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Census Bureau service provides timely updates on business startups

Census Bureau service provides timely updates on business startups

Florida has seen unprecedented growth during the past two years in the number of new business starts. In 2020, more than 495,000 new applications were filed to start a new business — up 26.8% from the previous year. While these were staggering numbers, the pace continued at the same robust rate in 2021. Last year, there were more than 632,000 new business applications [another 27% increase year-over-year]. 

These same trends were happening across the entire nation, with new business creation booming in most states. Peer states, like New York, California and Texas, were also experiencing tremendous growth in new businesses, but none had growth as robust as Florida. As one of our partners, the Florida Chamber of Commerce, shared last year, Florida has been the No. 1 state for new business starts for the past two years. 

The 2021 county-level data was just released June 23. The county-level numbers are also used to populate county and regional policymakers dashboards.

U.S. CENSUS BUREAU

U.S. Census Bureau

Business applications are easier to track and compare due to the launch of a standard data product by the U.S. Census Bureau. The Business Formation Statistics data series provides timely information on new business applications and formations in the United States. There are many perks of using the BFS as a real-time indicator for tracking the business environment, including that it is available at the national, regional, and state levels. However, the strongest asset of the data series is that it is available weekly, meaning you can regularly track where your state is compared to the previous year.

FL new businesses

Moreover, the data series tracks different types of applications. The overall application number is benchmarked against high-propensity applications. This group includes those that are from some key industry sectors, corporations, those with planned wages, and those that are hiring. All of the other sub-types of business applications are included in the overall business applications number. Examining it this way confirms that the majority of business growth is in those that are going into business for themselves as a non-employer or a sole proprietorship. The overall business number for our state reflects that trend as well — 2.4 million of 2.8 million businesses are non-employers. 

BFS are also available by county, but not in real time. The 2021 county-level data was just released June 23. The county-level numbers are also used to populate county and regional policymakers dashboards.

Last year, aspiring entrepreneurs were about 19% of the Florida SBDC Network’s clients, and startups [those in business less than three years] were about 30% of its clients. To some, that market segment distribution of clients may be surprising. After all, established businesses have been dealing with various external pressures like the pandemic, rising operating costs, supply chain and labor shortages, and now inflation. However, the flip side of the Great Resignation has been that advancing technology and cultural shifts in work-life balance have fostered a fertile ground for aspiring entrepreneurs. Ultimately, this means that the demand for Florida SBDC Network services is extremely high from all market segments of businesses and will likely continue to be throughout the year. 

Pulling together this data for the network, the Florida small business community and our partners through dashboards can provide a variety of insightful relationships, including where growth is happening most in earnest, how industries are growing throughout the state and how marketing teams can target these new entities most effectively. Florida might rank third in population, but it is proving to be No. 1 for businesses.

 

See the original article in the print publication

Treasure Coast Business is a news service and magazine published in print, via e-newsletter and online at tcbusiness.com by Indian River Media Group. For more information or to report news email [email protected]

Oct. 14, 2022|

Do your homework before buying an existing small business

Do your homework before buying an existing small business

BY NANCY DAHLBERG AND SUSAN GUILLORY

Do you dream of owning your own business? There’s more than one way to make this dream come true. Some entrepreneurs launch a business from scratch, while others buy an existing business. There are certainly advantages to buying an established business, but is it the right move for you? Let’s find out.

Pros and Cons of Buying an Established Business 

If the idea of starting a new business isn’t your cup of tea, you might consider becoming the new owner of an existing business. Let’s look at the benefits and drawbacks of doing so.

Pros

An established business has done the hard work of setting up, establishing customers and generating revenue, so you will have less work to do. Contrast this to launching a startup, which will require a lot of capital upfront, as well as a lot of strategies and planning to be a success.

Another benefit is that you can have a clear understanding of what sort of revenues you can expect. Smart business buyers ask to see their accounting. Looking at the business’ financial statements for the last three to five years, such as cash flow statements, balance sheets, profit and loss statements, and personal and business tax returns can show how financially healthy the business is and has been.

Cons 

On the other hand, you may not be able to find the type of business you are interested in for sale or at a price you can afford.

You may also inherit liabilities like debt from the owner, which can add to the cost of buying a business. In addition, you may not be aware of any issues with staff, suppliers, location or zoning until you take over ownership and see for yourself.

Consider why this person is selling the business. Is it because it’s flailing and they want to get out before the ship sinks? You don’t want to be the one to go down with the ship.

What to Consider Before Buying a Business

If you are considering buying a business, here are some things to consider.

What’s the Real Story?

It’s important to consider why small business owners sell their businesses. If they’re planning to retire, that’s one thing. However, if they have racked up debt and cannot afford to run the business, then that becomes your problem.

Find out as much as you can about the business. Don’t just look at the balance sheet; talk to employees to see how they like the company and how it’s run. Examine equipment to see what kind of shape it’s in.

What Will it Cost?

The purchase price is just one expense you’ll have in buying an existing business. If equipment is outdated, you may soon need to replace it. In addition, consider that some employees might leave when you take ownership, so you may need to invest in hiring new ones.

Also, consider other fees or licenses you may need to transfer or get in your name as a new license. Review the requirements for business licensing in your state so you know those costs ahead of time and can ensure you have the cash flow to cover all these expenses.

Is There Any Debt?

If the business has outstanding loans or other liabilities, what are they, and will you be responsible for paying them off? You may be able to negotiate this as part of the sale agreement so that you’re not saddled with debt, which may start you off on the wrong foot when it comes to building business credit.

What Work Needs to be Done?

You may be able to step into this business as a turnkey operation and do nothing more than put your name on your office door. Or you might have major renovations, hiring, training or purchases to make. Consider your new ownership as an opportunity to make design improvements if the location you’re buying is run down or in need of a coat of paint. A few cosmetic tweaks can communicate to customers that there’s a new owner eager to serve them well.

Do You Need Help?

You certainly can buy a new business but it may be helpful to hire a business broker. They know how to find the kind of business you’re looking for, and can help with due diligence and the negotiation process.

How to Buy an Existing Business

Now let’s look at the steps for how to buy a business.

Step 1: Do Your Due Diligence

It is your responsibility to learn as much as you can about the business. That means carefully analyzing financial records and tax returns or having a CPA or a consultant do it if you are not clear about what the owner discloses about the business’ financial health. You need to look at all the assets including intellectual property and be aware of all liabilities.

Also, check its credit history because you will be inheriting it. If the owner did not pay any outstanding bills, it will be reflected in the business credit scores and may affect your ability to secure future financing.

Step 2: Review the Business Plan

You’ll want to know as much as possible about business operations, so if the company has a business plan, ask to see it. This can give you insight into the previous owner’s vision for the company and you can see how well it is aligned with where the business is.

Step 3: Conduct a Business Valuation

The owner will have given you the sale price, but now it is up to you to do a business valuation to see how accurate that price is with the market value of the business. A business valuation should include both tangible and intangible assets, including real estate, monthly retainers, accounts receivable and debts.

A business broker, accountant or business consultant like Michael Bernard can help with these calculations. Ultimately, you’re trying to determine whether, at the asking price, you would be able to see a solid return on investment within a few years.

Step 4: Give Your Letter of Intent

This letter states your intent to purchase the business, though you can opt out if you decide it is not the right business. Some business owners won’t release tax returns and other financial information until you give them a letter of intent.

Step 5: Get Your Financing Together

We’ll cover this more in-depth in the next section, but before you can buy a business, you need to ensure you have enough cash to cover not only the sale price but also those costs you’ve calculated. If you do not have enough cash you may need to take out a small business loan.

Step 6: Sign on the Dotted Line

Sign the required legal documents to seal the deal. Once both parties have signed, the business is yours.

Financing Options for Buying a Business

Term Loan 

Banks and online lenders are willing to finance a business acquisition, if you qualify. You will need good to excellent credit for the low-interest rates.

SBA Loan

Another option is a loan backed by the Small Business Administration. These also offer low rates for those who qualify.

Seller Financing 

Some sellers, particularly those who are motivated to sell, may be willing to finance the deal. If you don’t qualify for a low-interest loan, this may be a good option. You may be asked to provide a down payment based on the asking price and then make monthly payments for a predetermined period of time.

Find the Business That’s Right for You 

Finding the right business that fits your needs and fulfills your dream will take time, but if you do your due diligence, you have the potential to build on top of a well-established business with your own unique flair.

 

See the original article in the print publication

Treasure Coast Business is a news service and magazine published in print, via e-newsletter and online at tcbusiness.com by Indian River Media Group. For more information or to report news email [email protected]

Oct. 14, 2022|

TCMA- Fall 2022

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See the original article in the print publication

Treasure Coast Business is a news service and magazine published in print, via e-newsletter and online at tcbusiness.com by Indian River Magazine Inc. For more information or to report news email [email protected]

Oct. 12, 2022|

Modern-day land rush

Modern-day land rush

Food service distributor Cheney Brothers

High demand has led to record prices for land on which to build huge warehouses and distribution centers in the Treasure Coast. At Legacy Park in Port St. Lucie, more than 5 million square feet are developed, or soon will be, eventually employing more than 3,000. Food service distributor Cheney Brothers held a groundbreaking in April for its distribution center and food-service warehouse. CITY OF PORT ST. LUCIE

Region experiencing a boom in industrial land development

BY BERNIE WOODALL

There is a land rush like no one has ever seen for large plots ripe for industrial development on the Treasure Coast.

Jeff Chamberlin is one of the most active real estate professionals who deal in the large parcels in high demand mostly west of the heavily populated areas.

Chamberlin thinks of the 1920s political pitch promising a “chicken in every pot” as a sign of prosperity when he thinks of this industrial boom.

“Here on the Treasure Coast, we’re going to get a million-square-foot warehouse at every I-95 interchange,” Chamberlin, president of SLC Commercial, said.

Chamberlin’s firm brokered the land sale for the Amazon distribution warehouse, which Amazon calls a fulfillment center, on 110 acres at Midway Business Park on West Midway Road near Interstate 95. 

Midway and I-95 is just one of the areas being developed for industrial sites. Others include the Kings Highway corridor near the Orange Avenue [State Road 68] interchange with I-95 and Legacy Park at Tradition in Port St. Lucie at Becker Road and I-95.

There is also a booming area for industry between the Treasure Coast International Airport and Kings Highway, where 37 acres recently sold for $5.2 million in a deal brokered by Coldwell Banker Commercial Paradise.

SLOW START IN THE ’80S

One of the major companies at Legacy Park is FedEx

One of the major companies at Legacy Park is FedEx. The company’s distribution center is shown under construction in October 2021. Amazon is at Legacy, too. Legacy Park developer Sansone Group said it is a two-hour drive from 8 million people and a four-hour drive from 20 million people. CITY OF PORT ST. LUCIE

Lifelong St. Lucie County resident Hoyt C. Murphy Jr., a Realtor with the firm, said the promise of an industrial land boom is not new. It’s been around since the late 1980s when I-95 was completed from Miami to the Georgia state line. The completion of the interstate along with the confluence of it and Florida’s Turnpike in Fort Pierce made the area logistically alluring to industrial developers.

When his firm did the site sale for the Walmart Distribution Center on Jenkins Road in Fort Pierce nearly two decades ago, Murphy said he figured that a wave of similar sales was in the offing, but that didn’t happen.

“Then, in the past three years, it’s gone crazy,” Murphy said. “… well over 10 million square feet of industrial facilities are under construction or in the permitting process” in St. Lucie County.

The $5.2-million sale Murphy’s firm brokered was at an average of $140,000 an acre. Five years ago, a generous estimate of the value would have been $40,000 per acre, Murphy said.

Chamberlin says land values for large parcels good for industrial development are $150,000 to $200,000 per acre, up from $90,000 and less several years ago.

It’s the location, land price and the access to major highways that lures big companies from Amazon to FedEx to build in the region.

“You can reach 65% of the population in Florida within two to three hours” of St. Lucie County, said Pete Tesch, president of the St. Lucie Economic Development Center, which has been instrumental in the process of developing the large land parcels.

Tesch said the county and the Treasure Coast benefits by the growth of the overall Florida economy, which he says would be the 15th or 16th largest in the world if it were its own country.

industrial real estate developers, map

A half-dozen industrial real estate developers, all with multistate footprints, are working on seven St. Lucie County sites. Higher prices and fewer large parcels south of the Treasure Coast has pushed developers to Indian River, Martin and St. Lucie counties. ST. LUCIE ECONOMIC DEVELOPMENT COUNCIL

DELIVERING THE GOODS

There are precious few large parcels of land still open to industrial development in the more populated counties south of the Treasure Coast: Miami-Dade, Broward and Palm Beach. Those are also the three most heavily populated counties in the state to make up its largest consumer market.

When there are such parcels in the largest counties south of the Treasure Coast, the prices are much higher, said Chris Dzadovsky, St. Lucie County commissioner.

As the consumer market shifts to delivery-to-home purchases, there is more demand for massive warehouses and distribution centers, Chamberlin said.

 “This is all new territory for us,” Chamberlin said. “It’s the advent of distribution being the new retail. Delivery to your home.”

W. Lee Dobbins, a land-use attorney in St. Lucie County, said that rather than put a distribution warehouse in South Florida or Central Florida, it makes sense to locate on the Treasure Coast in order to serve both of those big markets. 

When city and county and economic development officials work to land large industrial facilities, they use code words to help identify them but keep their details secret until sales are closed.

Elijah Wooten Jr., business navigator for Port St. Lucie, said a Project Green and a Project Apron both call for 1-million-square-foot buildings north of the under-construction Amazon 1.1-million-square-foot distribution center in the Midway Business Center.

RIPE FOR DEVELOPMENT

Industrial land development is progressing on a smaller scale but is active in Indian River and Martin counties.

Phil Matson, community development director for Indian River County, said that there are about 9,000 acres of land for potential development in Fellsmere west of I-95 and north of State Road 60. And there is a 99-acre parcel ripe for development on Oslo Road and I-95 that was the former site of a state youthful offender prison.

There is major potential for industrial development on Oslo Road, in the southern part of the county, particularly once a new interchange at Oslo and I-95 opens in three years, Matson said. There is also a plan to improve Oslo Road from 58th Avenue to west of the interstate.

In northern Indian River County, an existing industrial park that is home to Triton Submarines has parcels available for development, Matson said.

In Fellsmere, there are several large land owners that have flirted with sales of large tracts, and some projects are in the planning stages, said Fellsmere City Manager Mark D. Mathes. Some of the acreage now devoted to citrus farming may become available, he said.

Land values are likely to continue to rise, and Fellsmere is located to take advantage of relatively low land prices and development expenses in an area close to growing Central Florida.

“If you want to get in, this is the time to get in. It’s about ready to take off,” Mathes said.

Chandler Bats

Not all companies coming to the Treasure Coast need huge warehouses. Chandler Bats, which makes wooden baseball bats for Aaron Judge of the New York Yankees as well as other Major League Baseball players, moved its headquarters and manufacturing plant from Pennsylvania to Port St. Lucie.
ST. LUCIE ECONOMIC DEVELOPMENT COUNCIL

JUST A MATTER OF TIME

Martin County Administrator Don Donaldson said that while there is industrial activity in the county, there are no 1-million-square-foot mega-warehouses going up or in the planning process. For now, the largest parcels are zoned for agriculture and do not allow for industrial development.

But Chamberlin says it’s a matter of time that pressure will build to create those huge buildings along I-95 in Martin County. It may take longer than in St. Lucie County, but Chamberlin says he still sees a million-square-foot warehouse at every I-95 interchange from the Palm Beach County line to Sebastian.

Frannie Hutchinson, St. Lucie County commissioner and lifelong resident of the county, said she has sought to bring smart development to the county in her 20 years as commissioner. 

She said that there was considerable interest in the county’s industrial land until the recession around 2008 quelled it for a decade or so.

“We have been discovered,” Hutchinson said. 

The type of industrial development happening will help keep taxes down for homeowners and create jobs.

“These huge buildings are going to generate a lot of taxes and they are not going to add to the traffic in town,” Chamberlin said.

However, Dzadovsky is aware of the burden that the growth might cause homeowners.

“We have tried to focus on taking the pressure off the homeowners and diversify our tax base,” he explained. “When you are too reliant on residential rooftops to pay for your infrastructure, it puts too much of a strain on homeowners.” 

 

See the original article in the print publication

Treasure Coast Business is a news service and magazine published in print, via e-newsletter and online at tcbusiness.com by Indian River Media Group. For more information or to report news email [email protected]

Oct. 12, 2022|