On May 30, 2019, Endeavor Insight, with support from Knight Foundation, released the report, “Miami’s competitive advantages in entrepreneurship.” See the press release with more information here.
The goal of this report is to identify and highlight Greater Miami’s competitive advantages in entrepreneurship. This report is based on analyses of new data on more than 20,000 companies, and was conducted by Endeavor Insight thanks to the generous support of Knight Foundation and its staff. This research yielded four major conclusions.
- Greater Miami has grown rapidly in recent years, but its economy needs solutions to reduce its reliance on low-paying service jobs. Miami’s economy continues to lag behind other major cities.* Lower-paying service industries are more prevalent in Greater Miami than in the rest of the United States. Many local workers are also employed in industries that are projected to grow more slowly than the rest of the economy. If Miami is going to reach its economic potential, decision makers must reduce the prevalence of lower-paying service industries by generating more high-paying, knowledge-intensive jobs in growing sectors.
- The most prosperous U.S. cities provide examples of how Miami can build a stronger economic future by generating more larger, high-value, entrepreneurial companies. The U.S. cities with the highest incomes per capita and greatest productivity generate more of a specific type of local business: larger, high-value, entrepreneurial companies. These businesses bring a number of benefits to cities.
Larger: Companies that have grown to 50 or more employees — often referred to as “scaleups” — create the vast majority of jobs in U.S. metropolitan areas. They also pay higher wages, on average.
High-Value: Businesses in industries that generate greater productivity per employee are of high value to local communities. These companies generate larger proportions of knowledge-intensive jobs and also tend to draw in more revenues from outside their cities and regions.
Entrepreneurial: Businesses created by local entrepreneurs reinvest a greater share of their sales within their communities compared to branches of companies that are headquartered elsewhere.
Unfortunately, Greater Miami has a lower proportion of these companies than many other major metropolitan areas. If local leaders wish to bring the benefits of these businesses to the city, they should work to accomplish two objectives: (1) increase the number of new larger, high-value, entrepreneurial companies, and (2) support existing larger, high-value, entrepreneurial companies as they continue to grow.
3. The Miami area has a diverse set of competitive advantages in entrepreneurship that can be found in six types of local companies. Though Greater Miami has a relatively low number of larger, high-value, entrepreneurial companies, those that do exist in the city are much younger than the ones found in other major cities, on average. This indicates that Miami has significant potential to generate more of these valuable companies in the next five years.
Decision makers should support the growth of new, larger, entrepreneurial companies in all high-value sectors. However, Miami is fortunate to have six types of companies that make up the city’s specific competitive advantages in entrepreneurship. They are:
— Passenger Transit and Transportation Services Companies;
— Financial Intermediary Businesses;
— Consulting Firms;
— Pharmaceuticals and Medical Device Companies;
— Software and Software-Enabled Companies; and
— Advertising Firms.
Among these groups, Miami has as many as 2.9 times more larger, high-value, entrepreneurial companies than the rest of the country, relative to its population size. Almost all the industries in which these types of businesses operate are projected to increase employment and generate a greater-than-average share of knowledge-intensive jobs.
4. Entrepreneur-Led Economic Development can help Miami’s leaders to enhance competitive advantages in entrepreneurship and generate more high-paying jobs. If local decision makers wish to create an economy that is less dependent on slower-growing, lower-paying sectors, they should offer more targeted support for founders building larger, high-value, entrepreneurial companies. The recommendations at the end of this report outline an approach for entrepreneur-led economic development that puts these founders at the center of the local entrepreneurship community. These actions can help to create a new pillar of local economic development based on Miami’s competitive advantages in entrepreneurship.
The following pages of this report offer in-depth explanations of these findings, as well as detailed analyses based on data from thousands of businesses in the Miami area.
* The authors use “Miami” and “Greater Miami” synonymously to refer to the Miami–Fort Lauderdale–West Palm Beach, FL metropolitan statistical area throughout the study. This area consists of Miami-Dade, Broward, and Palm Beach counties as defined by the U.S. Census Bureau.