Starting a business in Miami (or, for that matter, anywhere else) always has an uncertain outcome. However, enterpreneurship has found a way to thrive in less friendly environment than Florida is. After getting to Miami, you ask yourself what you should be doing next. This article offers some advice on starting a business in Miami.
1. Know the Florida tax rates
Florida is almost a tax haven in the middle of the USA. For years, Florida has enjoyed some of the lowest tax rates in the entire country. This means that business startups will have an easier time getting ahead. The State of Florida often offers some sort of financial or other incentive for business startups. There are also other, more specific incentives for certain industries. The costs of capital, land and labor are also lower than in, say, California or New York. Some benefits of Florida taxation system are:
- No income tax (aside from federal income tax);
- Zero estate or inheritance tax;
- No intangibles tax – this is espeically great for investors and investment firms;
- Sales tax is between 6% and 7.5% in some counties;
- Corporate income tax rate is 5.5%.
2. Decide the ownership structure
Are doing it alone? Is it a family business? Maybe a large group of individuals? These are several types of business entities which the federal law recognizes. If you’re starting alone, maybe sole proprietorship is the best type of business entity for you. Most starting businesses are, in fact, sole proprietorship. Unlike corporations and limited liability companies (LLC), there is no legal distinction between the business itself and the owner. Besides, you must file for a fictitious name, unless you want to work under your own name. There are also partnerships, but they are only good for some specific situations.
3. Know both local and state regulations
This is important for many reasons. There are two types of laws that you must obey if you wish to start a business in Florida. Those are federal and state laws. For example, there are certain restriction when it comes to naming your business – for a reason. Imagine the confusion that would happen if somebody starting a business in Miami named their business “FBI”! You should also apply for e-Verify to make sure that your employees actually have the right to work in the USA. The best thing you can do, however, is contact an attorney. The help you get is worth the cost.
4. Do some market research on the market trends in Florida
Competition isn’t anything new. It exists since time immemorial. The key question you seek to answer through market research is: “What do the customers want?” Market research will improve your business idea. Good areas that you can research are consumer psychology and market trends. Starting a business in Miami without previous research is a shot in the dark at best, and money loss at worst. There are some question you have to answer before starting a business in Miami:
- How big is the demand? That is, are there enough people that want your product?
- Market size: how many people would that be?
- Macroeconomy: what is the unemployment rate? GDP? Average wages?
- Location: how many potential customers will you reach?
- Saturation: how many other businesses are there with the same idea? If many, what can you do to make your idea better than theirs?
- Pricing: how much would the customers be willing to pay for these alternatives?
5. Make a business plan
I will stress immediately that there is no “right” or “wrong” business plan. You have to suit it to match the needs of your business. Actually, the “right” plan is the one that gets you what you want, be it customer loyalty, appreciation, or just plain old profit. There are traditional and lean business plans. Most business plans use a traditional business plan format. It is much larger, more in-depth and more complex than a lean business plan. Lean business plan only takes about one to two pages, so it is the bare minimum of what your business should actually be. There are some things you have to outline when making a business plan, such as:
- Revenue streams;
- Cost structure – will you minimize costs or maximize value? Maybe both? If so, how?;
- Contact and customer relations.
6. Calculate the costs of your startup business
You will have expenses long before you even make your first buck. This means that you will need to have some cash to start your business. If you do aren’t careful with cost calculation, your business could end with a foreclosure. Planning ahead is the key to starting a business in Miami. This means that you will need to have separate funds for things such as:
- Employee salaries;
- Lawyer and accountant;
- Office space and utilities;
- Market research and advertizing;
- Licence and permits;
- Website creation (you actually don’t have to make a website, but the free market penalizes such an act heavily);
- Insurance and utilities.
It may seem like a nightmare at first, and it certainly isn’t easy starting a business in Miami. However, once you’re past the initial stage, you will find yourself vying for customer’s affection without fear of getting stomped by the competition.
7. Finding a good funding source is key to starting a business in Miami!
This is maybe the most important piece on the list, namely because funding a company is always risky. However, there are some things you can do about that. Generally speaking, you could get a bank to fund your business. Another option are potential state and private investors. If you have an original idea, you may want to crowdfund your project. The downside of crowdfunding is that it is often slow, and the upside is that you are under no obligation to repay your funders should your idea tank. Most businesses turn to the Small Business Administration (SBA) for loans. If you have some money, but not quite enough, you should ask for a small loan under favorable conditions.