?
Supporting small businesses is always a great idea because they bring more money within communities due to companies’ collaborations and partnerships. But when it comes to priorities, Arizona is surely showing its strengths and leading industries since the following sectors have the most small businesses in the states:
Professional, Scientific, and Technical Services;
Real estate, rental and leasing
Transportation and warehousing;
Construction;
Health care;
Arts and entertainment;
The bottom of the list consists of agriculture, mining, and utilities, with most of these enterprises having up to 19 employees. On the other hand, the best-paid sectors include technical services, health care, and construction.
Still, Arizona isn’t the best place for new beginnings
Compared to other states in the US, Arizona has a lot to work with in order for it to be preferred by entrepreneurs. Although nothing compares to Vermont, where the startup costs or business opportunities discourage even the most courageous business person, the following states are where most individuals start a small enterprise:
North Dakota is the leader on the list due to a low barrier for new business entry, a high survival rate of 77%, and a resilient environment;
Indiana provides significant funding for small businesses, an economically attractive location for leaders and employees, and a considerable labor pool;
Arkansas has a cost-effective living environment, massive workforce, and affordability, helping companies thrive;
North Carolina also helps small businesses with consistent funding, an extensive labor pool, and a balance between resilience and growth;
What should Arizona change to be more attractive
Despite its latest economic boom, Arizona faced various challenges that hindered its development compared with other states. If we were to locate the problem at its roots, we could see the need for accessible and high-quality education so the next generations are prepared for future requirements and demands from the labour market. This is why companies compete for talent because most skilled potential employees leave the state, while others don’t continue their education to improve their current competencies.
Overall, Arizona needs to build a stronger local community where teenagers and students feel they have improved chances. Affordable housing, transportation, and cultural events are part of what needs to be done in the state. For that, the people must choose the proper officials, so it’s an endless cycle of opportunities.
Solving these issues would be the only way to build community capital and help the state flourish. It would bring prosperity to a community that needs it.
What will the business ecosystem look like in the future?
While it seems like Arizona was left behind, it must already prepare for the future because the business dynamic is continuously changing. For example, one of the most important aspects of a successful small business is keeping employees engaged, considering the smaller range of opportunities. That’s why entrepreneurs must improve their communication and collaboration skills in order for partnerships to go smoothly.
At the same time, since we live in an ever-changing technological era, the right technology approach could enhance employees' skills. Therefore, every small enterprise should incorporate technology into its operations, regardless of industry, because it could help workers be more efficient and innovative.
Finally, one of the biggest challenges small businesses experience is regulatory shifts that don’t provide any type of reassurance for the future. Collaborating with a law advisor would be best to stay on top of the competition since regulations regarding trends and new customer demands are volatile. Being the first to recognize and assess them is the fastest path to success.
Do you think Arizona will improve for the business sector?
Various actors have always impeded small businesses, from the unstable economic environment to the lack of workforce. Still, small firms are some of the most critical components in a state’s improvement, so governments are starting to show more support regarding their life in the market. The Arizona Loan Guarantee Program will help entrepreneurs get easier access to capital and navigate through the financial literacy hassle of applying for a loan.
