Michigan’s small and mid-sized businesses are facing mounting economic pressure as sales, hiring, and capital investment fall to record or near-record lows, according to the Q4 2025 Michigan Future Business Index (MFBI), released by Cinnaire in partnership with the Michigan Business Network.
The statewide survey of 500 small and mid-sized businesses finds that inflation, rising healthcare costs, tariffs, and economic uncertainty continue to weigh heavily on business confidence. Only 25 percent of respondents reported increased sales over the past six months—an all-time low for the index—while just 17 percent reported increased capital investment, also a record low.
“Michigan’s small businesses are incredibly resilient, but this data shows they are under real strain,” said Mark McDaniel, President and CEO of Cinnaire, who presented the findings. “With sales and investment at historic lows and optimism waning, we are at a crossroads. The choices policymakers make in the months ahead—particularly around healthcare costs, economic stability, and workforce support—will have a significant impact on whether small businesses can regain momentum.”
The MFBI also highlights healthcare costs as a growing challenge. Seven in ten businesses expect healthcare costs to rise in the next six months, with nearly one-third anticipating significant increases. At the same time, fewer employers are offering health insurance compared to a year ago, signaling increased pressure on both businesses and workers.
Despite ongoing challenges, the report identifies modest bright spots. Difficulty accessing qualified talent has eased slightly, and artificial intelligence and automation are increasingly viewed as having a positive impact on business operations.
“Inflation, tariffs, healthcare costs, and a reduction in demand are all creating significant drag on growth and sustainability in the business community. Uncertainty about the future is causing businesses to hold tight rather than move forward,” said Chris Holman, CEO/Founder of the Michigan Business Network. “Anticipation for the future is at its lowest ebb. Not a pretty picture!”
Looking ahead, projections for sales and profit growth continue to soften, and hiring expectations remain largely flat, raising concerns about the pace of recovery in 2026.
The Michigan Future Business Index is conducted quarterly and provides insight into the experiences and expectations of small and mid-sized businesses across the state.
Click here for the full Michigan Future Business Index.