Michigan’s entrepreneurial economy is continuing to grow and small businesses have been resilient in the post-COVID-19 era, according to the Entrepreneurship Score Card released Tuesday by the Small Business Association of Michigan (SBAM) Foundation.
The organization’s 18th annual Score Card is designed to analyze the state’s economy in order to assess Michigan’s entrepreneurial climate.
“Though many challenges persist, it’s safe to say Michigan’s small businesses have experienced significant improvement since the pandemic began and over the last 18 years since the Score Card was developed,” says Brian Calley, president of the SBAM. “While inflation and worker shortages are threats to the future, small business revenue trends and startup trends give reason for optimism.”
The economic conditions identified in this year’s Score Card include:
- Michigan economy holding up well in 2021-2022. In seven out of the last nine months, Michigan places in the top states for three-month economic improvement.
- Michigan small businesses have been outperforming the U.S. since 2020 (measured in percent growth in businesses open and in business revenue).
- Spending and consumption have remained strong, along with exceptionally strong state sales tax collections.
- New business starts have been notably robust since the second half of 2020 and the five-year establishment survival rate of small businesses has begun to inch up.
The Score Card also identified issues facing small businesses and entrepreneurs in 2022.
One issue is that percent of people employed and labor force participation have declined since before the pandemic. Another is that growth has slowed since the recovery began in mid-2020 and Michigan job postings growth has been somewhat below the U.S. average.
Inflation is the top issue facing small businesses in 2022 with 41.9 percent of Michigan’s small businesses facing large/severe price increases (40.6 percent).
Affordable housing in safe, pleasant communities becomes part of the challenge, according to the survey. While Michigan ranks in the top five states for home ownership, housing has become an important factor in stabilizing and improving low/moderate income neighborhoods and quality of life.
“While Michigan’s small businesses have clearly played a large role in Michigan’s economic growth, we cannot take their success for granted,” Calley says. “Our policy makers must be careful not to throw a wet blanket on small business success with policies that stifle new business starts with limitations on independent contractors or further exacerbate cost increases with additional government mandates.”
The full Score Care report is available for download here.