Here Nina Lincoff of the South Florida Business Journal discusses to value of market research. In Entrepreneurship for Transitioning Miltary we discuss this important research in modules 1 and 2. Many veterans and military entrepreneurs spend too little time researching the market. Don't fall into that trap. Just like when you write an operations order you need to have the Situation Paragraph complete, you need to do the same in your business planning.
Lincoff writes---When Amy Angelo and her husband, Scott, were looking for the right neighborhood in which to open the flagship location of their coffee roaster and shop Oceana Coffee, they were searching for a market that had the right demographic mix and support system for a small business.
The Angelos had worked in the private yacht industry for seven years but eventually returned to South Florida, where Amy had spent some of her childhood. When they arrived, they noticed a gap in Palm Beach County’s coffee roasting and retail market. And it turned out the makeup of its residents was perfect for launching a high-end, gourmet roaster and coffee shop in 2011.
“What makes Palm Beach County – especially the northern end – so special is that the demographics are very good for the kind of product that we want to bring to market,” Amy said. “And … this community is very supportive of local businesses.”
New research reflects that. The South Florida region that consists of Palm Beach, Broward and Miami-Dade counties ranks No. 4 among 106 metros for small business, according to American City Business Journals’ 2017 Small Business Vitality survey.
And it’s not just South Florida. Six other Florida metros claim spots in the Top 25, led by Sarasota-Bradenton at No. 1. Similarly, five markets in California and three in Texas rank among the top metros for small business.
So, what is it about certain communities when it comes to small business? And what can other metros learn to encourage small business vitality in their backyards?
Florida, with certain metros like South Florida as standouts, has the right mix of population growth; small-business-friendly industries such as tourism and health care; government and business development support; and an innate entrepreneurial spirit that fosters small businesses. It also doesn’t hurt that there’s no state income tax.
“It’s a very business-friendly place, and that’s hard to quantify. It’s going to sound strange, but it’s just an animal spirit,” said Penny Pompei, chair of Palm Beach SCORE, an office of the national business counseling and development organization. “There are so many successful small businesses, and we don’t have a lot of major companies, so the economy has to run on small business.”
South Florida is also undeniably a hot spot for immigrants, and immigrants in the United States are 13 percent more likely to own a business than non-immigrants, according to the U.S. Small Business Administration.
American City Business Journals looked at 15 metrics to determine a metro’s Small Business Vitality rank. Factors like the number of small businesses per capita, private-sector jobs generated by small businesses, and change in population over three-year and one-year periods were combined to determine each metro’s rank. Florida’s top-ranking metros performed well across almost all metrics.
The lowest-ranking metros had a shrinking number of small businesses per capita and a decreasing population. That isn’t surprising, as increases in population are big drivers of small business.
“That’s one of the main components that Florida and South Florida have – a healthy rate of population growth, which creates a base whose aggregate demand is growing constantly,” said Mekael Teshome, assistant vice president and economist for PNC Financial Services Group in Pittsburgh.
For Mark Volchek, founding partner of Fort Lauderdale, Florida-based Las Olas Venture Capital, the constant influx of people into South Florida, coupled with a relative lack of large companies, is part of what drives the region’s entrepreneurial spirit.
“With less big business, and less traditional ‘big business jobs’ relative to the amount of people that are moving here, it pushes people to start startups,” Volchek said.
Las Olas Venture Capital, which largely invests in series A and late seed funding rounds, considers about 10 deals a week, and about half of those are Florida deals, Volchek said. Throughout Florida, more than 98 percent of the state's employers are defined as small businesses, according to the Florida Small Business Development Center Network.
“We’re a region of deal makers. We have a lot of people here that like to do business and make deals and make things happen. That kind of feeds off itself,” said Jacqueline Bueno Sousa, regional director of the FSBDC at Florida International University in Miami.
Certain business sectors can play effectively to small business support as well. While industries such as tourism, real estate and health care can have big business players, they also require a vast amount of ancillary services. Those services often are provided by small businesses.
“With several major metro areas … the more hospitals you need, the more infrastructure, the more restaurants,” said Stanley Jacobs Jr., a corporate attorney with global law firm Greenberg Traurig, working in South Florida. “The fact that there are a number of strong independent metro areas [in Florida] makes it a good environment for small business.”
While the Angelos have made their strides in South Florida — Amy was on her way to secure a lease for the brand’s third location late last month — there also are elements of their story that highlight where additional small business assistance opportunities could have been beneficial.
When the Angelos were looking at different spaces for their first location, they struggled to receive approval for a coffee roaster in a certain municipality. Coffee roasting was a foreign concept that seemed too much like a manufacturing process to nab approval in a retail space. So, the entrepreneurs looked elsewhere.
“That’s the thing,” Amy Angelo said. “Certain towns are definitely more friendly to small business.”