Research Paper on Small Businesses Thrive in Booming Economy

Introduction

The state of Florida has one of the biggest economies in the United States. The economic growth rate in Florida has been impressive, and it outpaced the combined growth rate in the United States. Small businesses form the backbone of the economy in Florida due to its conducive operating environment. Businesses in this state flourish well, thanks to the favorable business taxes that the state has. The best performing industries for small businesses in the state include hospitality services, tourism, healthcare, construction, and retail industries. The sunshine state of Florida is not only a great tourist attraction but also a great place to invest (Images, 2019). The CNBC ranked the state as number twelve when listing the best states to start businesses in 2019. All this put into consideration, the state of Florida has its competitive strengths, weaknesses, opportunities, and threats to attracting new businesses and industries. This paper will conduct a market analysis to evaluate the strengths, weaknesses, opportunities, and threats for entry of new businesses in the state of Florida.

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Market Analysis

The economic indicators for the state of Florida are encouraging, but there are still several dynamics that affect entry of new businesses. To fully comprehend these dynamics, a market analysis is necessary to identify the opportunities present and challenges that entrepreneurs face in Florida. The market analysis will discuss several dynamics such as taxes, cost of living, quality of life, education, real estate, infrastructure, international trade, crime, solar energy, among other factors that affect the state of Florida attracting new entrepreneurs. The several elements of market dynamics will be analyzed below:

Taxation in Florida

The state of Florida is a preferred destination for new businesses due to its overall low tax burden on corporates. The taxation policies in the state contribute to its attractiveness for entrepreneurs. Corporations operating in Florida are required to file an income tax return at the rate of 5.5 % (Cammenga, 2019). There exist several exemptions that tend to significantly lower the corporate tax rate. The tax rate is comparatively low in Florida as compared to other neighbouring states such as Georgia, Louisiana, Alabama, and Texas. Other states such as Missouri, North and South Carolina have lower tax rates when compared to Florida. The following graph shows how Florida compares to its neighbouring states in terms of corporate tax rates.

Figure 1. Showing how Florida compares with its neighbours in terms of tax rates.

The state of Florida is at a competitive advantage because of many factors. One of the factors is the pro-business tax policies. Florida is known as one of the states that are tax-friendly in the United States (Murphy, 2019). These policies make the state favorable to establish a business like the planning and growth of the business is at a competitive advantage. Florida is among the few states in the United States that has zero personal income tax, making it an attractive environment for pass-through businesses such as limited liability entities. The sales tax rate in Florida stands at 6 % for rented or purchased goods. The sales tax rate is not charged on necessities such as medicine and groceries. Business owners are attracted to relocate to Florida since it does not have nuisance and punitive business taxes that are applied in other states. Entrepreneurs and small business owners are moving into Florida to benefit from its tax advantages. S corporations are popular in Florida because the entrepreneurs are shielded from paying any income tax. The business owners are also shielded from various financial and legal risks that may arise while in operation. The tax benefit is an existing advantage of setting up new business in Florida as it results in huge financial savings.

Cost of Living

The cost of living is a crucial consideration for entrepreneurs when conducting market analysis in a State. The prices for basic amenities such as housing and food vary considerably across different states in the U.S. The state of Florida ranks as the 17th lowest state to live in terms of cost of living adjusted for income at $ 47,093 (Sauter, 2018). The cost of living in Florida remains more affordable to new business owners as compared to other major states across the country. The cost of living is significantly lower compared to other economic hubs such as New York, Chicago, and San Francisco. It is important for entrepreneurs to research local markets as there exist significant price fluctuations based on locality. Setting up new businesses tend to be more expensive in Miami than in other metropolitan localities such as Tampa Bay or Jacksonville (Uzialko, 2019). The relatively lower cost of living in Florida can act as motivating factor to lure entrepreneurs to plug into the growing economic landscape in the state at a reasonable cost.

Crime Rate

The crime rate in Florida is a worrying factor for entrepreneurs seeking to start new businesses in the state. The crime rate in the state is higher than the average crime levels across the country. According to the Statistica Research Department ranking (2018), Florida has a crime rate statistic of 408.0 violent crimes per 100,000 residents of the state's population. The murder rate is also high, with a statistic of 5.0 deaths per 100,000 people (Stebbins, 2019). The slightly higher violent crime rates are as a result of an unemployment rate of 3.6 % in the state. Security is a top consideration for entrepreneurs as they conduct market analysis. The slightly higher crime rates in Florida reduce the attractiveness of the state for investment and thus it is a threat to entry of new businesses.

Infrastructure

The state of Florida has an extensive infrastructure network that can appeal to entrepreneurs. The state boasts itself in having a modern multi-modal transport system comprising of international airports, shipping ports, highway, and railway networks and to top all that multiple hubs which ensure data transmission at very high speed across the globe. Florida enjoys worldwide connectivity as the state is interconnected to the world in almost every imaginable way. The modern ports and airports and the developing space industry enhance the state's global reach making it a crucial global economic hub for businesses. The state has elaborate internet connectivity that has enabled it to be recognized as a leading telecom hub in the world. The 'Network Access Point (NAP)' situated in Miami functions as a key switching station for regulating internet traffic emanating from all over the globe. The Florida Lambda Rail is a high-speed network that facilitates research and development efforts in the state (Enterprise Florida Inc., 2019). Additionally, the state prides itself in having an extensive wireless network that is fast and widely available. Improved infrastructure is a major motivation for entry of new businesses into the state of Florida.

Strategic Positioning Analysis

Florida has unique selling points that aid in attracting new businesses and industries. To begin with, the state has a huge population which offers a wide market base. The state is also home to 18.3 million people, with hundreds moving in every day (Ware, 2008). The market is huge since the state is a great tourist attraction and hence forming a strong and diverse customer base. The state of Florida also happens to have good weather that attracts new residents. The favorable business-friendly tax policy is also another factor that puts this state at an advantage in attracting new businesses and industries as compared to other states. All this put into consideration, the state of Florida would do with several strategies to ensure that it maintains a sustainable competitive advantage in attracting new businesses and industries.

Florida has a considerably great and developing presence in many front-line economic divisions. They include aviation, aerospace, Homeland Security & Defense, information technology, clean energy, and life sciences. Political and economic stability are also other factors that make Florida stand out amongst the best states to start and grow business in the United States. The first strategy to ensuring that the state gains and maintains its place at a competitive advantage would be to ensure all these areas are well taken care of to ensure they do not fall below expectations. If the front-line economic divisions maintain their place or better yet improve their efficiency, then the state is likely to sustain the businesses that are already in place as well as attract new ones.

The foundation for the growth of the state of Florida is based on the traditional industries, which are; tourism, agriculture, and military (Johnson, 2015). The second strategy that the leaders of the state out to put into place is venturing into other fields and industries that would be beneficial to residents. Venturing into new businesses ensures that the state of Florida creates more job opportunities for its population. It also increases the income for the government of the state and hence making it easy to come up with required development. When the government has a steady source of income from taxing diverse industries, developing infrastructure becomes easier and more possible.

Providing incentives for the industries and businesses that are being established acts as a motivator for entrepreneurs. Florida has amongst the most stringent rules for performance in the U.S. (Johnson, 2015). To ensure that the state maintains its place at a competitive advantage, the state should be willing to offer incentives to new and growing industries to encourage their growth. Failure to do this will result in the state being bypassed by other states that offer incentives to new businesses and industries. Investors are more likely to invest their money in a state that is more performance-friendly. Offering incentives to companies makes Florida one of these states. Incentives such as tax credits may seem unnecessary for a state that is already at a competitive advantage like Florida, but failing to offer incentives may disadvantage the state as there's a fierce competition of economic development amongst states in the United States.

Investing in information technology is another strategy that can be used to maintain and attract new businesses and industries. Leaders of the state of Florida should be prepared to invest in the division of information technology to keep the state at a competitive advantage. Information technology plays a vital role in all businesses and industries. All sorts of companies need information technology to conduct operations like accounting, advertising, marketing, among other things. Improving information technology will put the industries and businesses that are already in place at an advantage and also attract new investors to start industries and businesses. It is therefore wise to ensure efficiency in this area of the economy if the state is to keep and attract new businesses and industries.

Leaders should also ensure that they survey their market both locally and internationally. Understanding one's market is the key to prospering in businesses. Both political, social, and economic evaluations must be made priorities in ensuring improved business strategies. Understanding the market in terms of size and structure ensures that production is adjusted and also improved to fit the targeted market. When companies produce products with a good understanding of the market, they tend to make a maximum output out of their production. This, in turn, improves the economic status of the state of Florida. This is because when the output of companies increases, the government r...