As part of our yearlong project "The State of Small Business," Business News Daily plans to report on the small business environment in every state in America. In this installment, we asked a few of Florida's more than 2 million small business owners about the challenges and opportunities of operating in their state. Here's what they had to say.
Small business owners report generous tax benefits, access to several large markets, and ease of transportation by sea, air, and ground. Businesses in the Sunshine State also benefit from the thriving tourist industry, which brings potential customers in from out of state year-round. Florida boasted the country's fourth largest economy in 2014, totaling a gross domestic product of $838.9 billion. Its economic growth also outpaced the nation by half a point that year at 2.7 percent. Small business owners also overwhelmingly said they don't feel restricted by state regulations.
Entrepreneurs said recruiting the skilled labor they need remains difficult and that retaining customers can be a challenge in industries that cater to transient groups such as tourists. Some business owners also said they felt there was little guidance from the state when it came to complying with regulations, though the entrepreneurs we interviewed were nearly unanimous in saying the rules are not burdensome.
[See Business News Daily's complete coverage of the State of Small Business in the U.S.]
There's a reason Florida is called the Sunshine State; it's a thriving tourist hotspot. In 2014, the state attracted more than 98 million tourists, which generated more than $80 billion in economic activity, according to Visit Florida, the state's official travel planning organization. Through the first three quarters of 2015 tourism outpaced that record-breaking year by 5.5 percent.
Laura Haftel, owner of the central Florida-based children's boutique Tugboat and the Bird, said that prior to moving to their current location in Winter Park, Fla., her business was unable to harness the purchasing power of tourists.
"Moving to Park Avenue was a great move; we retained our loyal customers, but saw a real influx and uptick in the tourist business," Haftel said. "Tapping into that tourist base was really key for us."
For Rita Goldberg, founder of the British Swim School, the tourism industry indirectly benefits her business. While her swim lessons tend to attract residents, she said many were tourists first, and some have even become franchise owners.
"The more people who come here to visit, the more people who settle here," Goldberg said. "A lot of my franchising down here is from people from abroad. We appeal to people who want to make a life down here."
Florida is home to more than 20 million people living across more than 53,000 square miles of land. Large population centers are spread evenly throughout the Sunshine State, including in Miami, Orlando, Tampa, Jacksonville, and Tallahassee. The even distribution of Florida's largest cities offers economic opportunity to the surrounding areas as well, and population density remains nearly uniform along the coasts of both the Atlantic Ocean and the Gulf of Mexico, easily connecting the cities with more suburban areas.
Ronnie Dragoon, who owns Ben's Kosher Delicatessen Restaurant and Caterers, said the growing population coupled with tourism has been a big boost to business.
"It has been growing," Dragoon said. "I have seven units and [Boca Raton] is my highest grossing unit, because Florida is such a high tourist area and also because South Florida has been settled and resettled by northerners."
The continued draw of retirees from northern states ensures demand will continue grow, Sean Smallwood, founder and owner of law firm Sean Smallwood, P.A., said.
"With exploding population growth and retirees moving here in droves, the opportunity for small business owners to prosper in the Sunshine State is great for all different types of businesses," Smallwood said.
Even web-based businesses not bound by borders, like Candice Galek's swimwear dealer Bikini Luxe, are happy to zero in on local customer bases in cities like Miami despite their ability to reach out of state markets as well.
"In 2016, we plan on taking more advantage of the local economy," Galek said. "We are most concerned about focusing on our Miami clientele."
Every small business owner we spoke to cited favorable taxes as a big boon to doing business in Florida. For one, there is no personal income tax in the state. In addition, there's a cornucopia of tax benefits available to businesses in Florida. One such benefit is the Community Contribution Tax Credit, which allows any company that donates to an eligible community-based organization to take a credit of 50 percent of the donations against its corporate income tax up to $200,000 per year. The state's Department of Revenue maintains a list of the other available incentives.
"The small business climate is strong here," Stacia Pierce, a success and business coach, said. "There’s so many tax breaks and other incentives that encourage people to go into business for themselves."
The entrepreneurs who spoke to Business News Daily invariably praised the tax climate, with some even saying it gives them the opportunity to better compensate their employees.
"For the business climate here, as a whole, the obstacles are very low," Peter Wasmer, CEO of Chrome Capital, said. "We don't have a high tax problem that would preclude us from making positive decisions about benefits to employees, and that allows us to retain and attract talented employees."
"We have low taxes," Galek, of Bikini Luxe, said, adding that it makes the increasing minimum wage not just manageable, but a welcome change. "We have good morale, our employees are happy, and minimum wage is increasing, so that's exciting."
Robust transportation networks
Florida's vast transportation network makes both traveling for business and importing and exporting goods an easy task. With a comprehensive rail system, several international airports, and major seaports surrounding the state, there are plenty of opportunities for ingress and egress of both goods and people. Moreover, entrepreneurs said the local infrastructure is well-maintained and reliable.
Ricardo Villadiego, CEO of fraud prevention firm Easy Solutions, said that as an international operation, transportation opportunities are a top priority for his company. In Miami, Easy Solutions is able to nimbly manage its global business, particularly in South America, he said.
"We had a strong operation in Latin America, every country from Mexico down to Venezuela and Argentina," Villadiego said. "When you are trying to be a global company, you also need to be close to a major airport to connect you in one stop to every major city in the world. That's Miami. We can be anywhere in the world."
Wasmer, the CEO of Naples-based Chrome Capital, said the same is true for the Gulf Coast, where his company operates. Chrome Capital has a presence in 42 states, Wasmer said, so the ability to travel is key to their business.
"It's really easy with the Southwest International Airport just 35 minutes away," Wasmer said. "It's very convenient from a transportation perspective."
Baby K'tan, a company that sells baby products manufactured in Guatemala and China, relies heavily on access to the ports to bring their products to market.
"We benefit from being close to a very active port," CEO and Founder Isaac Wernick said. "That active port and its improvements facilitate the items we receive from our manufacturers in Guatemala and China."
A dearth of tech expertise
For companies looking for skilled technology employees, it can be difficult to find the right fit. Entrepreneurs in Florida's tech industry said that because the area is not traditionally associated with high-tech development, it can be difficult to attract talent from out of state, making recruiting tech employees highly competitive.
"Because we're in software development, the obstacles we face are recruiting related," Dickman, the project lead at NowCar, said. "Most people don't think of south Florida as being a tech hub. A lot of our potential employees don't look at the area as being techy."
Still, there is a sense that south Florida is transforming now. According to Villadiego, the CEO of Easy Solutions, the traditional view of Miami is shifting to include industries typically perceived as confined to Silicon Valley on the west coast.
"If you look at this area these days it is a lot different," Villadiego said. "People are realizing now that these companies are forming everywhere in the world, outside of the Silicon Valley area and even outside of the U.S."
"A lot of people describe the Tampa Bay area as the Silicon Valley of Florida," Cliff Sullivan, the former chairman of the Pinellas County SCORE chapter, said. "Between Tampa Bay and Orlando … it's quite exciting. We have a new wave in Tampa."
Retaining customers in tourist industries
Also problematic, at least for businesses that rely heavily on tourism, is cultivating repeat customers. Since the tourist population comes and goes, building brand loyalty can be nearly impossible for small businesses. Haftel, owner of Tugboat and the Bird, said she is working on launching an e-commerce component to try and overcome that obstacle.
"For several years, I would hear that people would come in and spend a lot of money and leave and I wouldn't have the opportunity to sell to them again," Haftel said. "One time shoppers can't help us once they leave, which is frustrating."
While Haftel is optimistic that launching her website will help court those big spenders whom live out of state, she said it took a lot of capital to do it right. Turning tourists into loyal customers, she said, can be an expensive and risky endeavor.
"The online business is a challenge, just the uncertainty of it," Haftel said. "We think the economy is coming back and the market is out there, but to make that jump was definitely a challenge."
Lack of guidance
Though small business owners don't feel constricted by the tax code or state regulations, that doesn't mean it's easy to navigate. Some entrepreneurs expressed difficulty learning the ins and outs at first, and said that state officials were only able to point them in the direction of government websites.
"It was a little bit difficult for us to figure out where we stood as an online only business. We had some miscommunication," Galek, owner of Bikini Luxe, said. "Taxes were a little confusing, too. You're really on your own."
Dragoon, owner of Ben's Delicatessen, said the best route for a business owner who is new to the area might be to rely on professionals who are familiar with the rules. For example, he ran into some difficulty when building his first restaurant, and had to pick the brains of contractors he hired to know whether he was on the right side of state law.
"I think the greatest challenges might be learning how to navigate the system and what the specific requirements are of each governmental jurisdiction when planning and building a restaurant," Dragoon said. "It is best – as I did when I first came to Florida – to use local talent, whether it is the architect, engineer, building expediters, local artisans, equipment manufacturers, et cetera."
Resources for small businesses in Florida
If you're a small business owner in Florida looking for resources to help you move forward, here are a few organizations you might want to learn more about.
SCORE's volunteer business professionals and expert mentors give counsel and guidance to entrepreneurs looking to start or expand their businesses. The services and workshops are entirely free and volunteer-driven.
"We are really able to help new businesses get a foothold. We have a lot of wonderful, wonderful resources," Sullivan, the former chair of the Pinellas County chapter, said.
Here are some of the SCORE chapters located in Florida.
U.S. Small Business Administration (SBA) District Offices
The U.S. SBA offers financing and grants, as well as consultations and counseling services. There are also opportunities to apply for federal government contracts through the SBA and avenues for obtaining assistance in the wake of natural disasters.
Florida Small Business Development Centers
Florida hosts more than a dozen development centers for small business. Each is dedicated to supporting the development and retention of small business, helping entrepreneurs do everything from craft business plans to navigate the state's tax code. You can find your region's small business development center at the link below.