Case Study: Using Government Resources to Research Your Industry

This case study shows how you can use various sources of industry reasearch to make assumptions and projections for your startup business.

Here's a look at some of the data you can get from information that the federal government makes available online. In this case study, presume the new business is a submarine sandwich restaurant in Cedar Rapids, Iowa. The same type of information is available for most metropolitan areas.

Census of retail trade. In Cedar Rapids in 2002 there were 303 eating and drinking establishments with total sales of $193,381,000. These are your competitors.

Check out some of the other statistics about Cedar Rapids from the Census Bureau. This information can assist you in making realistic assumptions about your business.

Census Bureau. While too much information can sometimes cloud the issues, you can find an astonishing amount of information at the Census Bureau's American Factfinder. For example, the population of Cedar Rapids is about 121,000, with about 46,000 people between the ages of 20 and 44. These are the target customers of the new sub shop. Obviously, only some of those people will find your business geographically desirable and want the type of food that you'll serve.

Bureau of Labor Statistics. The BLS reports that the average wage for food preparation and serving related occupations in Cedar Rapids was $7.90 an hour in 2002. Of course, it is necessary to plan for the possibility of increases in state and federal minimum wage requirements. It is also important to balance the qualities an employee brings to the business with the amount he or she is paid.

State and metropolitan area data book. This publication is a compendium of links to state specific information. Several of the statistics were repeated in other publications and we'll not repeat those here. This publication did list the 1989 new housing starts as 1081.

County and city data book. The 1988 births were 1,694 and deaths were 926. The total number of people in school, including college, was 28,022 with a dropout rate of 352. The percentage with a high school education or higher was 84.5. The percentage of people on Social Security was 26.3 percent.

County business patterns. Cedar Rapids is located in Linn county. The table below shows how many employees the eating establishments have.

Summary of the above research. In this example, for the new sub sandwich restaurant, several stats are useful in planning for the new business:

• All the eating places in Cedar Rapids averaged $548,866 in annual sales, with an annual payroll of $147,203, (compute to 26.8 percent of sales) and an average of 22 employees.
• The perfect location for the new sub shop has already been located. There is not another restaurant within a mile of it in all directions, thus four square miles. This four- square-mile area is typical of the whole city. In this four-square-mile area, there will be approximately 8,128 people and 3,400 housing units.
• The average wage in 2006 was $8.69 per hour.
• In the business plan, the intentions are to employ high school students and retired individuals. In Cedar Rapids there are 28,022 students, which should provide a sufficient labor supply. The owner also wants to hire retirees who want to work on a part-time basis, which should not be a problem with 26.3 percent of the Cedar Rapids population on Social Security. Also, the owner wants an educated workforce, which it appears exists, with 84.5 percent of the population with at least a high school education and the dropout rate at only 352 kids.
• The number of establishments that have a certain number of employee varies. The mean number falls in the range of 10 to 19 employees. This will help in the future when planning for employee needs for the new business.

The above case study's main purpose was to show you that the federal government compiles a huge quantity of information. Some of the information will be of great value and will be a good starting point for you when you are planning your new business.