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 $287,228.
Net Cash Flow over 5 years
|Year 0||Year 1||Year 2||Year 3||Year 4||Year 5|
|Net Operating Profits||$41,819||$62,728||$83,638||$85,645||$87,701|
|Net Cash Flow||-$74,939||$41,819||$62,728||$83,638||$85,645||$350,802|
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 Warren.
- median income
- gross rent
- population density
- July temperature
- household size
- land area
- November temperature
- May temperature
- family households
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About Warren and its Consumers
The Michigan city of Warren is located in Macomb County, about 15 miles north of Detroit. One of the largest suburbs in the Detroit metropolitan area, Warren is often referred to as the City of Progress. Other surrounding cities include Sterling Heights (to the north), Hazel Park (to the west), and Roseville (to the east). Interstate I-696 and Michigan State Highway 53 service the city, which is also close to Interstate I-75. First settled in 1835, the area which now comprises Warren was principally farming territory throughout much of its history. In 1909 a village emerged and this village would eventually become incorporated as the city of Warren in 1957. Between 1940 and 1970, the city experienced a very significant era of large population growth although since that time this trend has reversed itself. Warren today is home to a wide variety of businesses and serves as the headquarters of Big Boy Restaurants International
The Michigan city of Warren is located in Macomb County, about 15 miles north of Detroit. One of the largest suburbs in the Detroit metropolitan area, Warren is often referred to as the City of Progress. Other surrounding cities include Sterling Heights (to the north), Hazel Park (to the west), and Roseville (to the east). Interstate I-696 and Michigan State Highway 53 service the city, which...description source
Population Population (2012) 134,141 Population Density 3,901 ppl/sq mi Population Growth Rate 0.1% Median Income $41,658 Median Age 39.7 Unemployment 12.1% Family Household Percent 64.0% Avg. Household Size 2.5 Avg. House Price $84,500 Foreign Born 9.7% Married 35.0% Cost of Living 47.0%
Demographics White 77.1% Hispanic / Latino 2.1% Black / African American 13.4% Asian 4.6% Native American 0.4%
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.