On the way into the office today, I was listening to an NPR series part, Michigan’s Hybrid Economy: Helping the Entrepreneurs, and a few things struck me. The first is the comment that the auto industry has continued to suck local investors dry.
It’s frustrating, though understandable, that most Detroit-area investors have sought out auto. Of course, auto has been Detroit’s golden goose, but really? Are we that resistant to change that investors are still drawn to the money pit Detroit auto has become? I’m absolutely all for helping out my hometown’s bread-and-butter, of course I have family deeply embedded, but diversification is an absolute necessity if not inevitable.
The next striking point is the apparent lack of investors in Detroit at all.
And Michigan can win investment from those places, but it’s more likely they’d be forced to move.
The article suggests we can attract these investors with tax incentives. I must admit, I’ve felt the pull of out-of-state solutions to better achieve my ambition. It’s irritating our state has done little to better influence these investors. After all, as the report mentions, that is how the auto industry we know today began.
The strategy at this point is to target incentives to particular industries, like film or electric car batteries.
That means some entrepreneurs will get less help than others.
So, now that Detroit has learned from the mistake of putting all of its eggs in one auto industry basket, we’re rising from the ashes to put our eggs in only a few new industries. Hm. Really? Sure, we’ve shown some early successes with film and others–just like the auto industry did. But are we really about to take those same steps with no insurance (through diversification) for our future?
All I’m saying is it’d be nice if Michigan would stop pulling the seat from underneath itself and stop screwing over its own future.
What IF we let entreprenuers pursue their dreams and make the business cases for what they know best? What IF our focus was encouraging their development, whatever it may be, and supported the viable business cases that ensued?
The Single Business Tax was killing most of the entrepreneurial spirit in Michigan. Now that it is gone hopefully it’s replacement, the Michigan Business Tax, won’t be such a deterrent.
This isn’t totally a policy issue, it’s mostly a culture issue. After all, some of the states with hotbeds for entrepreneurs have extremely high taxes (California, Massachusetts, New York, et all). Policymakers want to make it look like a policy issue; after all, to a carpenter the solution will always be a hammer. Also, it’s easier politically to say “It’s the SBT/MBT” as well as it scores points. It’s part of the problem, but it’s not the whole problem by any stretch.
One of the things I’ve found these last years are that there are some REALLY supportive people; but most folks look at entrepreneurship as a bad thing. It’s in leaders, it’s in the average joe, it’s in my aunt who keeps sending me “job leads” not realizing that I have a job – and that’s my business. As an example, it blows her mind (and others) the idea of working for yourself.
Because we were so long a “work on the line” palce, the idea of ultimate security is very important; in some ways, that’s changing mainly because it’s gone and the great lie around that (that you never have security, and you must use your own wits to truly succeed) has been exposed.
We’re going to be way better off after this shakeout than before it. Hopefully, necessity wakes up our leaders to a host of issues.
Tax breaks for entrepreneurs would be a nice start!
Almost all of my business deals with people outside of Michigan; I find it tiring how often I hear “Oh, you’re in DETROIT?” I make it a point to let people know that I am proud to work from here and that it is a great place to conduct business. All too often I hear people apologizing about or explaining why they’re in Michigan; “oh, my family is here!” etc. I feel that, besides actual capital investment, it would be nice for entrepreneurs and small business owners to band together and let everyone know that conducting business in Michigan is a good thing. Call it emotional investment. We need that too.
Wow. You’ve made your point very clear, and I think you’re right. Michigan needs investment, and not just in established “stuff” we’ve already done.
Jeremiah, in the past two years I’ve spent in Greenville, the mentality is still the same — a job on the line is much more secure than one in your spare bedroom. We have a solid movement of freelancers and independent practitioners, but we’re always going up against more formal “companies.”
I think the change is happening slowly. We just can’t give up the drumbeat. I think you’re right that the necessity has exposed itself. Time for us all to push harder??
Thank you for the thoughtful comments. Keep them coming. You guys are making great points.
I like the differentiation between political vs cultural expectations.
There is another layer I see to the onion of culture which Jeremiah mentioned. It seems that some business to business small business owners in Detroit and Michigan face harsher judgment from clients located outside the area. It just seems that we are sometimes held to a more strict standard. I would say it’s because of a bad regional reputation if I had to guess. On the other hand, in my online retail business, we have been seeing more sympathy buys the past year, but those only go so far, and aren’t sustainable.
Has anyone else experienced such realities, or is that off base?
Shauna,
Great article! State government has spent money (21st century jobs fund) but they made the mistake of trying to support industries of the future, instead of merely backing the best ideas, regardless of industry.
You should check out the recent research that Detroit Renaissance has done, they have a firm grasp of both the problem and the solution. Unfortunately no one in Lansing is listening to them because it doesn’t fit their pre-conceived notions.
Shauna,
Well said! I wish more entrepreneurs would publicly voice their opinions regarding doing business in Michigan. I have been in business here for 21 years and often felt like a second-class citizen, especially in financial circles. Oh, you would like a business loan or line of credit – well we need your personal guarantee even though your business has been profitable for several years. Oh, you would like a mortgage and your SELF-EMPLOYED. We need your last three years’ tax returns and financial statements. If you had a JOB, we would only need a check stub or W-2.
Finding assistance for non-technical, non-healthcare, non-automotive businesses has been very difficult, yet there are a lot more of these “invisible” businesses, both startups and existing, than there are the glamor ones. Besides, who has the JOB security today?
If you’re interested in additional perspectives, the conversation was continued: http://www.detroityes.com/mb/showthread.php?t=1120
I’m not sure exactly how to respond to Detroit Yes comments on their site, so here’s the clarification:
The MI government is providing tax breaks to industry-specific initiatives, such as Film. Rather than ONLY inspiring one or a few verticals, why not encourage innovation through entrepreneurship?