Market Research Report
Based on the parameters below, we project this business would break even in 1.8 years with a net present value of $260,889.
Net Cash Flow over 5 years
|Year 0||Year 1||Year 2||Year 3||Year 4||Year 5|
|Net Operating Profits||$37,571||$56,356||$75,142||$77,763||$80,475|
|Net Cash Flow||-$68,304||$37,571||$56,356||$75,142||$77,763||$321,901|
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 Lexington.
- median income
- gross rent
- population density
- land area
- July temperature
- household size
- November temperature
- May temperature
Abrasive blast cleaning businesses can provide a range of services, from surface contaminant removal and cleaning, to the preparation and finishing of many different types of surfaces.
Allison Abrasives Inc
141 Industry Rd Lancaster, KY 40444
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About Lexington and its Consumers
Lexington, consolidated with Fayette County, is the second-largest city in Kentucky and the 62nd largest in the United States. Known as the "Horse Capital of the World", it is located in the heart of Kentucky's Bluegrass region. In the 2013 US Census Estimate, the city's population was 308,428, anchoring a metropolitan area of 489,435 people and a combined statistical area of 708,677 people. Lexington ranks tenth among US cities in college education rate, with 39.5% of residents having at least a bachelor's degree.It is the location of the Kentucky Horse Park, The Red Mile and Keeneland race courses, Rupp Arena, the world's largest basketball-specific arena, Transylvania University, the University of Kentucky and Bluegrass Community & Technical College. With its abundance of government and technology jobs, Lexington has one of the nation's most stable economies. Lexington has been described as having "a fortified economy, strong in manufacturing, technology and entrepreneurial support, benefiting from a diverse, balanced business base".
Lexington, consolidated with Fayette County, is the second-largest city in Kentucky and the 62nd largest in the United States. Known as the "Horse Capital of the World", it is located in the heart of Kentucky's Bluegrass region. In the 2013 US Census Estimate, the city's population was 308,428, anchoring a metropolitan area of 489,435 people and a combined statistical area of 708,677...description source
Population Population (2012) 305,489 Population Density 1,077 ppl/sq mi Population Growth Rate 3.3% Median Income $47,207 Median Age 34.2 Unemployment 3.6% Family Household Percent 56.6% Avg. Household Size 2.3 Avg. House Price $163,400 Foreign Born 3.3% Married 35.0% Cost of Living 47.7%
Demographics White 72.9% Hispanic / Latino 7.0% Black / African American 14.4% Asian 3.5% Native American 0.1%
Market & Regulatory Conditions For Kentucky
Third parties rate Kentucky's business and regulatory conditions according to their own methods. We report them here for informational purposes.
Small-Business Friendliness Overall small business friendliness B- Ease of starting a small business C+ Cost of hiring a new employee C- Overall regulatory friendliness C Friendliness of health and safety regulations D+ Friendliness of employment, labor, and hiring regulations B Friendliness of tax code C- Friendliness of licensing regulations C Friendliness of environmental regulations C Friendliness of zoning regulations C- Publicity of training programs F Publicity of networking programs D+ Current economic health of small business 6th/50 Change in revenue over past 12 months 31th/50 Forecast of small business's future economic health 18th/50Source: Thumbtack.com (2012)
Business Friendliness Overall Business Friendliness 39th/50 Cost of Doing Business 14th/50 Economy 46th/50 Infrastructure 29th/50 Workforce 29th/50 Quality of life 42th/50 Technology and innovation 37th/50 Business friendliness 36th/50 Education 35th/50 Cost of living 1th/50 Access to capital 47th/50Source: CNBC (2014)
Tax Friendliness Kentucky Corporate Tax Rate 6.0% Avg Local Corporate Tax Rate in Kentucky 0.0% Avg Combined Corporate Tax Rate 6.0% Overall tax friendliness 26th/50 Corporate tax rank 29th/50 Individual income tax rank 30th/50 Sales tax rank 11th/50 Unemployment insurance tax rank 45th/50 Property tax rank 17th/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.