Michigan's small-business scene is holding its ground but not really going anywhere fast, according to a new statewide review that finds stability without much spark. Owners are wrestling with rising costs that are prompting them to hit pause on hiring and expansion. The report points to a large base of self-employed residents and solid five-year survival rates, yet notes that fewer firms are scaling up and that new openings have nearly matched closures in recent years. With higher labor, energy and health-care bills frequently cited as reasons to delay investment, the state is left with a sturdier foundation but less net growth on Main Street.
That assessment comes from the Small Business Association of Michigan's 22nd Entrepreneurship Score Card, released on Tuesday. The Score Card reports that Michigan now has more than 815,000 self-employed people and that firms with fewer than 100 employees account for about 52% of the state's private-sector jobs. SBAM warns that stability is no longer translating into opportunity and growth, a phrase the group's president used in the report, according to SBAM. The Score Card also notes that roughly 55% of small firms reach five years in business, while expansion has slowed and contraction has ticked up. SBAM singles out rising business costs, including labor, energy and health care, as the main brakes on hiring and investment decisions.
Reporters first picked up on the Score Card's findings via Crain's Detroit Business, which detailed how those cost pressures are tamping down small-business growth across Michigan. The governor's office, for its part, points to a slate of recent investments, workforce training efforts and tax moves it says are improving the state's business climate, as outlined in a state economic brief updated last Friday. That brief highlights large projects and tax changes aimed at attracting jobs. The contrast helps explain why big headline investments and everyday Main Street realities often move on different timelines. For many local owners, immediate operating costs matter more than the potential long-term upside from major projects.
Why Main Street Is Hitting The Brakes
Rising wages, higher health-insurance premiums and steeper energy bills show up again and again in both the Score Card and broader small-business data, squeezing margins and limiting hiring. Intuit's Small Business Index showed declines in small-business revenue and employment in 2025, with leisure and hospitality among the hardest hit, which lines up with the Score Card's finding that cost pressures are curbing growth. Tight credit conditions and selective investment are additional constraints that make owners wary of adding staff or opening new locations. Together, those forces help explain why business openings and closures have crept toward parity over the last two years.
Policy Options And What Owners Want
SBAM's Score Card urges a more deliberate focus on growth: making it easier to launch companies, helping existing firms scale and addressing workforce and cost obstacles, as the organization argues in its analysis. Policymakers have several tools available, from targeted tax relief and grants to workforce training and health-care solutions, but the Score Card suggests that more tailored support for early-stage and second-stage firms is needed, according to SBAM. The governor's office maintains that recent policy moves and investments will help over time, though those changes may take months or years to filter down to local Main Street operators. For owners deciding whether to hire or expand right now, immediate cost relief often matters more than long-range announcements.
Health-care inflation is a national problem, adding extra pressure. The Kaiser Family Foundation's 2025 Employer Health Benefits Survey shows employer premiums continued to climb, making coverage more expensive for small firms and narrowing their options. SBAM surveys have repeatedly found that health-care costs are a top barrier to hiring in Michigan, with many owners saying they reduced or cut benefits under pressure. Taken together, those dynamics, higher benefits costs alongside wage competition and energy bills, make growth decisions riskier for Main Street businesses. Until costs settle down or targeted relief arrives, many owners are likely to keep expansion plans on ice.
For Michigan's broader economy, the Score Card is a reminder that a stable small-business foundation is not the same thing as real momentum. The data sketch a nuanced picture: communities can lean on durable local employers even as state and national forces chip away at growth prospects. Lawmakers and business groups will be watching to see whether policy moves and market shifts ease price pressures enough to turn stability into renewed hiring and new-firm growth. In the meantime, entrepreneurs say they will be judging the next six months by a simple metric: whether their costs ease up or keep biting into already thin margins.
