Entrepreneurship Score Card shows Michigan as top performer in the Midwest, yet falling behind nationally

Prior to the COVID-19 pandemic, Michigan’s entrepreneurial economy was continuing to grow but was losing ground in comparison to other states, according to the 16th annual Michigan Entrepreneurship Score Card released Tuesday.

The Score Card, released by Michigan Celebrates Small Business in collaboration with the Small Business Association of Michigan (SBAM), evaluates the state’s performance in the areas essential to a successful entrepreneurial economy: climate, change and vitality.

The 2020 Score Card showed that Michigan remains a top performer among Midwest states, based on data showing the economy has grown at a rate exceeding its neighbors for the last six years. That data is from Michigan’s Coincident Index, evaluating employment and wage/salary data on a monthly basis.

“It’s no secret that entrepreneurs drive innovation and economic activity that make our communities great places to live,” said Brian Calley, SBAM president. “While we have seen some progress in Michigan, we know that if you’re standing still, you’re falling behind and the risks of complacency have never been greater for entrepreneurs. This Score Card gives a clear and accurate view of how Michigan ranks compared to other states and must be used carefully to create a pathway forward.”

The report offers insights and rankings on where Michigan stands in comparison to previous years and other states, which will help determine where changes are needed, especially given the
uncertainty the global pandemic has created. The rankings show:

• Entrepreneurial Climate, including factors that support the entrepreneurial economy, Michigan is ranked 22nd (down from 17th on last year’s Score Card).
• Entrepreneurial Change, measuring the direction and momentum of growth in the entrepreneurial economy, Michigan ranks 26th (down from 23rd last year).
• Entrepreneurial Vitality, comparing the level of entrepreneurial activity compared to other states, Michigan ranks 36th (down from 35th last year).

“While Michigan has come a long way since this Score Card was first developed more than 15 years ago, we still have a long and difficult climb to becoming a top 10 state for entrepreneurs,” said SBAM CEO Rob Fowler. “Our economy certainly has taken a hit as a result of the COVID-19 pandemic, but this scorecard gives us insights we can work on to make a difference for entrepreneurs in our state.”

This year’s Score Card also analyzed the top 10 performing entrepreneurial states to determine what Michigan can learn from them as it works to rebuild its economy in a post-COVID world. Evaluation revealed that in most states, workforce, education and productivity were the major drivers of entrepreneurial success.

The Score Card also showed areas where Michigan is currently among the Top 10 states include: physical science and engineering workers, workers’ compensation premiums, business tax burden, homeownership rate, foreign business employment growth, patients per innovation worker, industry research and development, high tech manufacturing employment, ACT Scores, four-year technical credentials, business liability costs, university research and development, US News top graduate programs, export intensity growth, lack of health insurance, and voter turnout.

Michigan ranks among the bottom 10 for malpractice costs, law enforcement employees, bridge quality, university spinout businesses, hate crimes, public high school graduation rates, cultural institutions, next generation internet, increase in high performance firms, prime working age residents, manufacturing capital investment growth, unemployment insurance costs and unemployment insurance tax structure.

The Score Card is released annually by Michigan Celebrates Small Business, a nonprofit serving Michigan’s entrepreneurial community. Analytics and methodology for this analysis was developed by Dr. Graham Toft of Growth Economics Inc. The Score Card is sponsored by the SBAM, Blue Cross Blue Shield of Michigan, DTE Energy, MiBiz, Michigan Association of State Universities, Michigan Municipal League and the Michigan State Housing Development Authority. For a complete copy of the 2020 edition, visit www.sbam.org.