A wholesome, vibrant small enterprise neighborhood is essential to the way forward for Genesee County
On Tuesday, the Flint & Genesee Economic Alliance released the results of their Genesee County Small Business Analysis 2021, which provides a comprehensive overview of the state of the region’s small businesses. The Business Alliance commissioned the report in February, produced by 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 be commended in the report, including evidence of a vibrant, determined and expanding corporate culture, more needs to be done to nurture 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 sales of less than $ 10 million.
A major area of concern identified in the report is the unmet capital needs of small businesses in the region. Of the 350 companies surveyed for the study, lack of working capital is a leading cause of business failure, second only to the lack of a market for a company’s products or services. Additionally, 75 percent of small business owners believe that they will need additional external funding to continue to operate successfully.
Policy makers and economic development organizations, including the Economic Alliance and its partners, continue to allocate resources to improve access to much-needed capital to support local small businesses.
The report also found that minority-owned small businesses need a solid foundation of resources, training, funding and support during their first few years of operation. This in turn would help increase the number of healthy businesses and build long-term opportunities and prosperity in the region.
Currently, 83 percent of minority owned businesses in Genesee County are under the age of 15, and more than half have been in business for five years or less. According to the US Bureau of Labor Statistics, about 50 percent of small businesses nationwide fail within the first five years. Unfortunately, the numbers are even bigger in Genesee County, where 67 percent of minority-owned businesses will cease operations before their sixth fiscal year. It is therefore crucial to accelerate support for new minority-owned businesses.
Community support is essential for small businesses as well, as we saw in the economic fallout from the COVID-19 pandemic in 2020. For example, personal care (e.g., beauty salons, fitness centers) and arts, entertainment and recreation companies suffered some of the largest net profit losses – 45 percent and 72 percent, respectively – at pre-pandemic levels, the report said.
This collapse in the local consumer market underscores the importance of local shopping. Indeed, this is being noted by small business owners who see “local shop initiatives” as “an effective and efficient way to build a resilient and vibrant local business community,” the report says.
That’s because the money spent in local small businesses stays in the local economy at a higher percentage than the money spent in retail chains – 14 percent for chains versus 45 percent for local businesses, according to the American Independent Business Alliance. Small businesses make a significant contribution to local job creation and donate more to local nonprofits and causes. Local shopping also supports the development of a unique, vibrant local culture.
This is just a selection of the results of the Genesee County Small Business Analysis 2021. It contains much more information that will aid us in our future economic development initiatives for the benefit of Flint & Genesee.
In the meantime, I invite you to read the full report on our website at flintandgenesee.org.
Tim Herman is the CEO of the Flint & Genesee Group.