Michigan’s small business economy remains strong and stable, but is no longer advancing, according to the 22nd edition of the Entrepreneurship Score Card released Tuesday by the Small Business Association of Michigan (SBAM) Foundation.
This annual analysis combines dozens of metrics and measures to create a comprehensive evaluation of Michigan’s economic strength, with an emphasis on the entrepreneurial economy.
“While small businesses continue to provide a stable foundation for jobs and local communities, the slowdown in growth, decline in new business formation, and increasing cost pressures signal that stability is no longer translating into opportunity and growth,” said Brian Calley, president and CEO of SBAM. “Without stronger momentum - particularly in helping businesses start, scale, and hire - Michigan risks falling further behind the nation. Addressing these challenges is essential not just for today’s small businesses, but for the state’s long-term economic competitiveness and job creation. This is a critical turning point for Michigan’s economy.”
The Score Card shows that Michigan small businesses still anchor the state’s private-sector employment and payroll, with a large and growing base of self-employed businesses, and continue to show strong business survival rates. At the same time, the state’s small business growth has slowed, and Michigan is not keeping up with national trends. These changes indicate a loss of momentum in Michigan’s entrepreneurial economy.
Calley continued: “To move our small business economy forward, we need a deliberate focus on growth. That means focusing on making it easier to start a business, giving existing companies the support they need to scale, and tackling the rising costs and workforce challenges that are holding them back.”
—Report Highlights:
• Michigan has a large and growing base of self-employed people, now exceeding 815,000, reinforcing the importance of entrepreneurship across communities and industries.
• Small businesses with fewer than 100 employees in Michigan continue to anchor the state’s private sector employment, providing 52% of all private sector jobs.
• Michigan continues to show strong business survival rates, with 55% of small businesses reaching five years in business, contributing to economic stability.
—Report Lowlights:
• Michigan’s growth has slowed in all sizes of business and substantially trails the nation.
• Early-stage growth is weakening, with fewer new businesses being formed and fewer firms moving successfully into larger stages of growth.
• Business expansion has slowed, while contraction has increased, signaling a loss of momentum in the entrepreneurial economy.
• Over the past two years, business openings and closings have been nearly equal, narrowing a key indicator of economic vitality.
• Rising business costs - including labor, energy, and health care - are limiting hiring, expansion, and investment decisions for many small businesses.
Overall, the Score Card highlights to a central challenge: Michigan’s small business economy is stable but constrained, with limited upward movement in the entrepreneurial pipeline. For Michigan to be competitive in the long run, small business growth constraints – formation, costs and workforce capacity, must be addressed.
The term “entrepreneurial economy” refers collectively to sole proprietorships as well as small and midsized for-profit businesses. This segment is known for its dynamism – lots of establishments forming, merging, surviving, failing, expanding, contracting, moving, and growing.
The full Score Card is available at www.sbam.org/scorecard.
This annual analysis combines dozens of metrics and measures to create a comprehensive evaluation of Michigan’s economic strength, with an emphasis on the entrepreneurial economy.
“While small businesses continue to provide a stable foundation for jobs and local communities, the slowdown in growth, decline in new business formation, and increasing cost pressures signal that stability is no longer translating into opportunity and growth,” said Brian Calley, president and CEO of SBAM. “Without stronger momentum - particularly in helping businesses start, scale, and hire - Michigan risks falling further behind the nation. Addressing these challenges is essential not just for today’s small businesses, but for the state’s long-term economic competitiveness and job creation. This is a critical turning point for Michigan’s economy.”
The Score Card shows that Michigan small businesses still anchor the state’s private-sector employment and payroll, with a large and growing base of self-employed businesses, and continue to show strong business survival rates. At the same time, the state’s small business growth has slowed, and Michigan is not keeping up with national trends. These changes indicate a loss of momentum in Michigan’s entrepreneurial economy.
Calley continued: “To move our small business economy forward, we need a deliberate focus on growth. That means focusing on making it easier to start a business, giving existing companies the support they need to scale, and tackling the rising costs and workforce challenges that are holding them back.”
—Report Highlights:
• Michigan has a large and growing base of self-employed people, now exceeding 815,000, reinforcing the importance of entrepreneurship across communities and industries.
• Small businesses with fewer than 100 employees in Michigan continue to anchor the state’s private sector employment, providing 52% of all private sector jobs.
• Michigan continues to show strong business survival rates, with 55% of small businesses reaching five years in business, contributing to economic stability.
—Report Lowlights:
• Michigan’s growth has slowed in all sizes of business and substantially trails the nation.
• Early-stage growth is weakening, with fewer new businesses being formed and fewer firms moving successfully into larger stages of growth.
• Business expansion has slowed, while contraction has increased, signaling a loss of momentum in the entrepreneurial economy.
• Over the past two years, business openings and closings have been nearly equal, narrowing a key indicator of economic vitality.
• Rising business costs - including labor, energy, and health care - are limiting hiring, expansion, and investment decisions for many small businesses.
Overall, the Score Card highlights to a central challenge: Michigan’s small business economy is stable but constrained, with limited upward movement in the entrepreneurial pipeline. For Michigan to be competitive in the long run, small business growth constraints – formation, costs and workforce capacity, must be addressed.
The term “entrepreneurial economy” refers collectively to sole proprietorships as well as small and midsized for-profit businesses. This segment is known for its dynamism – lots of establishments forming, merging, surviving, failing, expanding, contracting, moving, and growing.
The full Score Card is available at www.sbam.org/scorecard.
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