Great Lakes Wire

Michigan’s entrepreneurial economy has seen improvements since the 2020 COVID recession, but it has not fully rebounded, according to the SBAM Foundation’s recently released 2024 Entrepreneurship Score Card.

The annual Entrepreneurship Score Card, now in its 20th year of publication, is a comprehensive assessment of how Michigan’s entrepreneurial economy is performing and how it compares to other states. The 20th edition reviews, analyzes, and measures how Michigan and its entrepreneurial economy have changed over the last two decades.

“The Score Card consistently shows that small businesses play an indispensable role in our economy in both good and bad economic times,” said SBAM President and CEO Brian Calley. “While there has been an impressive rebound in some areas, Michigan’s economy has not shown its typical exuberance and is now lagging behind neighboring states.”

Key takeaways from this year’s report include:

- The business cycle dominates the ebbs and flows of Michigan’s small business activity and vitality.

- In the last 20 years, Michigan gained, then lost, a leadership position in net new jobs from business expansions. Between 2011-2019, Michigan job growth skyrocketed, becoming one of the best-performing states in the region. Since the 2020 Recession, Michigan continues to track downward toward the lowest-performing state.

- The success and struggles of the entrepreneurial economy are closely tied to the broader state economy.

- The per capita income gap between Michigan and the rest of the nation has worsened in the last 20 years.

- Michigan saw impressive gains in small business growth and vitality between 2012 and 2018, but that progress has faded since the pandemic.

- New business formations continue to drive job growth and diversify Michigan’s economy.

- Since the mid-2010s, Michigan’s small business survival rate has improved and moved closer to Massachusetts, the best-performing state.

- Michigan continues to rank in the Top 10 for research and development and high-tech workforce jobs. The state is also strong in physical science and engineering workers, as well as skilled trades, technicians, and technologists.

- In the last 20 years, Michigan’s labor force participation has continued to decline, a trend that will likely persist and worsen in the coming decades.

In addition:

- The fastest-growing businesses by size category have been those with 1-9 employees which increased by 30 percent in the past 20 years.

- Sole proprietorships have become more prevalent with job growth increasing faster than larger businesses.

- Payroll growth among these smallest businesses has grown by 103 percent over two decades nearly double that of larger businesses.

- Income growth for sole proprietors has improved over ten years outpacing U.S. averages.

- Business ownership by women now surpasses national rates.

Looking forward focusing on key areas will be essential for economic success including:

Investing in research development innovation STEM education credentialing programs high-tech employment

Capitalizing on technology workforce

Investing in digitization broadband

Enhancing energy reliability for business attraction retention

Focusing on foreign direct investments

The full Score Card report is available at www.sbam.org/scorecard.

Originally published in SBAM's July/August issue of FOCUS magazine.

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