On Tuesday, the Flint & Genesee Economic Alliance released the findings of its 2021 Genesee County Small Business Analysis, which provides a comprehensive look at the state of the region’s small business community. The Economic Alliance in February commissioned the report – produced by the Ann Arbor-based research firm EntryPoint – to better understand the current challenges and opportunities facing local businesses and entrepreneurs as well as the issues that are unique to our community.
While there is much to salute in the report, including evidence of a vibrant, determined and expanding entrepreneurial culture, more must be done to cultivate this critically important sector of the local economy. The research firm focused its microscope on the county’s registered businesses with 25 full-time employees or fewer and average annual revenues of less than $10 million.
A chief area of concern identified in the report are the unmet capital needs of the area’s small businesses. Of the 350 businesses surveyed for the study, running out of operating cash is a leading cause of business failure, second only to the lack of a market for a business’ product or service. Also, 75 percent of small business owners anticipate needing additional outside funding to continue operating successfully.
Policymakers and economic development organizations, including the Economic Alliance and its partners, are continuing to devote resources toward improving access to the much-needed capital to sustain local small businesses.
Additionally, the report found that minority-owned small businesses need a strong foundation of resources, training, funding and support in the first few years of operation. This, in turn, would help increase the number of healthy businesses, building long-term opportunity and wealth in the region.
As it stands, 83 percent of minority-owned businesses in Genesee County are less than 15 years old and more than half have been in business for five years or less. According to the U.S. Bureau of Labor Statistics, about 50 percent of small businesses nationally fail within their first five years. Unfortunately, the numbers are even greater in Genesee County, where 67 percent of minority-owned businesses cease operations before their sixth year of business. Therefore, speeding support to new minority-owned businesses is vital.
Community support is also essential for small businesses, as we have seen from economic fallout of the COVID- 19 pandemic in 2020. For example, businesses in personal care (e.g., beauty salons, fitness centers), and arts, entertainment and recreation suffered some of the largest losses in net earnings – 45 percent and 72 percent, respectively – from pre-pandemic levels, according to the report.
This collapse of the local consumer market highlights the importance of shopping local. In fact, it is a need identified by small business owners who view “shop local” initiatives as “an effective and efficient way to build a resilient and vibrant local business community,” the report found.
That’s because money spent at local small businesses stays in the local economy at a higher percentage than money spent at chain retailers – 14 percent for chains versus 45 percent for locally owned, according to the American Independent Business Alliance. Small businesses contribute significantly to local job creation and donate more to local nonprofits and community causes. Shopping locally also supports the development of a unique, vibrant local culture.
This is just a sampling of the findings of the 2021 Genesee County Small Business Analysis. It contains much more information, which will help guide our economic development initiatives going forward for the benefit of Flint & Genesee.
In the meantime, I invite you to review the full report on our website at flintandgenesee.org.
Tim Herman is CEO of the Flint & Genesee Group.