How Accurate are Distributor demographic studies

[forfunandprofit]

All:

We are considering building a new CL facility. How accurate are distributor market/demographic studies? How accurate are their cash flow projections? Are they inflated or do they reflect reality as implemented (assuming prudent business mgmt).

Thanks,

Pete

[SecretarytoBraveDave]

You had better know how to prove their accuracy with demographics as well as potential income. If you are relying on the distributor to do all your homework, you may not like how it all turns out. It is in your best interest to understand exactly what the demograpphics and market analysis show for your target area and how theses analysis' were configured.

[Duane]

It is your money and your future, don't rely on anyone else.

Distributors are there to help you (and they do), but you must do all the homework and research. Most distributors just order a demographic survey from companies.

Demographic studies do contain a lot of information. Some of the things to look for in a 1-2 mile radius is a high rental percentage, low to middle income, younger or older population.

Cash flow projections can be accurate. It is just a matter of plugging in your expenses and then calculating your income by how many turns per day (TPD) your store does. But...... It only works if you get the customers to use your store and that is the hard part. When building a new store you don't create new customers, you steal them from your competitor. And stealing them isn't as easy as you think. People are creatures of habit and it is hard to get them to change their habit. If you do steal customers be ready for your competitors to try and steal them back.

Buying an existing store will give you a starting customer base (and income) that you can increase by redoing the store and adding new up to date equipment.

Duane.

www.LMARIES.com (http://www.LMARIES.com)

[homchz]

There was a good article in the Journal maybe a year ago expaining demographics and how they relate to business, I am sorry I don't remeber the issue, but if they have back issues available maybe you can, request on. I beleive it was a cover story.