1. Michigan Future Business Index
June 2016
Including Partial Current Data
Chris Holman
President
Michigan Business Network

2. Michigan Future Business Index
Survey of 636 small to medium-sized businesses
Mixed-mode survey, conducted online and by phone
Commissioned by Accident Fund & Michigan Business Network
Conducted by ROI Insight
May 3 through June 3, 2016
Margin of Error: ± 3.9% (95% Degree of Confidence)

3. Michigan Future Business Index
Current Survey in the field
200 completed surveys so far
Will run through November 2016

4. Key Themes: June MFBI
Small businesses were in a positive holding pattern in June. Growth had slowed, overall sales and profits remained strong with little sign of a decline.
In December of 2015 respondents said the second half of 2015 was the most profitable in the history of the MFBI and in June they said profits largely stayed steady.
Sales, hiring and wages remain strong since December.
Finding talent, managing that growth and healthcare costs remain as significant challenges

5. The Last Six Months: June MFBI
Growth in sales and profits remain strong since December
After hitting new record highs in December, all growth indicators have stayed strong.
Few say sales, profits, wages and hiring are declining.

6. Trending The Indicators: June

7. The Last Six Months: Current Partial Data
Sales up one point to 41%
Hiring up four points to 29%
Wage increases tick down slightly by 2 points to 40%
Profits up four points to 34%
Investments up 7 points to 32%

8. Satisfaction with Economy: June
In June, there was a slight decline in satisfaction with the state economy, but it remained very positive when compared to one year prior.
Only about 3 in 10 were dissatisfied with the economy (32%)
Satisfaction was strong across the state
Northern Lower Michigan market rebounded from lowest satisfaction in December to highest in June

9. Satisfaction with Economy: June As it Affects Your Business

10. Satisfaction with Economy: Partial Current Data
Slight decline in satisfaction: down three points to 63%
Dissatisfaction up five points to 37%

11. Profit Margin Expectations: June
While there was a slight pullback in optimism for future profit margins, it remained strong.
More than one-third expected an improved bottom line this year
Fewer than one-in-five expected a worsening bottom line
More than 40% believed their profit margins would stay the same, after reaching a record high in December
Optimism remained strongest among new businesses and those in the business services sector

12. Bottom Line In Next 6 Months: June

13. Profit Margin Expectations: Partial Current Data
41% now expect their bottom line to improve, up 6%
25% expect a worsening bottom line, also up 6%
29% expect their bottom line to stay the same, down 12%

14. Greatest Challenges To Business: June
“Keeping/attracting good employees” continued to outpace other issues as the greatest challenge to doing business, dropping slightly from 22% in December to 18% in June – 2 points higher than the previous June
“Managing growth” remained the second biggest challenge – up from 11% in December to 12% in June
“Economy” mentions up from 6% in Dec to 10% in June
“Government Regulations” remained at 7%
“Finding New Customers” mentions were up to 8% in June from 6% in December
Keeping and attracting qualified workers is strongest in the Manufacturing and Construction sectors
Managing growth is strongest in the Business and Professional services sector

15. Top Reasons for Optimism: June
“Business is growing” (14%) – remaining steady
“Economy is improving” (12%) – up 2% from December
“Great staff” (10%) – up 2% from December
“Demand for products/services” (5%) – down 4%
“More opportunities” (7%) – no change
“Have a good product/service” (5%) – down 1%
“Sales are up” (5%) – down 1%
“New customers” (5%) – up 1%

16. Projected Sales and Profits: June
Expectations for sales and profits remained largely positive:
Increased sales: 60%
Increased profits: 54%
Expectations for decreases in sales and profits continue to drop
Expectations for increased sales were highest in West Michigan (66%) and Northern Lower Michigan (65%)
Expectations for increased profits were highest in Mid-Michigan (61%) and West Michigan (56%)

17. Projected Sales: June

18. Projected Profits: June

19. Projected Sales and Profits: Partial Current Data
Expectations for sales and profits continue to improve:
Increased sales: up two points to 62%
Increased profits: up two points to 56%

20. Projected Hiring Trends: June
Hiring projections remained positive
34% said they planned to hire more over the following six months, down from a record high (40%) in December.
However, a majority (57%) were saying they would maintain staff at current levels
Projected layoffs remained low (4%), unchanged for over a year
Respondents in Northern Lower Michigan were most likely to hire (44%).
The demand for workers was strongest in business and professional services (42%)

21. Projected Hiring Trends

22. Projected Hiring Trends: Current Partial Data
Hiring projections improve
37% say they plan to hire in the next six months, up three points since June
49% will maintain staff levels, down eight points
6% say they plan layoffs, up two points

23. Job Candidate Availability: June
After a continued upward trend of businesses indicating difficulty with filling job openings, we saw that number drop from 49% in December to 45% in June.
Lower than the previous June (47%)
Was at only 15% in October 2011
56% of those actively searching for talent were having difficulty, which was down from 63% in December
65% of those hiring say the lack of qualified applicants was the primary challenge, four points lower than a year prior.
Positions remain open, filled with less-qualified candidates or employers retrained employees to fill new roles

24. Job Candidate Availability: Partial Current Data
54% now indicate they are still having difficulty filling job openings, up nine points
56% of those hiring say the lack of qualified applicants is the primary challenge, nine points lower than June.
Over one-third now say their aren’t enough candidates applying overall

25. Projected Wage Increases: June
After projections for wage increases reached a new high in December, we saw a seven-point drop to 35% in June
Most (61%) said they would keep wages unchanged
The percentage of those planning wage decreases remained very low at only 1%
Projections for wage increases were strongest in healthcare (37%) and manufacturing/construction (37%) sectors

26. Projected Wage Increases: June

27. Projected Wage Increases: Partial Current Data
39% now say they plan to increase wages, up five points from June
Most (51%) continue to say they will keep wages steady
Not one (0%) respondent plans to decrease wages

28. Evidence of Benefit Cuts: Current Partial Data
7% say they will decrease benefits
Up from 4% in June
31% say they will not offer healthcare benefits to their employees
Up from 18% in June

29. Projected Investments: June
63% planned to invest in employee training – up from 61% June 2015
Continued to retrain employees to fill open positions
27% planned to invest in office equipment – down from 37% in December
50% planned to invest in advertising – down from 59% in December

30. Projected Investments: Partial Current Data
69% now plan to invest in employee training – up six points since June
30% plan to invest in office equipment – up three points since June
61% plan to invest in advertising – up 11 points since June

31. Michigan Job Opportunities Remain Strong: June
After some seasonal retractions in hiring needs, Michigan remained a strong area for job seekers in June and still does today
Small businesses continue to make investments in hiring, wages, employee training and equipment/furniture
Finding workers remains a significant challenge, but there are also signs that increasing healthcare costs are creating additional pressure

32. Business Remains Optimistic
Small businesses continue to expect growth in profit margins along with higher projections for increased sales and investments
More than two-thirds believe Michigan is a great place to do business 7 in 10 say we have a fair tax system.
Over one-third plan an expansion of their business with a new product line or service.
There has been consistent growth in this area over the past three years