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ECON First believes that business success centers around the businesses knowing the economic and demographic characteristics of their primary market area. While business experience, insights and intuition are important, they are substantially advanced by hard data.

When a business is considering expanding or opening a second site within its primary market area, one set of data examined by ECON First is the population of similar business establishments and the changes in that population.

ESTABLISHMENT DETAILS

Detailed data on establishments for specific industries is increasingly available through the Census Bureau, particularly in County Business Patterns and the QCEW data bases.

To illustrate how this data might be used, let’s take the example of furniture and home furnishing stores (NAIC 442) for four dissimilar counties in the state of Indiana.

The table below shows the total furniture and home furnishings stores in the four counties as of 2015 and the employee size class of each of the establishments. The change in the total establishments from 2005 to 2015 is provided as well.

  1 to 4  employees   5 to 9 employees   10 to 19 employees   20 to 49 employees   50 to 99 employees   100 to 249 employees
Total 2015 Change 2005-15 2015 2015 2015 2015 2015 2015
Clinton county 2 0 0 2 0 0 0 0
Hamilton county 56 -19 31 5 12 7 0 1
St. Joseph county 47 -15 21 15 7 2 2 0
Warrick county 9 3 5 3 1 0 0 0

To provide context, Clinton county is a rural county within commuting distance of the city of Indianapolis. Hamilton is a suburban county contiguous to Indianapolis. St. Joseph encompasses the city of South Bend. Warrick is a remote rural county that lies on the border of West Virginia.

A few observations jump out from the data. First, not surprisingly, the more urban counties support far more furniture and home furnishing establishments than do the more rural counties, and have a far more extensive range of establishment sizes. (With one store in Hamilton reaching the 100 to 249 employee size class.)

Second, over the business cycle (recognizing the 2007-08 recession), the furniture and home furnishing retail industry is far more volatile in the urban areas. Between 2005-2015, the total establishments in Clinton remained unchanged while the number of establishments in rural Warrick actually increased. Meanwhile, the population of establishments in urban Hamilton and St. Joseph dropped approximately 25%.

The distribution of establishments by size class, as shown in the next table, is also informative.

  1 to 4  employees   5 to 9 employees   10 to 19 employees   20 to 49 employees   50 to 99 employees   100 to 249 employees
2015 2015 2015 2015 2015 2015
Clinton county 0% 100% 0% 0% 0% 0%
Hamilton county 55% 9% 21% 13% 0% 2%
St. Joseph county 45% 32% 15% 4% 4% 0%
Warrick county 56% 33% 11% 0% 0% 0%

Over half of the furniture and home furnishing retail stores have just 1 to 4 employees and two-thirds have 9 employees or less. Obviously, this retail line is more inventory than labor intensive.

CONCLUSION

ECON First specializes in providing the hard data that allows business owners to make more informed decisions regarding start-ups. expansion, marketing channels, and pricing strategies. The type and frequency of marketing campaign used by regional businesses should take into account the continual turnover of households through relocation.

Let ECON First help you to evaluate any plans for expansion.

Dr. John E. Stapleford

ECON First

www.econfirst.com