The entrepreneurial spirit is alive and well despite what might seem like a hundred-year storm of bleak conditions including high interest rates, labor and material cost inflation, housing affordability and lack of buildable land. Additionally, the recent news about Earth Cruiser, a beloved local company, shutting down hit close to home for our region.
There are undoubtedly economic headwinds we’re all facing with respect to hiring & retaining, capital, increasing costs and new policy hurdles. Like FDR said though, “A smooth sea never made a skilled sailor” and an easy market doesn’t make a skilled business operator. Despite the challenges, we have reasons to be optimistic
In a wide-ranging conversation with Skip Newberry, CEO of TAO, economic advisor and entrepreneur, he pointed out that startup activity is at a 10-year record high with new companies being formed. He pointed out that business diversity is also increasing with companies being formed in multiple sectors like AI, Business-to-business software, hardware, and healthcare. He went on to say that Bend’s influx of talented remote workers means our available talent pool is expanding, creating an incentive for companies to base their operations here. The long-term outlook is strong.
Talent, hiring and retaining —
Getting the team right is one of the hardest parts of building any business. How to identify the right person, at the right time, for the right role at the right cost is a never-ending hurdle. As of today, we’re still in the throes of the remote work debate. Businesses are pulling people back into the office. Individuals are still looking for remote work. Job postings that are open for remote work get 5x as many applications on average. The pendulum continues to swing.
In both 2022 and 2023 the overall population in Oregon declined while Bend’s population is up a little bit (1.3%). Using LinkedIn, we can see that there are over 11k people in Bend, out of ~80k people with a profile, with an “open to work tag” on. That does not mean those 11k people are unemployed. Some might be unemployed, but most are looking for something different or better.
Hiring continues to be a challenge as the demand for hires is largely in construction, engineering, healthcare and the hospitality /service sector; all fields we don’t have enough available talent for locally in Central Oregon. Attracting people from outside the area comes with its own set of hurdles.
When it comes to retention, what’s working for many companies is giving employees more freedom over their schedules (including some work-from-home flexibility), getting them more involved in higher-level decision making and offering proactive cost-of-living adjustments.
Funding —
In a conversation with Pat Becker, CEO and President of Becker Capital, he noted that funding is hard for every kind of business right now. The leading industry to attract funding right now is AI-related companies. Becker also noted that compared to two years ago, the terms Venture Capital firms are getting today are more favorable for the VC instead of the founders. While VC may not be highly active in Bend, we did recently see the launch of the Bend Entrepreneurs Lab by Carrie and Scott Douglas & Nicolas Pluche to focus on helping locals launch new businesses. Pulche has a background working around venture capital. This will be a space to watch.
Given the challenges and expense of getting additional capital, most companies in Bend are slowing growth to what they can pay cash for. Gone are the days of borrowing at low interest to fund long-term growth.
Looking ahead —
To date, 2024 has brought us challenges. Despite those challenges, we have reasons to be optimistic. Inflation is down compared to one year ago. Startup activity is high. The Redmond airport is moving forward with its $150-$200m expansion project which will bring in more flight options and more tourism. The 128-acre OSU Cascades Campus is continuing to expand and attract more students into this area. Our housing affordability leaders are making progress on hundreds of units across Central Oregon. There are a few hundred million dollars going into school upgrades, new multifamily projects and commercial projects as well. And our commutes between Bend, Redmond, and Sisters are about to get much easier with the completion of the North Corridor project around the corner.
For the balance of 2024, the best business operators will anticipate continued headwinds and prepare as much as possible. They’ll prepare by watching personnel and finances carefully, ensuring the team has what is needed to excel and is focused on the most important activities to generate revenue. Investments in retention will continue for most organizations. Our initial prediction from earlier this year, 1-1.5% new job growth, is still in line with what we are expecting for the balance of the year.
