Detroit Future City
May 22, 2024
Detroit Future City (DFC), the think-and-do tank focused on advancing economic equity in Detroit, released the “State of Micro and Small Businesses in the Detroit Region” report to provide insight into the outlooks, challenges and goals of Detroit Region’s small businesses. The survey data in the report was completed by the New Economy Initiative (NEI) and Invest Detroit’s Business Support Network Office in partnership with JFM Consulting survey ambassadors and Detroit’s small-business ecosystem who worked to encourage business owners to respond to the survey.
“In our efforts to identify solutions for creating an equitable future for Detroit, we recognize that small business ownership provides an important pathway to wealth generation and economic mobility for Detroiters,” said Anika Goss, DFC CEO. “The results of this survey can help private and public institutions understand how they can better support small business owners of color, who are vital contributors to our community and economy.”
In summer 2023, NEI led a survey of small business owners across southeast Michigan which included 1,235 respondents from Wayne, Oakland and Macomb Counties. Some key data that provides insight into the primary focus group of the survey:
- Most would be considered micro businesses, representing one piece of the overall small-business landscape.
- 61% were Black-owned businesses.
- 71% had only one or two full-time employees.
- 45% reported revenue of $10,000 or less.
- 45% were less than three years old.
“Small businesses are the backbone of any city’s economy,” says Wafa Dinaro, Executive Director of New Economy Initiative. “In our efforts to build a more inclusive small business support network, we are working to ensure that entrepreneurs can start, maintain, and grow their businesses in Southeast Michigan.”
The survey showed small businesses had positive outlooks on the current business environment, while acknowledging significant challenges, especially around accessing and navigating the cost of capital. Three out of five survey respondents felt either somewhat or mostly positive about the current business environment with four out of five having positive feelings about their business’ financial future.
The top three types of resources businesses reported needing to reach their goals were financial resources, marketing resources and strategy resources.
- For all three resources, a higher share of businesses with lower household income and revenue found these to be very important to reaching their goals.
- Less than one in four respondents strongly agreed these resources were readily available in the ecosystem.
- A higher share of businesses that engage with business support organizations (BSO) agreed they knew how to find the resources needed to help their business compared to businesses that were less engaged.
The primary challenge acknowledged by small business owners, accessing capital, was also the second highest ranked goal for businesses over the next one to two years. The first- and third-highest ranked goals were acquiring new customers and acquiring new contracts, respectively.
A critical component to accessing capital is having current financial statements available as doing so increases a business’ likelihood of securing loans or assistance from government programs. However, the report shows that only half of the businesses surveyed reported regularly having up-to-date financial statements on hand. A higher share of businesses that engaged with BSOs reported having current financial statements available compared to those not engaged.
“State of Micro and Small Businesses in the Detroit Region” outlines several key recommendations for how the business ecosystem can support small businesses and expand economic opportunities and activity throughout the region. Primarily, the report calls for BSOs, lenders and policy makers to consider ways in which these survey results can inform new and innovative ways to break down barriers to accessing affordable capital and supplying businesses with other resources they need.
The report also notes that there is an extensive list of BSOs doing important work for small businesses across the region already, but more must be done to make sure small businesses know about all the resources that exist and gaps in resources should continue to be filled. Understanding if businesses feel like they know how to find resources can help BSOs and other service providers determine if those resources exist, or if outreach strategies need to be adjusted to make sure businesses know about existing opportunities.
DFC will be hosting a webinar on Tuesday, June 25, at 2pm to offer further insights and discussion about the “State of Micro and Small Businesses in the Detroit Region” and answer community questions.
To view the “State of Micro and Small Businesses in the Detroit Region” and register for the webinar, visit www.detroitfuturecity.com.