Starting a New Small Business in Michigan

If you’re considering starting a new small business in Michigan, we’re here to guide you through the core steps necessary to generate an exciting and sustainable blueprint for success. The good news is that Michigan is a uniquely hospitable place to launch a business – with economic and cost-of-living features that can reduce your tax burden, keep expenses reasonable, and ensure the long-term growth of your new enterprise.

Starting a New Small Business in Michigan

Overall, Michigan ranks 12th in the nation in the 2022 State Business Tax Climate Index, registering in the top 20 for corporate, individual income, sales, and unemployment insurance tax rates. Michigan is also among the 11 most affordable states when accounting for home price, median household income, unemployment rates, and cost of living. Due in part to this ideal economic climate, as well as rising access to startup investment, U.S. Census Bureau statistics show that nearly 81% of Michigan startups remain active after their first year.

Formulate a Viable (and Compelling) Business Idea

Before committing to a new business idea, it’s important to reflect on your core motivations and skill sets. Of course, you want to determine the long-term financial viability of your business idea, but you also want to ensure that your idea aligns with what you would love to do long-term and what you find consistently purposeful. Your new business idea should also allow you to capitalize on your existing skills to contribute meaningfully to your community and broader society. Often, new entrepreneurs will ask simple but foundational questions like: “Is there a problem I (my business) can solve that will make others’ lives easier?”

If you feel confident in your new idea based on these reflections, it’s time to focus on the following:

  • Offering a product or service that is entirely new OR
  • Offering a product or service that is an improved, modified, or specialized version of what already exists

Although there are noteworthy exceptions, many new businesses land in this second category. In this case, it’s incredibly important to conduct market research to confirm trends in your given industry or field. We’ll explore the value of market research in the next section, including different types of research that can aid your long-term business planning.

As you explore the market or industry where you’ll be operating, this is also an ideal time to brainstorm for a creative business name that holds lasting value, captures the services or product(s) you’ll offer, and piques client interest through the name alone. You might list some preliminary branding ideas in this phase, as well.

Next, be sure to confirm through Google (and then the Michigan business entity database) that your business name is not already taken. You may need to generate a variation on your original idea, particularly as you establish your online presence: website domain registration, social media handles, etc. 

Create a Business Plan & Determine Startup Costs

A business plan lets you synthesize all of the key information related to your business’ “trajectory” from inception to future success. Although it’s a powerful touchstone for you to revisit once your business is up and running, it’s also an active promotional tool you can use to attract investors and other forms of financial support.

In addition to formulating an executive summary that includes your mission, vision, values and overall strategy, you’ll also want to concretely capture how your business solves problems for potential clients and offers a genuinely distinct product or service.

Returning to the topic of market research, your business plan should also showcase the range of market research you’ve conducted to confirm the viability and longevity of your business idea. Note that you can invest minimally or extensively in this process, whether it’s competitor research, industry research, B2C customer research, B2B customer research, or general market research. In general, you should be able to show how your business will occupy a unique and appealing position within a market to demonstrate the likelihood of success.

Other sections of your business plan should outline how your business will be structured – including staff and leadership configurations – as well as a description of the product or service you’ll offer, and a marketing plan that aligns with major insights from your market research.

In your Fundraising and Financial Planning sections, you have the opportunity to show not only what your business requires to operate and grow, but also how you will responsibly and strategically distribute the funds you receive. 

Register and Secure Financing for Your Business 

If your business is a corporation, LLC, or sole proprietorship operating under a name different than your legal name, you’ll need to register your business at the county and/or state level. In the process, you’ll need to acquire an employer identification number (EIN) and apply for all applicable licenses, permits, and forms of insurance. We also recommend establishing business banking and credit accounts at this stage.

In terms of financing, Michigan businesses can access SBA loans, business lines of credit, equipment financing options, as well as startup-specific funding opportunities like “angel investors'' and VC investors. These latter investors generally invest funds to help startups gain traction in the early phases of operations. VCs tend to invest large sums in exchange for greater influence in a business’ operations. With recent data showing that Michigan is considered the #1 emerging startup ecosystem, it’s an ideal time for Michigan-based entrepreneurial ventures to apply for funding from angel investors and VCs. 

Launch Your Business and Remain Legally Compliant with Workforce PayHub

Once you’ve started a business in Michigan, you’ll still need to manage payroll, timekeeping, human resources, and employee benefits, and take measures to remain legally compliant with municipal, state, and federal labor laws. At Workforce PayHub, we have solutions for all of your business needs. We’ve helped companies throughout Michigan, and nearly 40 other states, streamline administrative functions to focus on growing their business. Whether it's helping you complete necessary employee documents or simplify time and labor tracking, we’re here to support you in the early stages and beyond. Ready to start your business on the right track? Contact us today to start our collaboration.

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Eric Jones
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