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- Industry Profiles

In my last few blogs I have written about creating Someday Goals as a prelude to setting long term goals for your business. In effect a ten year Strategic Plan. Doing so requires some research using a search engine, local library and physical observation in a local market.  I have been using a fictitious women's clothing store to illustrate what can be done. Check earlier blogs for sources and results covered to date. The purpose of the research is to use industry profiles to establish that it is possible to reach the sales goal of $600,000 that is required to meet the fictitious owner's income goal.

In the last blog I mentioned two data bases from which a person could get more data. Reference USA and AtoZ charge subscription fees but can be accessed for free through the many library systems, colleges and universities who are subscribers. They have similar data sets. I have access to AtoZ via my library so I looked there. Sorry I cannot provide a link to my library. AtoZ contains data on both businesses and consumers that is searchable and downloadable. The data is supplied by DatabaseUSA, a company that compiles data on businesses and sells it in various forms.  I searched for stores in my county using two NAICS codes, one for women's clothing stores (448120) and another for department stores (452111) and downloaded the resulting 15 column spread sheet.

The spreadsheet contains details on 61 stores. I was primarily interested in DatabaseUSA estimates of the annual sales of independent women's retail stores and added department stores as related businesses. The file contains estimated sales and number of employees for each store.  Some analysis indicated that DatabaseUSA estimates sales based on a Sales per Employee factor and an estimate of the Number of Employees in each store. Not 100% solid data, but at least it is something. Privately owned companies rarely make their numbers public so Database USA has to estimate on some basis. Unfortunately, they do not disclose how, at least in the free AtoZ version. The table shown below summarizes the data divided into several groups.

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I was hoping that the data would confirm the sales estimate for the average women's clothing stores found in the SizeUp data I wrote about earlier. That number was $500,400, much higher than the average $293,000 for Small Stores in this data. It is annoying when data doesn't support a theory, but that is the way it goes. Still, of the 13 stores the two largest were estimated to have average sales of $580,000. Twenty two stores (including the 13) with average sales per employee less than $125,000 have average sales of $478,000. Twenty five stores (including the 22) with  average sales per employee less than $150,000 have average sales of $702,000. Those three subsets of the data more or less confirm that it would be possible to achieve sales of $600,000 (or does it confirm that a researcher can make data fit a theory?).

AtoZ Data-  Women's Clothing & Department Stores in My County
	Sales per	Estimated	Estimated	Average
Number	Employee	Total	Total	Est'd Store
of Stores	Factor Used	Employees	Sales	Sales
Small Women's Clothing Stores
1	$100,000	1	$100,000	$100,000
12	$116,000	32	$3,712,000	$309,333
13	$115,115	33	$3,812,000	$293,231
Small and Medium Sized Independent & Chain Stores
2	$100,000	16	$1,600,000	$800,000
7	$116,000	44	$5,104,000	$729,143
1	$127,000	11	$1,397,000	$1,397,000
2	$131,000	43	$5,633,000	$2,816,500
1	$152,000	28	$4,256,000	$4,256,000
1	$170,000	2	$340,000	$340,000
22	$171,000	562	$96,102,000	$4,368,273
1	$186,000	4	$744,000	$744,000
1	$195,000	13	$2,535,000	$2,535,000
38	$162,809	723	$117,711,000	$3,097,658
Large Stores (average sales per employee varies)
10	$653,516	483	$315,648,000	$31,564,800
All Stores
61	$352,842	1239	$437,171,000	$7,166,738
Subsets of the Data
Two Largest Independent Stores
2	$116,000	10	$1,160,000	$580,000
Stores with average per employee sales under $125,000
22	$113,075	93	$10,516,000	$478,000
Stores with average per employee sales under $150,000
25	$119,361	147	$17,546,000	$701,840

By now readers may be wondering why they should go through exercises like this as part of their planning process. After all it takes hours to do it. The answer is simple. It is better to make plans for the future based on facts rather than on pure guesses even if the "facts" are somewhat spongy. The owner of a business that achieves success will probably spend 42,000 hours working in it before retiring after 20 years. 40-80 hours spent now planning to make those hours worth the effort is not much of an investment in light of that. Next, can a $600,000 women's retail store generate $125,000 in income for its owner?

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.

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