Michigan small business owners told us in a recent statewide survey that, by and large, 2010 showed some signs of renewed entrepreneurial vigor in the small business economy. But when asked to look forward to 2011, they were somewhat less optimistic. That’s kind of unusual for entrepreneurs, who typically are an upbeat bunch of folks. The fact that they feel that way gives us the distinct impression that although the state’s economy has improved, the recovery is fragile and needs nurturing.

Looking back at 2010

Our October 2010 Barometer survey of 400 small business owners across the state asked them to assess the performance of their business operations over the previous six months. The responses showed improvements in business performance compared to the last time we asked the questions in January of 2010.

Some examples:

• 34 percent of small business owners reported in October 2010 that sales increased over the previous six months. Only 23 percent reported in January 2010 that they had sales increases.

• 10 percent said they increased the number of employees; only 5 percent said in January that they had hired workers.

• 10 percent said they boosted wages; only 8 percent said in January that they had given out wage hikes.

• 20 percent said profits had increased; 15 percent said in January that profits had gone up.

• 12 percent said their major investments in plants and equipment had increased; 9 percent said in January that they had boosted investments.

Looking ahead to 2011

After asking small business owners how their business had performed over the previous six months, we asked them to look down the road and project how they were going to do in the next six months. By and large, they were less optimistic compared to when we asked them the same questions in January 2010.

• 32 percent of small business owners said they expect sales to increase in the next six months (through April 2011). But 42 percent in January 2010 said they expected sales to increase in the next six months.

• 32 percent said they expect profits to increase; 30 percent in January said profits would rise.

Contributing to their gloom is a perception that Michigan continues to be a tough place in which to do business. In the October survey, 60 percent of small business owners gave a negative rating to Michigan as a market for their goods and services, and 53 percent gave an unfair rating to the way Michigan’s tax system affects their business.

What does this all mean? We think these survey results show that despite some slight, moderate improvement in economic conditions in 2010, small business owners are worried about a number of potential problems coming down the road in 2011—challenges that could have a major impact on their ability to sell their products and services, afford to provide employee benefits and make a profit.

From a public policy standpoint, those challenges include budget, tax and regulatory reform – and the impact those reforms (or lack of reforms) will have on the cost of doing business in mid-Michigan and across the state. On the national scene, small business owners are still very wary of the unfolding impact of federal healthcare reform.

Successfully addressing these public policy challenges will determine if 2011 turns out to indeed be a prosperous new year.

		Michael Rogers can be contacted at This e-mail address is being protected from spambots. You need JavaScript enabled to view it and followed on Twitter @mwrogers. The Small Business Association of Michigan can be found online on Facebook, LinkedIn and at www.sbam.org.