Struggles of Michigan small businesses, and how health insurance agents can tackle them

Everyone has heard the whispers of a recession on the horizon, and small businesses across Michigan aren't exempt. According to a Small Business Association of Michigan (SBAM) survey published in April 2025, the potential economic recession is the top problem facing businesses, beating out inflation and labor issues. Despite these challenges, they're still prioritizing employee wellbeing. Health insurance agents are the secret weapon.

You understand better than anyone the need for valuable health benefits without tipping into the red. What must agents know about Michigan small businesses, and how can they help these businesses—and in turn, their own agencies--thrive?

Striking a balance

The economy is by far the single biggest concern for small businesses. Nearly half (48%) are taking steps to reduce overall expenses in preparation for a possible recession. But there is one place small businesses won’t cut corners: The overall wellbeing of their employees. Despite the clear desire to cut some expenses off the top, 67% report increasing wages over the past year.

The message is clear to health insurance agents. Employers are battening down the hatches financially, but they are not willing to do so at the expense of their employees. This delicate balancing act creates an opening for you to offer solutions that both control costs and deliver value.

The average Michigan-based small business

So what are small businesses like in Michigan?

• 86% have 50 employees or fewer
• 48% have just 1-10 employees
• Most commonly operate in professional services (23%), retail (19%), and construction (18%)
• 39% report annual gross sales between $250,001-$500,000
• 36% report gross sales between $500,001-$1,000,000

And the cherry on top is that 83% of these small businesses offer health insurance benefits to their employees. Their money is where their mouth is, and most are as willing to invest in their employees as they say. However, there's a concerning disconnect happening with the availability of these benefits and how these benefits are used.

The $3 trillion (yes, with a T) problem

Despite employers investing approximately $3 trillion in employee benefits nationally—with an average of $16,500 per employee on health benefits alone—these programs are dramatically underused and undervalued.

Here’s the facts:

• 25% of employees believe their overall benefits are worth $1,000 or less (again, the actual value is 16 times higher)
• Only 10% of workers accurately understand the value of their benefits
• Nearly half of employees can't explain core benefits like HSAs, FSAs, or 401(k)s
• 40% don't consider benefits part of their compensation at all

You might think the problem stems from a lack of benefit offerings to those employees, particularly those who are temporary workers. But in Michigan specifically, 77% of small businesses don't employ seasonal workers. They're investing in year-round staff who need comprehensive benefits education.

The benefits space has had phrases like "massive financial waste" hurled at it. But, that doesn’t jive with what employees say they want from their employer. Of course higher compensation was the top request (68%), but insurance benefits followed at 49%.

And on top of all that, many business owners are struggling with rising costs—54% report health insurance costs increased by 10-14% this past year alone.

Ancillary products aren’t exempted from this phenomena either. Supplemental products like accident insurance, hospital indemnity, and cancer plans are typically used by less than 30% of employees. So Michigan small business owners are paying for benefits their employees either don't understand or don't appreciate.

So it sounds like three moving parts are at play: employers in Michigan spend boatloads to support their employees, but their employees (who are requesting these benefits) aren’t taking advantage, and the costs are only getting worse. Yikes.

Enter the friendly neighborhood health insurance agent

As a health insurance agent in Michigan, you can grind these three moving parts to a halt. Here's how:

1. Listen First

With businesses primarily concerned about the economy, take time to understand each client's specific financial pressures before proposing solutions. Learn about their workforce composition, current benefit usage rates, and cost-saving priorities.

2. Customize Cost-Effective Coverage

Help clients find the right balance between comprehensive benefits and affordability. This might mean comparing options, adjusting plan designs, or introducing consumer-driven health plans paired with health savings accounts. Your expertise can help them reduce expenses without sacrificing quality.

3. Educate Relentlessly

Tackling that knowledge gap from the employee side will be a slow battle, but it’s your greatest opportunity to add value. Create simple educational materials that help employees understand how to use their benefits cost-effectively. Host digital workshops explaining how to maximize HSAs, distribute carrier materials on when to use telehealth services, or write a short email on how to locate in-network providers. Slow drip guides for voluntary benefits that translate insurance jargon into plain language and real-world scenarios. Or contact your field marketing organization (FMO)—they will have some tricks up their sleeves, too.

Remember, nearly three-quarters of employees stay with the same benefits year after year, even after major life changes. Your educational efforts help employees maximize their benefits while ensuring a full return on investment.

The market is waiting

The economic environment is uncertain right now. Small businesses need partners who understand the double edged sword businesses wield. You can’t support your employees if you don’t spend money, but can’t make money if you spend it all on your employees. By embodying both a cost-manager and an educational consultant, you can help small business owners transform their benefits programs from an administrative expense into a strategic tool for employee retention and financial efficiency.

The vast majority of Michigan businesses can benefit from you--and many are actively looking for ways to reduce expenses. Listen carefully, customize benefit solutions, and educate employees to ensure those benefits deliver their full value. Your owners will thank you now, and you can count on their business for years to come.