Making a better future for the next generation in Michigan.

Will Michigan Be Small Business Friendly in 2040?

Jul 12, 2023 | Economic Development, Entrepreneurs, Future, Michigan, Small Business | 0 comments

  • One in five working people in Michigan are small business owners.
  • Small businesses are home to almost half of the employees in the state.
  • Maintaining a healthy climate for small business will provide opportunities for independence, innovation, employment, and prosperity for the next generation.

In 1930, my grandfather Jack Fehsenfeld got fed up with taking orders from managers who knew less about the fuel distribution business than he did. So, he put together a rudimentary business plan, found some financing from a relative and a neighbor, quit his job, and founded the Crystal Flash fuel company in Indianapolis with one truck and a rented office.

In 1936, my dad helped found a Michigan branch of the company and led it for the next 40 years, growing slowly through boom times, recessions, and oil embargoes. In 1974, I joined the Michigan branch and helped lead it for the next 42 years. When I retired, we converted it from family ownership to employee ownership and the company is still going strong after 90 years – now with 350 employee-owners.

Crystal Flash is a small business – which the federal government defines as one with less than 500 employees. It never grew into a national phenomenon or went public. Still, over the decades, it provided fuel delivery services for tens of thousands of customers, a good living for thousands of employees and their families, and we always endeavored to be a good neighbor in the communities where we operated.

Running a small business can be rewarding career for those who love new challenges. In my time at Crystal Flash, there was always a new problem to solve, a new opportunity to pursue, or a new team member to help develop. I am grateful that my grandfather – a second-generation American with just a high school education – took the initiative to found a company that gave our family such rewarding work and a prosperous future.

How is Michigan doing for its small businesses today?

According to the Small Business Administration (SBA), companies like Crystal Flash are – collectively — major contributors to the U.S. economy. In Michigan small businesses account for 99.6% of all companies and provide jobs for 47.9% of the state’s employees. Big business obviously has a role to play because its 0.4% of business entities provide over half of the jobs. My take-away from these SBA numbers is that states need a balance of big and small companies to prosper. They each have their role to play.

What I found most surprising in the SBA’s numbers is that Michigan has one small business for every five members of the state’s workforce. Think about that. Whenever five people in the workforce (currently employed) get together, it would not be surprising if one of them was a business owner. Most of these are self-employed people with no employees. One out of 29 people in the workforce of Michigan owns a business that hires people. My spreadsheet with the calculations is here:

The spreadsheet also compares Michigan numbers to North Carolina’s for benchmarking purposes, and to Indiana — which Forbes ranked as the best state to start a business in — and to the entire United States. Michigan and North Carolina showed slightly higher rates of business ownership than either of those. It looks like the two states are doing a good job holding and growing their base of small businesses.

Some of these businesses will take off and become the big businesses of the future. Take a look at the website to see some of the high growth stars in Michigan.

Will the 2040s be small business friendly?

Assuming that some businesses are partnerships with multiple owners, the ratio of small businesses to workforces in Michigan suggests to me that only 3 to 5% of working age people are owners of businesses that hire others. 3 to 5% is a small number, but these folks provide jobs for almost half of those employed in our states.

On average, each small business with employees provides jobs for ten others. Often they succeed by finding niches and serving customers big business has ignored. Once in a while, they catch a tailwind and become one of the big businesses of the next decade. These are just a few of the reasons why I believe it is worth nurturing and supporting entrepreneurial ambition in our kids and grandkids.

When the next generation takes on adult roles in the 2030s and 2040s, will Michigan be supportive for those who want to start businesses? How easy would it be for a second-generation American with just a basic high school education — like my grandfather — to start a successful business? Next week, I will be sharing some perspectives on that question.



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