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 $207,599.
Net Cash Flow over 5 years
|Year 0||Year 1||Year 2||Year 3||Year 4||Year 5|
|Net Operating Profits||$29,957||$44,936||$59,915||$62,131||$64,430|
|Net Cash Flow||-$55,481||$29,957||$44,936||$59,915||$62,131||$257,721|
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 Erie.
- median income
- gross rent
- population density
- July temperature
- household size
- November temperature
- May temperature
- land area
- family households
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About Erie and its Consumers
Erie is a city located in northwestern Pennsylvania, United States. Named for the lake and the Native American tribe that resided along its southern shore, Erie is the state's fourth-largest city (after Philadelphia, Pittsburgh and Allentown), with a population of 102,000. Erie's Metropolitan Area consists of approximately 280,000 residents and an Urbanized Area population of approximately 195,000. The city is the seat of government for Erie County. Erie is the principal city of the Erie, PA Metropolitan Statistical Area. Erie is near Buffalo, New York, Cleveland, Ohio, and Pittsburgh, Pennsylvania. Once teeming with heavy industry, Erie's manufacturing sector remains prominent in the local economy, though service industries, healthcare, higher education, and tourism are emerging as greater economic drivers. Millions visit Erie for recreation at Presque Isle State Park, as well as attractions like casino and horse racetrack named for the state park. Erie is known as the Flagship City because of its status as the home port of Oliver Hazard Perry's flagship Niagara.The city has also been called the Gem City because of the "sparkling" lake. Erie won the All-America City Award in 1972.
Erie is a city located in northwestern Pennsylvania, United States. Named for the lake and the Native American tribe that resided along its southern shore, Erie is the state's fourth-largest city (after Philadelphia, Pittsburgh and Allentown), with a population of 102,000. Erie's Metropolitan Area consists of approximately 280,000 residents and an Urbanized Area population of approximately...description source
Population Population (2012) 101,047 Population Density 5,295 ppl/sq mi Population Growth Rate -0.7% Median Income $31,901 Median Age 33.6 Unemployment 8.5% Family Household Percent 56.0% Avg. Household Size 2.4 Avg. House Price $83,100 Foreign Born 6.1% Married 42.7% Cost of Living 48.6%
Demographics White 72.6% Hispanic / Latino 7.3% Black / African American 15.0% Asian 2.0% Native American 0.2%
Market & Regulatory Conditions For Pennsylvania
Third parties rate Pennsylvania's business and regulatory conditions according to their own methods. We report them here for informational purposes.
Small-Business Friendliness Overall small business friendliness C Ease of starting a small business C+ Cost of hiring a new employee C Overall regulatory friendliness C Friendliness of health and safety regulations C+ Friendliness of employment, labor, and hiring regulations C- Friendliness of tax code C+ Friendliness of licensing regulations C Friendliness of environmental regulations C Friendliness of zoning regulations C Publicity of training programs D Publicity of networking programs C Current economic health of small business 26th/50 Change in revenue over past 12 months 34th/50 Forecast of small business's future economic health 39th/50Source: Thumbtack.com (2012)
Business Friendliness Overall Business Friendliness 44th/50 Cost of Doing Business 42th/50 Economy 37th/50 Infrastructure 37th/50 Workforce 48th/50 Quality of life 35th/50 Technology and innovation 8th/50 Business friendliness 39th/50 Education 6th/50 Cost of living 35th/50 Access to capital 17th/50Source: CNBC (2014)
Tax Friendliness Pennsylvania Corporate Tax Rate 6.0% Avg Local Corporate Tax Rate in Pennsylvania 0.3% Avg Combined Corporate Tax Rate 6.3% Overall tax friendliness 34th/50 Corporate tax rank 46th/50 Individual income tax rank 17th/50 Sales tax rank 24th/50 Unemployment insurance tax rank 50th/50 Property tax rank 42th/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.