Entrepreneurship Rating Card Reveals Uneven Financial Restoration, Small Companies Nonetheless Struggling

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LANSING – There are clear signs of economic improvement, according to the Michigan Entrepreneurship Score Card released today, but this recovery is uneven and lags behind that of the country.

This is the 17th Annual Score Card issued by Michigan Celebrates Small Business in association with the Small Business Association of Michigan. This year’s report required several improvements to assess the state of our corporate economy before and after the pandemic. The Entrepreneurship Score Card includes the traditional indices of the climate, change, and vitality of entrepreneurship, as well as an illustration of key factors contributing to our recovery, an overview of how Michigan has performed in previous economic rebounds, and a multi-faceted analysis of the recovery of small businesses.

“Michigan’s small businesses have been hardest hit economically and we know a full recovery won’t happen overnight,” said SBAM President Brian Calley. “Restrictions and changes in consumer behavior during the pandemic tended to have more impact on small businesses than others, but there is reason to be optimistic as the economy recovers.”

The score card revealed that Michigan’s topline economic stats don’t tell the full story, and reveals the following:

  • The “Small Businesses Open” and “Small Business Revenue” indices show a clear improvement compared to the low point of the recession, but are below the national average.
  • Employment participation rates have improved since bottoming out in spring and early summer 2020, but remain well below the pre-pandemic level. The shortage of available labor has emerged as a critical barrier to small business recovery.
  • Private consumer spending on goods has fully recovered to pre-pandemic levels, but private spending on services is lagging far behind. This presents challenges for small businesses that dominate the service industry.
  • Federal spending in the form of stimulus payments, the paycheck protection program, and increased unemployment benefits were key to the early stages of the recovery.
  • The continuation of supplemental unemployment benefits and rising costs have presented new challenges for small businesses to work on recovery.
  • Hopefully, based on trends following previous recessions, Michigan can expect an abrupt turnaround in the next two years, driven by business ramps up, start-ups, and the revival of businesses that have been inactive from the recession.