According to a report released today, Michigan’s entrepreneurial economy continues to thrive and is above the U.S. average. Released by the Association of Small Businesses of Michigan (SBAM) Foundation, the 19h Annual Entrepreneurship Score Card measures Michigan’s performance in entrepreneurship-specific economic indicators relative to other states, predicts trends, and provides guidance for the future. It identifies signs of instability.
Over the past two decades, Michigan has experienced prolonged decline, stagnation, recovery, and growth. Despite the inherent risks associated with starting a small business, the index shows that the number of new start-ups is at a record high.
SBAM President and CEO Brian Carey said, “The pandemic appears to have caused a remarkable increase in entrepreneurship.” “Michigans appear to be more entrepreneurial than ever, even as inflationary costs and labor shortages challenge them and a potential economic slowdown is on the horizon. .”
Beginning in the summer of 2020 and through 2022, Michigan has seen record business starts, including businesses with employees and businesses operating as independent contractors and sole proprietorships. Moreover, his 5-year survival rate for small businesses shows a marked improvement.
“It’s a widely held rule of thumb that more than half of start-up small businesses will go bankrupt within five years,” Currie said. “However, since 2020, Michigan has seen a marked improvement in its five-year survival rate. The increase in new business starts and the number of companies that have survived beyond five years is a powerful combination for growth. ”
Positive economic indicators for Michigan small business identified in this year’s scorecard include:
Small business revenues have increased 24.2% since 2020, triple the 8% increase in the US.
Michigan now has 8.5% more small business openings than it did in early 2020. This compares favorably with the national average of his 3.1% increase.
Nationally, Michigan ranks fourth in percentage of four-year and technology-related qualifications, or bachelor’s degrees/certificates earned in technology-related fields. This talent pool is critical to Michigan’s future tech and non-tech growth.
The scorecard also identified pressing issues facing small businesses and entrepreneurs, such as workforce lag.
Michigan’s working population is down 721,000 since January 2000. The labor force participation rate peaked at 68.8 percent around the beginning of this century. Michigan is currently struggling to stay above 60 percent.
During this period, Michigan experienced the steepest drop in labor force participation among young workers.
By the end of 2022, Michigan’s workforce had shrunk by 97,200 since the coronavirus outbreak.
Michigan’s net internal immigration has improved over the past decade but remains negative, suggesting that out-of-state labor supply is not a viable labor supply.
…and inflation remains dire:
40.6 percent of U.S. small businesses and 41.9 percent of Michigan small businesses will experience what they describe as a large or severe price increase in 2022.
A full scorecard report is available for download at www.sbam.org/scorecard.