Planning for Customers by the Numbers
BY Tim Berry
As an essential first step to writing a business plan, you should have a good idea of how many potential customers there are.
Most business plans contain an analysis of potential customers. The way you find that out depends on your type of business. For example, a retail shoe store needs to know about individuals living in a local area, a graphic design firm needs to know about local businesses, and a national catalog needs to know about households and companies in an entire nation.
Good sources depend on what you need. Government and commercial statistics are usually more than enough, but for some plans you may end up purchasing information from professional publishers or contract researchers.
For general demographic data about a local area, if you have no easier source, ask the reference desk at a local library. A local university library is even better, particularly a business library. Chambers of Commerce usually have general information about a local market. In the United States, there is the U.S. Census Bureau. Nowadays the quickest route to the Census Bureau is its Web site at www.census.gov.
The official statistics are good for business information as well. You should be able to find a count of local businesses with some measure of size, such as sales or employees. The U.S. Census Bureau has a lot of information on businesses. You can also find free information at the Chamber of Commerce and probably at a local library.
Before the Internet became so prevalent, I frequently turned to vendors of mailing lists for general information about people and types of business. The mailing list vendors often have catalogs listing total numbers of types of people and types of business. For example, to find out how many attorneys or CPA offices there are in the United States, I might look at the lists for sale at a list broker.
Magazines provide another good source of demographics. If you're selling to computer stores, for example, call Computer Retail Week and Computer Reseller News and ask both publications for a media kit. The media kit is intended to sell pages of advertising to potential advertisers. They are frequently full of demographics on the readers. For information on any specific type of business, get the media kits for the magazines that cater to those types of businesses as readers.
Just browsing through the Census Bureau's Web site while preparing this draft, it took me about 10 minutes to discover that my home county has 378 general contractors, of which 360 have fewer than 20 employees and the remaining 18 have between 20 and 100. There are 238 legal businesses in my county, of which only 12 have more than 20 employees. Also, following the shoe store example, there are 32 shoe stores in the county, none of them having more than 20 employees. There are 111,000 households in the county, 61% of them occupied by the owner, with an average of 2.49 people per household. Some 22% of adults in the county are college graduates, and the median household income is $26,000. All of this information was available for free at the U.S. Census Bureau's Web site.