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 $151,658.
Net Cash Flow over 5 years
|Year 0||Year 1||Year 2||Year 3||Year 4||Year 5|
|Net Operating Profits||$21,576||$32,363||$43,151||$44,616||$46,130|
|Net Cash Flow||-$37,196||$21,576||$32,363||$43,151||$44,616||$184,520|
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 Las Cruces.
- median income
- gross rent
- population density
- July temperature
- land area
- household size
- November temperature
- May temperature
- family households
- median resident age
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About Las Cruces and its Consumers
The New Mexico city of Las Cruces is located on the banks of the Rio Grande just west of the Organ Mountains in Doña Ana County. The city is situated at the crossroads of Interstates 10 and 25 in the southern part of New Mexico, about 45 miles north of El Paso, Texas. The city is also serviced by U.S. Routes 70 and 180, and New Mexico State Highways 28, 101, 185, 188, 292, 320, 373, and 478. Las Cruces is home to New Mexico State University (NMSU), the state's only land-grant institution. Las Cruces is Spanish for "The Crosses". There are numerous theories on exactly how the city got its name, ranging from local legends about crosses erected to honor past victims of Indian raids to simply an early Spanish geographic description of the city as a "crossing" or "crossroads". Incorporated in 1907, Las Cruces has benefited from the presence of the University and since the latter half of the 20th century has seen its economy grow primarily due to the advent of the nearby White Sands Missile Range and National Aeronautics and Space Administration (NASA) facilities located in the area.
The New Mexico city of Las Cruces is located on the banks of the Rio Grande just west of the Organ Mountains in Doña Ana County. The city is situated at the crossroads of Interstates 10 and 25 in the southern part of New Mexico, about 45 miles north of El Paso, Texas. The city is also serviced by U.S. Routes 70 and 180, and New Mexico State Highways 28, 101, 185, 188, 292, 320, 373, and 478....description source
Population Population (2012) 101,047 Population Density 1,324 ppl/sq mi Population Growth Rate 3.5% Median Income $37,576 Median Age 31.9 Unemployment 6.9% Family Household Percent 60.7% Avg. Household Size 2.4 Avg. House Price $146,000 Foreign Born 11.0% Married 34.4% Cost of Living 45.2%
Demographics White 37.5% Hispanic / Latino 56.8% Black / African American 2.0% Asian 1.5% Native American 0.9%
Market & Regulatory Conditions For New Mexico
Third parties rate New Mexico'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 D Cost of hiring a new employee D Overall regulatory friendliness D+ Friendliness of health and safety regulations B+ Friendliness of employment, labor, and hiring regulations F Friendliness of tax code F Friendliness of licensing regulations F Friendliness of environmental regulations B+ Friendliness of zoning regulations C Publicity of training programs B- Publicity of networking programs A- Current economic health of small business 32th/50 Change in revenue over past 12 months 6th/50 Forecast of small business's future economic health 5th/50Source: Thumbtack.com (2012)
Business Friendliness Overall Business Friendliness 37th/50 Cost of Doing Business 17th/50 Economy 43th/50 Infrastructure 15th/50 Workforce 30th/50 Quality of life 33th/50 Technology and innovation 32th/50 Business friendliness 47th/50 Education 36th/50 Cost of living 26th/50 Access to capital 23th/50Source: CNBC (2014)
Tax Friendliness New Mexico Corporate Tax Rate 5.1% Avg Local Corporate Tax Rate in New Mexico 2.1% Avg Combined Corporate Tax Rate 7.3% Overall tax friendliness 38th/50 Corporate tax rank 35th/50 Individual income tax rank 35th/50 Sales tax rank 45th/50 Unemployment insurance tax rank 10th/50 Property tax rank 1th/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.