A call to action begs for change in troubled times

July 6, 2009
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The Business Journal focuses on small business issues in this edition but the most grave of those issues are unreported — not for lack of small businesses but for lack of state and federal understanding of what is happening to “the backbone” of the largest source of employment in this state and nation.

As reported, the number of businesses registered with the Kent County Clerk’s office declined 7 percent between 2007 and 2008. Those would-be entrepreneurs who register business names or partnerships also have continued to plummet. On the national level, commercial bankruptcy filings are up 52 percent in the first five months of this year.

Meanwhile state and federal politicians are clamoring for new entrepreneurs, even quickly establishing training centers, listing business mentors and providing counsel in marketing, finance and legal issues.

While the Business Journal supports those essential services to existing and start-up companies, we also note those politicians are waiting to bind them hand and foot.

—The legislators off on paid vacation for their “summer break” have let stand the Michigan Business Tax, six months after promises of at least amending the grossly complex and inhibiting replacement for the former Single Business Tax. The MBT hammer is poised over every business, and is especially brutal on the bottom line of small businesses.

—Last week the Michigan Economic Development Corp. responded to the Detroit News that venture capital and private equity firms are indeed taking too long to invest in Michigan companies. The Michigan 21st Century Investment Fund was established three years ago with Michigan tobacco settlement revenue. Those “investors” have parted with $35 million to about 12 Michigan companies, from a fund of $109 million. The managing director of the 21st Century Fund told the News the investment firms were being “prudent.” It is important to note that the National Federation of Independent Business reported that bankruptcies are in part due to increasing difficulties for businesses to receive loans, or keep credit lines due to the world financial crisis, and despite federal bailout of financial institutions. The NFIB noted the statistic was the highest reported since the 1980-81 recession.

—Lack of venture capital in Michigan has been cited over and again for more than a decade. The Business Journal notes its impact in reporting this week, especially in regard to second-stage funding.

—Grand Valley State University Seidman School of Business this spring used “patents filed” as a measure of entrepreneurial activity in the West Michigan area. The lack thereof leads to the study conclusion that entrepreneurial activity here is demonstrably down. If the measure of entrepreneurship is in products or processes developed, this is a state and a country dependent upon manufacturing. But this is the only “industrialized” country that does not recognize manufacturing as the wheels of the economy, assigning such business to “commerce,” rather than a department of manufacturing. Service businesses from restaurants to law firms and financial institutions are certainly learning that an economy devoid of making something is devoid of profit. The state of Michigan, the one-time home of the world’s largest automakers, also is devoid of such policies of preference.

The issues are grave, and business owners of every phase and size are threatened. It is indeed a call to action.

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