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 $254,793.
Net Cash Flow over 5 years
|Year 0||Year 1||Year 2||Year 3||Year 4||Year 5|
|Net Operating Profits||$36,458||$54,687||$72,916||$76,270||$79,779|
|Net Cash Flow||-$68,468||$36,458||$54,687||$72,916||$76,270||$319,114|
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 Modesto.
- median income
- gross rent
- population density
- July temperature
- household size
- November temperature
- May temperature
- land area
- family households
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About Modesto and its Consumers
Founded in 1870, Modesto is a city of over 200,000 people. According to the Modesto Convention and Visitors Bureau, Modesto is the 15th largest city in California. According to the U.S. Census Bureau, Modesto has a metropolitan population over 500,000 people. Modesto is located in inland central California. It is one and a half hours southeast of Sacramento, the state capital, two hours southeast of San Francisco, and two hours northeast of San Jose. Modesto has twice been a finalist community for the National Civic League's coveted "All-America City Award". In 2004, Inc. Magazine named Modesto as one of the "Top 25 Cities for Doing Business In" in the "Medium Cities" category. One of Modesto's most famous businesses is the E & J Gallo Winery, the second largest wine company in the world. Modesto is centrally located in the San Joaquin Valley, one of the greatest agricultural areas in the the Unites States. Major agricultural products include: dairy products, nuts, fruits, wine grapes, and poultry products.
Founded in 1870, Modesto is a city of over 200,000 people. According to the Modesto Convention and Visitors Bureau, Modesto is the 15th largest city in California. According to the U.S. Census Bureau, Modesto has a metropolitan population over 500,000 people. Modesto is located in inland central California. It is one and a half hours southeast of Sacramento, the state capital, two hours...description source
Population Population (2012) 203,547 Population Density 5,521 ppl/sq mi Population Growth Rate 1.2% Median Income $41,863 Median Age 33.3 Unemployment 11.2% Family Household Percent 70.8% Avg. Household Size 2.9 Avg. House Price $160,200 Foreign Born 16.4% Married 34.2% Cost of Living 49.2%
Demographics White 48.9% Hispanic / Latino 36.3% Black / African American 3.7% Asian 6.5% Native American 0.7%
Market & Regulatory Conditions For California
Third parties rate California's business and regulatory conditions according to their own methods. We report them here for informational purposes.
Small-Business Friendliness Overall small business friendliness F Ease of starting a small business D Cost of hiring a new employee C- Overall regulatory friendliness F Friendliness of health and safety regulations F Friendliness of employment, labor, and hiring regulations F Friendliness of tax code F Friendliness of licensing regulations F Friendliness of environmental regulations D Friendliness of zoning regulations D Publicity of training programs C- Publicity of networking programs D+ Current economic health of small business 40th/50 Change in revenue over past 12 months 40th/50 Forecast of small business's future economic health 35th/50Source: Thumbtack.com (2012)
Business Friendliness Overall Business Friendliness 32th/50 Cost of Doing Business 48th/50 Economy 9th/50 Infrastructure 24th/50 Workforce 36th/50 Quality of life 23th/50 Technology and innovation 1th/50 Business friendliness 48th/50 Education 26th/50 Cost of living 47th/50 Access to capital 1th/50Source: CNBC (2014)
Tax Friendliness California Corporate Tax Rate 7.5% Avg Local Corporate Tax Rate in California 0.9% Avg Combined Corporate Tax Rate 8.4% Overall tax friendliness 48th/50 Corporate tax rank 34th/50 Individual income tax rank 50th/50 Sales tax rank 42th/50 Unemployment insurance tax rank 14th/50 Property tax rank 14th/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.