Running a Business

Growing a Business

A blog for businesses with 20 or fewer employees or for people planning on starting one. There are two threads. One for Starting a Business and a second for Growing a Business. Author: Henry McCabe

Goals- Research Industry Profiles

In my last blog I wrote about creating Someday Goals. I provided an example of a way to arrive at financial model for what your business must become in order for it to provide you with a certain amount of personal income. If you studied the instructions, you read "Research industry data to establish a profile of revenue and expense". My experience has been that few people know how to go about doing this. I am going to provide some tips. For purposes of illustration I'll assume that I run a small women's clothing store and am trying to establish Someday Goals for my business. I can use several free tools to develop a profile for what my business might become. In this blog I will illustrate one of them. I'll follow up with more in a future blog or two.

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The SBA provides access to a commercial service, SizeUp.  I can use this tool to get an idea of what is possible. The site provides three research options: My Business, My Competitors and Advertising.  Clicking on My Business and following the instructions I find a this table:

My Business	$251,000
My Small City, FL	$579,166
My County, FL	$500,400
Florida	$720,306
United States	$802,181
National Median	$534,000

What does this tell me? Well it gives me a sense of what is possible. The average for stores in my small city and large county is twice my sales volume. Based on this, it seems that a long term sales goal of $600,000 in today's dollars is reasonable. To achieve that requires about 9% per year in sales growth over a ten year period. I decide to look deeper so I click on the My Competitors button. The data lists 7 competitors in My Small City and another 359 in the surrounding area. Unfortunately it does not provide individual sales data. I know of another site that provides an estimate so I will look at that later. However, I know something about most of the local ones because of my ongoing tracking of the competition. Many have been in business longer than I. Some are not very well run. There is no reason that I cannot grow my sales to match or better theirs. It seems that a goal of achieving sales growth of about 9% a year over the next decade is an achievable goal. I can plan an advertising program to make that happen and get some estimates on what that will cost. 

I will need to figure out if a business of that size will produce the $90,000 to $100,000 a year of income that I seek. My rough calculations with Henry's spread sheet indicate that I might need higher sales than that. I need to do some research to see what the average cost of sales and overhead are in my industry so that I can fine tune Henry's spread sheet. And, some more research on how what a reasonable sales goal is.

In preparation for that it might be useful to find out what my North American Industrial Classification System code is. Lots of data is stored under those codes. So I go to http://www.naics.com/search.htm and do a search using  Women's Clothing Stores. My NAICS Code is 448120. I also learn that, under the older system, my SIC code is 56210000. I am ready for the next steps.

Planning. The only thing we know for sure about any plan we make is that actual events will turn out to be different. We must not let the attempt to create a perfect plan get in the way of completing one. An imperfect plan is better than none at all.

Answer to last quiz: One from whom you can make profit.

Definition Quiz:  What do we know about data gathered in our research?