Market Research Report
Based on the parameters below, we project this business would break even in 1.7 years with a net present value of $196,136.
Net Cash Flow over 5 years
|Year 0||Year 1||Year 2||Year 3||Year 4||Year 5|
|Net Operating Profits||$28,203||$42,305||$56,406||$57,760||$59,146|
|Net Cash Flow||-$48,115||$28,203||$42,305||$56,406||$57,760||$236,586|
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 Lansing.
- median income
- gross rent
- population density
- July temperature
- household size
- land area
- November temperature
- May temperature
- family households
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About Lansing and its Consumers
The city of Lansing, situated on the banks of Michigan's Grand River, is the capital city of the state. Located about 90 miles west of Detroit, Lansing is often referred to as the Car Capital of North America and is the birthplace of Oldsmobile, which was founded in 1897. Most of Lansing is located in Ingham County, although Lansing is the only U.S. state capital located in a county for which it is not also a county seat (the county seat of Ingham County is the city of Mason). The main thoroughfares servicing the Lansing area include Interstates I-69, I-96, and I-496; U.S. Route 127; and Michigan State Highways 43 and 99. The neighboring city of East Lansing, only four miles away, is well known for being the home of Michigan State University (MSU). Lansing boasts several attractions and both cultural and recreational sites. The Potter Park Zoo, located along the city's Red Cedar River, houses hundreds of animals and offers several programs and events for children and families. Museums in town include the Michigan Historical Museum and the Telephone Pioneer Museum.
The city of Lansing, situated on the banks of Michigan's Grand River, is the capital city of the state. Located about 90 miles west of Detroit, Lansing is often referred to as the Car Capital of North America and is the birthplace of Oldsmobile, which was founded in 1897. Most of Lansing is located in Ingham County, although Lansing is the only U.S. state capital located in a county for which...description source
Population Population (2012) 113,996 Population Density 3,162 ppl/sq mi Population Growth Rate -0.3% Median Income $31,975 Median Age 32.1 Unemployment 12.9% Family Household Percent 54.1% Avg. Household Size 2.3 Avg. House Price $82,200 Foreign Born 7.8% Married 45.3% Cost of Living 44.7%
Demographics White 54.8% Hispanic / Latino 13.3% Black / African American 20.4% Asian 5.5% Native American 0.3%
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.