The education system and quality and availability of workforce are still top concerns for local business leaders, according to Alliance Bank of Arizona’s 2017 Arizona Leaders in Business Survey. In a broadly positive set of findings about the state’s business climate, respondents also named healthcare costs as a top business challenge, moving this issue up by 10 percentage points over the inaugural 2016 survey and into this year’s list of top three business challenges.

In last year’s survey, 50% of business leaders named education as their number one concern and while still at the top of this year’s list, that number dropped to 38% suggesting some progress on this salient issue. Overall, the top three business challenges in Arizona in 2017 are quality/availability of workforce (40%), education (38%) and healthcare costs (34%). In last year’s survey, business leaders cited education first (50%), followed by quality/availability of workforce (41%) and state government (27%).

Approximately 500 Arizona business leaders completed the online survey, which was conducted for Alliance Bank of Arizona by WestGroup Research between Dec. 6, 2016, and January 20, 2017. The majority of responses were submitted in January.

 “Education and quality of workforce are still considerable concerns for the state as respondents of the survey list improvement of K-12 public education funding and providing more community college training/workforce development as the top two issues local government could address to improve the business climate for their company,” said Don Garner, Chief Executive Officer, Alliance Bank of Arizona. “It also makes sense that healthcare costs have moved up on the list of challenges as the country grapples with healthcare policy at the national level.”

Other key findings from the 2017 Arizona Leaders in Business Survey include:

Education Earns Top Spot for Arizona Business Leaders’ Personal Involvement

Asked to rank the top three business issues for any Valley leadership group that would be worth your personal involvement, business leaders this year prioritized K-12 education (56%), affordable healthcare (41%) and immigration reform: path to legal status and work permits (31%). In line with business leaders’ broader 2017 concerns about the challenges posed by healthcare costs, affordable healthcare bumped tax policy: comprehensive tax reform from its place on this top three list in 2016.

Arizona Business Leaders Are Optimistic About Their Prospects From 2017

On the whole, survey respondents expressed optimism about their business prospects in 2017. Eighty-six percent are very or somewhat confident that their company’s revenue will grow over the next 12 months, which is very close to last year’s finding of 89%. Similarly, 54% of respondents plan to hire additional employees in 2017, compared with 58% in 2016. As well, 61% surveyed this year agree that there are more growth opportunities for my company today than there were three years ago, albeit a drop from 73% in 2016.

Arizona Business Leaders Say New Administration Will Positively Impact Their Business Sectors

A majority of respondents (54%) reported the recent presidential election will have a positive impact on their business sector, while 30% were negative and 16% were neutral/not sure. Even with some degree of optimism from the recent election, those feeling there are more threats to growing their company today than there were three years ago increased in 2017, with 56% in agreement (compared to 2016, when 47% agreed).

More Than 30 Percent Of Arizona Businesses Still Plan To Expand In 2017

The percentage of organizations planning on expanding in the next 12 months changed only slightly between 2016 (38%) and 2017 (33%). Of those planning on expanding, most of the Arizona business leaders intend to grow in the state (88% in 2017). Interestingly, expansion is more likely to be closer to home, according to the survey: Those with expansion plans outside of Arizona, but still in the U.S., decreased markedly in 2017 (21% in 2017, compared to 40% in 2016). Further, those planning to expand internationally dropped to 5% in 2017 from 10% in 2016.  

Climate & Weather Continue to Top Benefits Of Doing Business in Arizona

When it comes to the top three benefits of doing business in Arizona, respondents in both the 2016 and 2017 surveys named the same three hallmarks: climate/weather (67% in 2017), quality of life (67% in 2017) and low cost of doing business (38% in 2017).