Michigan’s economy overall is recovering from last year, but lingering effects from COVID-19 are having a disproportionately negative effect on small businesses, according to a new report released by the Small Business Association of Michigan.
The 17th annual fall scorecard was compiled by SBAM along with the Michigan Celebrates Small Business advocacy group.
Michigan saw eight straight months of improved gross domestic product, while the state’s economy is improving at a similar pace as the rest of the country, according to data from Comerica Inc. and the Philadelphia Reserve Bank.
Industries dominated by small businesses, however, are struggling because of a range of factors, according to SBAM. These include the pandemic’s effect on consumer shopping habits as people turned more toward large online retailers, as well as COVID-19 restrictions that limited operations at small retailers and restaurants. The remote work trend has also contributed to less foot traffic in downtown districts.
As of June 30, Opportunity Insights’ Economic Tracker shows small business revenue down 43 percent, SBAM noted.
“The story of Michigan’s economic recovery is complicated and changing quickly,” SBAM President Brian Calley said in a statement. “While it is great to see consistent overall economic growth, the topline statistics are not necessarily representative of what’s happening with small businesses who have experienced significant closures and lost revenue. New challenges of acute workforce shortages, rising costs, and supply chain disruptions are hampering the recovery.”
Struggling to stay fully staffed, as well as high materials costs, are affecting industries across the board. But these factors also tend to have a larger effect on smaller businesses with slimmer margins, SBAM noted.
With consumers expected to spend more than last year on holiday shopping, small business owners are hoping to make up some ground this year that was lost during the holidays in 2020. Results from a JLL Inc. survey of more than 1,000 U.S. consumers show that individual shoppers plan to spend an average of $870 on holiday-related purchases this holiday season — a 25-percent increase from the $694 spent in 2020.