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2016 Michigan Entrepreneurship Score Card released

February 23, 2016

LANSING, MI. – February 22, 2016 – The twelfth annual Michigan Entrepreneurship Score Card – 2016 Edition reports the state continues to advance its post-recession entrepreneurial economy, although the rapid pace of growth exhibited over the previous five years has slowed. The Entrepreneurial Change Index which measures the direction and momentum of growth ranks Michigan #12 out of the 50 states for the second year in a row, up from 44 ten years ago. 

The Michigan Entrepreneurship Score Card, analyzing data from 2004 to 2014, was released today (February 22, 2016) by MiQuest, a Lansing-based nonprofit organization serving Michigan’s entrepreneurial community.  

Among the insights from the Score Card: 
Michigan’s entrepreneurial climate has experienced exceptional gains since 2009, when Michigan ranked among the bottom states for key metrics such as Growth in Establishments Gaining Jobs, Export Growth, and State Business Tax Structure. Michigan now ranks in the Top 10 states for several growth-related metrics, such as 5-Year Survival Rates and Small Business Payroll Growth. Among Michigan’s top rankings are:

  • Proprietor Income Growth  ̶  #3
  • Favorable Business Taxes  ̶  #5
  • 5-Year Establishment Survival Rate  ̶  #9
  • State Business Tax Structure − #9
  • Small Business Payroll Growth  ̶ #10
  • Growth in Establishments Gaining Jobs  ̶  #10

Michigan continues to invest in areas critical to future technology-based entrepreneurial growth. Throughout the 2000s, Michigan’s public and private sectors continued to invest heavily in R&D, innovation (measured by patents filed), STEM education, and job creation in technology fields. The state is especially strong in Workforce Preparedness metrics including Physical Science and Engineering Workers and High Tech Manufacturing Employment. Perseverance has paid off in Michigan’s current rankings among the 50 states:

  • Physical Science and Engineering Workers − #1
  • High Tech Manufacturing Employment  ̶  #1
  • Industry R&D − #5 
  • 4-Year + Technology Credentials − #5 (Percent of bachelor’s and above degrees/certificates earned in technology-related fields)
  • University R&D Performance − #6

Michigan’s Quality of Life metrics point to several strengths conducive to economic mobility and tech growth, including ranking #3 in Home Ownership. 

“The Score Card mirrors what we hear from entrepreneurs – businesses are growing and hitting new levels of sales, there’s a high demand for technical talent, and there’s increasing enthusiasm about the opportunities being created in Michigan’s urban centers,” says Diane Durance, President of MiQuest.

This twelfth annual Score Card uses 137 metrics spanning a wide range of factors from business climate indicators to quality of life measurements that influence entrepreneurship. For each metric, Michigan is ranked along with every other state. Here is a partial listing of the metrics: 

Business climate indicators include metrics such as:

  • Growth in Business Survival
  • Increase in Owner Incomes
  • Net New Establishments
  • Levels of Venture Capital Funding
  • State Business Tax Structures

Education metrics includes:

  • Number of STEM-educated workers
  • Number of engineering and other technology degrees awarded
  • Levels of research spending at universities
  • Availability of entrepreneurial education programs

Quality of Life metrics include the availability of parks and recreational opportunities and home-ownership rates. The metrics are used to develop three composite rankings:

  • Entrepreneurial Climate
  • Entrepreneurial Change
  • Entrepreneurial Vitality

Entrepreneurial Climate combines metrics to measure the underlying supporting conditions for the entrepreneurial economy. Factors include: innovation, capital, and general business conditions. This composite ranking uses 30 of the 137 total metrics gathered and reported upon. Michigan’s rank is now 23, slipping slightly from 21 in last year’s report, but up from 41 in 2008.

Entrepreneurial Change indicates the direction and momentum of growth in Michigan’s entrepreneurial economy relative to other states. It is a three-year average of variables tracking the direction of entrepreneurial economy and its growth or decline. Entrepreneurial Change is influenced heavily by Michigan’s business climate, which has increasingly improved since 2009. Michigan’s rank is 12 for the second year in a row, up from 49 in 2008.

“Since 2009, Entrepreneurial Change has picked up momentum and Michigan entrepreneurial activity has become increasingly more robust – and successful. The improvement in Entrepreneurial Change has been dramatic, from the bottom of scores for states in the Industrial Midwest in the mid-2000s to a rank of 12 for two years running,” says Graham Toft, PhD, president of GrowthEconomics, Inc., who developed the statistical protocol behind the Score Card and has authored the report each year.
 
Entrepreneurial Vitality measures the relative level of entrepreneurial activity in each state. This composite ranking includes metrics such as University and Research Institution Spinoffs and Federal Grant Awards. 

“Entrepreneurial Vitality is a difficult index to impact. The state’s high level of large industrial and corporate activity overwhelms the activity in the entrepreneurial sector. It will take many years for Michigan to build its structural Entrepreneurial Vitality to match its standing 100 years ago and the slowing down in the rate of net new business formations may negatively impact this index. However, the healthy Entrepreneurial Change index suggests positive factors are at work,” asserts Toft. Michigan’s rank is 35.

The Score Card is sponsored by Clark Hill, Consumers Energy, Crain’s Detroit Business, DTE Energy Foundation, MiBiz, Michigan Association of State Universities, Michigan Municipal League, Michigan State Housing Development Authority, and Small Business Association of Michigan.

For more information, or copies of the complete Michigan Entrepreneurial Score Card – 2016 Edition, contact Diane Durance, MiQuest president, at (734) 255-3183 or by email at ddurance@MiQuest.org. Electronic copies are available here.

MiQuest is a Michigan-based 501(c)(3) nonprofit organization providing research, services, events and opportunities to accelerate and celebrate entrepreneurial success. MiQuest’s mission is to ignite, unleash, and promote a culture of entrepreneurship in Michigan.

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