The SWOT Analysis of the Florida State

The state of Florida has one of the biggest economies in the United States. The economic growth rate in Florida has been impressive and has outpaced the average growth rate in the United States (Office, 2018). 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 (CNBC, 2019). 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.

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, infrastructure and crime 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 corporations (Uzialko, 2019). 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 are several exemptions that tend to significantly lower the corporate tax rate as well, such as the first $50,000 earned will be tax free (DePersio, 2019). The tax rate is moderately low in Florida when compared to other neighboring states such as Georgia at 5.75%, Louisiana up to 8% and Alabama at 6.5% (Cammenga, 2019). Other states such as Missouri, North and South Carolina have lower corporate tax rates which range from 2.5% to 6.25% when compared to Florida. The following graph shows how Florida compares to its neighboring states in terms of corporate tax rates.

Florida is known as one of the states that are tax-friendly (Murphy, 2019). Their policies make the state favorable not only to corporations and small businesses, but to settlers as well. 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 (Nolo, 2016) 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 (Florida, 2019). Business owners are attracted to relocate to Florida since it does not have nuisance and punitive business taxes that are applied in other states. S corporations are popular in Florida because the entrepreneurs are shielded from paying any income tax (DePersio, 2019). The business owners are also shielded from various financial and legal risks that may arise while in operation. The tax benefits are 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 (Uzialko,2019). It is important for entrepreneurs to research local markets as there are significant price variations based on locality. For example, 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 Florida 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 network infrastructure that can appeal to entrepreneurs. The state boasts itself in having a modern multi-modal transport system comprised of international airports, shipping ports, highways, railway networks and, to top all, multiple hubs which ensure data transmission at very high speed across the globe (Enterprise Florida Inc., 2019). Florida enjoys worldwide connectivity as the state is interconnected to the world in almost every imaginable way. The modern ports and airports as well as the developing space industry enhance the state’s global reach, making it a crucial global economic hub for businesses (Enterprise Florida Inc., 2019). 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 (Enterprise Florida Inc., 2019). The Florida LambdaRail is a high-speed network that facilitates research and development efforts in the state (Inbound, 2016). 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 which aids in 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 (Murphy, 2019). All this put into consideration, the state of Florida could 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 (Johnson, 2015). The first strategy to guaranteeing 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 should 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 hence making it easy to come up with necessary 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 (Ware, 2008). 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 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 (Hunter, 2015). 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 (Enterprise Florida Inc., 2019). 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.

Lastly, the leaders of the state of Florida should ensure that the education provided equips learners with skills that will help them with what they need to fit into the growing economy. Several changes happen within the environment that require an advanced and swift change in how skills are delivered and applied. Preparing learners for the ever-changing economy ensures that the state has a workforce that will last for a longer period. A dynamic economic landscape needs a workforce of employees who are prepared for change and who are equipped with requisite skills to keep up with the changes (Johnson, 2015). Preparing these learners is equal to promising current and potential investors that they are going to have enough workforce for their industries. This factor can also attract new businesses to the state thereby, keeping it at a competitive advantage.

Conclusion

The market analysis for the state of California has revealed several strengthens and weaknesses together with opportunities and threats for entry of new businesses. The pro-business taxation regime in Florida makes the state a favorable destination for numerous entrepreneurs who would wish to open businesses. The zero personal income tax rate is very attractive to investors since they are shielded from bearing any financial risks. The tax benefit is an existing advantage of setting up new business in Florida as it results in huge financial savings. The cost of living is relatively lower compared to other major business hubs thus making Florida a viable business state. The extensive infrastructure enhances the ease of doing business thus acting as a motivator to attract investors. On the downside, the significantly higher violent crime rates act as a deterrent to entrepreneurs. The state leadership needs to implement measures to curb the high crime rates to enhance security and safety of its residents.

It has taken a lot of effort for the state of Florida to get at its current position of being amongst the best states to establish new businesses and industries. Likewise, the state requires more effort to maintain this position and a greater effort to improve and attract even more investors. If all the strategies stated above are put into consideration, the state of Florida is likely to provide an environment that is more business-friendly hence attracting more investors and an equally larger market.

Executive Summary

The state of Florida has been constantly ranked amongst the best states in attracting new businesses. The state has good policies, developed infrastructure, economic and political stability, a good market, and a promising workforce. All these aspects put the state of Florida at a competitive advantage as compared to other states in the United States. A few strategies can, however, be put into place to ensure that this state remains at a competitive advantage. First, the state needs to ensure that there is an improvement in areas such as infrastructure, information technology, communication, and transport, to attract new investors. Improving them frequently could be an important aspect of ensuring sustainable development and better living standards of the people.

The state can also maintain a competitive advantage by providing incentives for new companies and businesses. This acts as a motivator for young investors. This aspect, if ignored, can lead to the state being bypassed by other states that offer incentives. One noticeable thing with new investors is coming up with new business ideas that increase competition in the industry. If the state accommodates new investors and their thrilling ideas, it would be an eye-opener to several aspects of doing business. Such liberal trade systems allow the State not only to improve but also compete against other advanced states across the country.

The state of Florida should also ensure they invest deeply into information technology. With the dynamic world of business, information technology plays a major role in the economy. A lot happens in information management, communication, online business, and computerized management have all contributed to better business methods. The state must allow investors in this field to come up with new ways that improve businesses. There may not be direct ways of allowing them to invest, but proper regulations on business protection and taxation could help.