Market Research Report
Based on the parameters below, we project this business would break even in 1.9 years with a net present value of $306,830.
Net Cash Flow over 5 years
|Year 0||Year 1||Year 2||Year 3||Year 4||Year 5|
|Net Operating Profits||$45,562||$68,342||$91,123||$93,310||$95,550|
|Net Cash Flow||-$87,752||$45,562||$68,342||$91,123||$93,310||$382,199|
Startup costs are estimated as the larger of PYE and median income multiplied by the cost of living in the city. The positive cash flows in years 1 to 5 are estimated from the PYE. The first year is discounted by 50%, the second year is discounted by 75%, the fourth through tenth years are inflated according to a growth rate estimated from the GDP growth rate of the state. The profit margin is defaulted 10%. In year 5 a “terminal value” equal to the year 5 net operating income times three is added. The hurdle rate is defaulted to 15%. All values are net of taxes.
How is this opportunity calculated?
The following ten market factors are the most important determinants used to calculate the need for businesses of this type in Ann Arbor.
- median income
- gross rent
- population density
- July temperature
- household size
- land area
- November temperature
- May temperature
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About Ann Arbor and its Consumers
Ann Arbor is a city in the US state of Michigan and the county seat of Washtenaw County. The 2010 census recorded its population to be 113,934, making it the sixth largest city in Michigan. The Ann Arbor Metropolitan Statistical Area (MSA) includes all of Washtenaw County, which had a population of 344,791 as of 2010. The city is also part of the larger DetroitAnn ArborFlint, MI Combined Statistical Area (CSA). Ann Arbor is home to the University of Michigan, a world-renowned institution of higher education. The university shapes Ann Arbor's economy significantly as it employs about 30,000 workers, including about 12,000 in the medical center. The city's economy is also centered on high technology, with several companies drawn to the area by the university's research and development money, and by its graduates. According to the United States Census Bureau, the city has a total area of 28.70 square miles (74.33 km2), of which, 27.83 square miles (72.08 km2) of it is land and 0.87 square miles (2.25 km2) is water, much of which is part of the Huron River
Ann Arbor is a city in the US state of Michigan and the county seat of Washtenaw County. The 2010 census recorded its population to be 113,934, making it the sixth largest city in Michigan. The Ann Arbor Metropolitan Statistical Area (MSA) includes all of Washtenaw County, which had a population of 344,791 as of 2010. The city is also part of the larger DetroitAnn ArborFlint, MI Combined...description source
Population Population (2012) 116,121 Population Density 4,172 ppl/sq mi Population Growth Rate 1.9% Median Income $49,219 Median Age 27.5 Unemployment 7.7% Family Household Percent 43.6% Avg. Household Size 2.2 Avg. House Price $229,200 Foreign Born 16.8% Married 54.7% Cost of Living 50.5%
Demographics White 70.4% Hispanic / Latino 4.1% Black / African American 7.6% Asian 14.3% Native American 0.2%
Market & Regulatory Conditions For Michigan
Third parties rate Michigan's business and regulatory conditions according to their own methods. We report them here for informational purposes.
Small-Business Friendliness Overall small business friendliness D Ease of starting a small business D+ Cost of hiring a new employee C- Overall regulatory friendliness D+ Friendliness of health and safety regulations C- Friendliness of employment, labor, and hiring regulations D+ Friendliness of tax code C- Friendliness of licensing regulations D+ Friendliness of environmental regulations D+ Friendliness of zoning regulations D+ Publicity of training programs C+ Publicity of networking programs B- Current economic health of small business 28th/50 Change in revenue over past 12 months 15th/50 Forecast of small business's future economic health 25th/50Source: Thumbtack.com (2012)
Business Friendliness Overall Business Friendliness 26th/50 Cost of Doing Business 31th/50 Economy 28th/50 Infrastructure 16th/50 Workforce 15th/50 Quality of life 45th/50 Technology and innovation 14th/50 Business friendliness 32th/50 Education 34th/50 Cost of living 17th/50 Access to capital 23th/50Source: CNBC (2014)
Tax Friendliness Michigan Corporate Tax Rate 6.0% Avg Local Corporate Tax Rate in Michigan 0.0% Avg Combined Corporate Tax Rate 6.0% Overall tax friendliness 13th/50 Corporate tax rank 10th/50 Individual income tax rank 14th/50 Sales tax rank 7th/50 Unemployment insurance tax rank 47th/50 Property tax rank 27th/50Source: Tax Foundation (2015)
Resources to Get Started
Now that you have a potential location and idea for your business, here is a list of helpful resources you may need to get started.