What is the purpose of having the Annual Spending by Education analysis in a business plan for a Full Service Restaurant?
The Annual Spending on an industry segment like a Full Service Restaurant gives a very clear idea of what kind of demographic our potential client may or may not fall into. This excellent analysis looks at the annual spending on Education for an industry segment like Full Service Restaurant and conducts that analysis over a period of 10 years thereby giving the reader of the business plan as well as a small business owner like Jack Gordon an idea about who they should or should not target in their target market locally.
In order to conduct the Annual Spending by Education analysis we categorize the population into the following education achievement buckets:
Besides the data that is presented in a table we also graph out the amount of spending in the most recent and the most historical time period covered in the analysis - this serves as an excellent tool for business owners since it assists them in quickly identifying the trends over time.
What does it mean if we see the most spending on Full Service Restaurant by folks that have the least education?
In the event our analysis comes up with a finding that the most annual spending on a Full Service Restaurant is being done by folks with the lowest education, and that the patterns stays consistent over time, it means that folks with the least education will be forming the most likely customer base from the total demographic mix of the target market and we need to focus on that. The reason for this is quite simply that they spend the most on the services we provide. This does not mean that a small business like A Touch of Tuscany should ignore the rest of the folks that have more education but it simply means that a small business owner like Jack Gordon would need to have special focus on the segment of the market with the least in educational achievement.
Is there a co-relationship between education and income?
Yes. There is a very high relationship between education and income. To put it bluntly, the more educated the target market population is on average, the higher will be their average income and income generating potential. While this may not come as a complete surprise to everybody, folks who come from humble working class neighborhoods tend to also have lower levels of education and this is why there is a push within such communities to further educational achievements for those that are falling behind.
Is there a high corelationship between education and the amount spent on goods and services?
This is a much tougher one to call. The reality of spending is that folks spend on the items they need. Thus in the case of fast food we may well find that the largest spending is coming from folks with less than a bachelors degree education, but that does not matter since they are still spending their hard earned money on a product or service. Rather than bother so much about how much is being spent, what we want our small business clients like Jack Gordon to understand is that this analysis reveals who they should be specifically targeting.
There is no sense in opening up a check cashing small business in a very affluent neighborhood since folks living there tend to be in the high income bracket, have better education and will most probably not need to cash their checks since they probably have the savings to wait until the checks written to them clear in their own bank accounts. Typically it will be the less well-to-do neighborhoods that will have a demand for check cashing services, since many folks there don't have the savings to wait until checks are cashed and made available to them in their checking accounts.
What if the Annual Spending by Education analysis reveals that folks with a high school education are spending the most on a product or service?
How should a small business like A Touch of Tuscany market to them?A business like A Touch of Tuscany would have to use a marketing database or service that already has the local target market demographic broken down by education and knows which households have folks with a high school education. Thus once you are armed with that information, you can go ahead and begin a marketing campaign offering discounts on your products and services in the form of coupons etc to the households in the target market where the residents have a high school education. Many marketing companies also use the income tax data tables provided by the IRS to correlate the income brackets of a certain target market with the level of education achieved.
What if there is a change in the Annual Spending by Education and folks with a masters degree are no longer spending as much as they used on a product or service?
This is very possible over the 10 year time period that we look at when conducting this analysis. Since the buying habits of the population can change quite a bit over that time period, you can easily find that folks with a masters degree have changed their spending habits and are now spending much less than they used to on a product or service from a Full Service Restaurant. This trend may be indicative of much lower demand for that product or service due to newer products and services being offered by the marketplace. If you are a small business still advertising to folks with masters degrees, you could be wasting your marketing dollars and may be better off by spending that money on folks who are actually spending the most money on your products and services.
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