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Wednesday, 21 March 2012 15:51

SBAM scorecard shows state’s entrepreneurial climate improving

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GRAND RAPIDS — Even before the restructuring of the state’s business tax and other major reforms made by Gov. Rick Snyder, Michigan last year was beginning to become a better place to start a business.

Michigan made significant strides in an annual entrepreneurial scorecard issued by the Small Business Association of Michigan. The state’s entrepreneurial climate ranked 15th nationally in 2011, compared to 45th in 2010.

The showing in the annual Entrepreneurship Score Card “is a strong indicator of healthier conditions for future business and entrepreneurial activity,” SBAM CEO Rob Fowler said.

“It’s a new day,” Fowler said. “The state has made some real progress.”

Fowler notes that progress came even before key legislative initiatives last year to improve the state’s business climate: the elimination of the much-maligned Michigan Business Tax and creation of a corporate income tax; and the re-writing of worker’s compensation and unemployment insurance laws.

This year’s Entrepreneurship Score Card incorporates data from before those changes were made, Fowler said.

The new 6 percent corporate income tax, for instance, took effect Jan. 1 and significantly improved Michigan’s ranking, from 30th to 19th, in an annual report of state tax burdens published by the Washington, D.C.-based Tax Foundation. Small business owners do not pay the tax and instead only pay income taxes on their earnings from the business.

Fowler anticipates that Michigan will make further strides in next year’s score card when it takes into account the new business tax and unemployment and worker’s compensation changes.

“We will improve in several categories when the data catches up,” Fowler said.

Mark Lange, executive director of the Edward Lowe Foundation in Cassopolis that promotes entrepreneurism, called the improvement in the entrepreneurial climate “a beacon of hope going forward that we are on the right path” in Michigan.

“That’s what’s go to change first. That’s a barometer of what’s to come,” Lange said. “Certain things have to happen first before other things happen.”

Fowler credits the improvements from 2010 to 2011 to a Michigan economy that’s improving faster than most states, with the strong recovery by the domestic auto industry and declines by other states.

Fowler also expects measures such as growth in the number of small businesses, where Michigan ranked 49th nationally, small business payroll (47th) and proprietor income growth (46th) to improve as Michigan’s economy further improves.

“You create an environment where small business can flourish, and that will result,” Fowler said. “This is ‘a rising tide raises all boats’ stuff.”

Michigan ranked in the top 10 nationally in private lending to small business, high-tech manufacturing employment, graduate programs, foreign direct investment growth, physical science and engineering workers, physical sciences and engineering degrees, and patents per innovation worker.

On the downside, Michigan continues to rank comparatively low for entrepreneurial change, 45th nationally, and entrepreneurial vitality (32nd) plus business costs, productivity and labor supply, K-12 education, infrastructure an quality of life. Fowler said those are all areas where state lawmakers are presently focusing their attention.

“By examining the data, we can see some areas where we need to pay attention and improve,” Fowler said.

Read 4605 times Last modified on Sunday, 12 August 2012 10:36

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