Detroit City Wire

The Small Business Association of Michigan (SBAM) Foundation has released the 21st edition of the Entrepreneurship Score Card, which indicates a decline in the strength of Michigan's entrepreneurial economy over time, especially in comparison to neighboring Midwest states. The Score Card uses a range of metrics to assess the economic health of Michigan, focusing on entrepreneurship.

"In recent years we have noted that the condition and strength of Michigan’s entrepreneurial economy has somewhat faded, and unfortunately it has slipped even further in this year’s report, which is alarming because half of all net new jobs are created by this segment of our economy," stated Brian Calley, President and CEO of SBAM.

The report suggests Michigan's economic competitiveness is declining even as the national economy becomes more unstable. Calley emphasized, "As the national economy becomes increasingly unstable, the ability for the state to quickly adjust to a rapidly changing environment will be crucial to small business success in the years ahead. There is still reason to think we can right this ship, as the Score Card shows Michigan has improved its five-year establishment survival rate."

The analysis highlighted both positive and negative trends. On the positive side, self-employment and small businesses have increased significantly over the past two decades, with a 33 percent and 43 percent rise in Stage 1 small businesses, respectively. The state also ranks highly in the Five-Year Establishment Survival Rate. Michigan has seen advancements in income growth among sole proprietors compared to national averages since 2011. Additionally, women-owned businesses now account for 35.5 percent of all businesses, a rise from 29.6 percent.

However, there are concerning trends as well. Since the pandemic, new business openings in Michigan have decreased while closures have risen. Fewer businesses are expanding their workforce compared to those contracting. Despite an initial surge in new business starts post-pandemic, activity has declined since 2023. Moreover, minority business ownership, though increased to 18.3 percent over the years, remains below the national rate.

The term "entrepreneurial economy" includes sole proprietorships as well as small and midsized businesses. This sector is known for its dynamic nature, contributing significantly to job creation.