Home Electrical Contractor Free Electrical Contractor Business Strategy Questionnaire 4.6 Target Market Owner Occupied Units Analysis Questionnaire
What is the advantage to having the Owner Occupied Housing Units analysis in a business plan for Lights On Electrical, Inc.?
Owner Occupied housing units analysis is an important measure of the local economic health of the target market of Cuyahoga, Ohio. This part of the business plan for Lights On Electrical, Inc. gives the reader of the business plan a good idea of the how many folks in Cuyahoga live in homes that are range from modest valuation like less than $149k to homes that are expensive, valued at more than $1 million.
What do you compare the Owner Occupied housing units in Cuyahoga to?
In our business plan for Lights On Electrical, Inc., when we look at the distrubution of owner occupied housing units in Cuyahoga we are trying to get a sense of how well the distribution of the owner occupied housing stock in market value compares with the rest of the state of Ohio. The reason for this is of course that we are trying to spot any significant deviations and look for explanations as to why a target market like Cuyahoga may be significantly different from the rest of Ohio. In the event your business is national in nature, you will most certainly have to look at the numbers for the United States as a whole.
Home values tend to be vastly different in different parts of the United States and so there will regional distortions in the values of homes. For example, home prices in the New York Metropolitan area or the Silicon Valley area tend to be very high and so in the event your target market falls into one of these counties, you will invariably see a higher percentage of home in the high value ranges.
For the purpose of this analysis we have used the following classifications:
What if the Owner Occupied housing units analysis shows a lot of homes owned falling in the lower end of the classification scale?
The reader of the business plan for Lights On Electrical, Inc. is trying to ascertain just how economically diverse the population of the target market is and one of the best ways to do that is to understand the value of the owner occupied homes in the categories mentioned above. Depending on the economic demographics of the target market like Cuyahoga you will find that the more affluent the target market, the higher the percentage of homes in the higher value categories. For example, in the county of Westchester, New York, it is not surprising to find a larrge percentage of homes worth more than $1 million. On the other hand if you were to go into an inner city neighborhood of New York, you are likely to find that there won't be many homes in the $1 million range.
What are the implications of Owner Occupied Housing units being mostly concentrated in the middle of the valuation scale?
Even though home values can be vastly different in different parts of the country, the idea is to give the reader of the plan an understanding that out of all the owner occupied homes, just how many of these homes belong to working class, middle class and affluent owners respectively. The reason for this of course is very simple - if there is a preponderance of homes in the middle valued ranges, it tells you that you are probably looking at a middle classs neighborhood and will have to price your products and services accordingly. Thus a business owner like Andy Powell of Lights On Electrical, Inc., will have to be careful that they don't price their products and services too low and risk not making enough to sustain the business and on the other hand not price the products and services so high that they become non-competitive.
We understand of course that the definition of middle class will be relative to the target market. The fact still remains that folks living in homes valued at less than $100k, will have a tough time paying for products and services that are priced for an upmarket clientele. Thus understanding the distribution of the home values of owner occupied homes in a target market like Cuyahoga is key to understanding your clientele.
Are there many variations between the target market and the State in which the target market is located?
There may be. Many times if you are in an affluent target market you will find that the number of homes valued in the higher end of the price ranges are many more than the same number for the State in which the county is located - this simply implies that your target market is more affluent when compared to the State in general. It also means that real estate leases and the cost of almost all business services will be higher for you, the small business owner, and you will have to price out your own products and services accordingly. One of the most common errors in calculation that a small business like Lights On Electrical, Inc. tends to make is to underestimate the cost of the local real estate. Especially in affluent neighborhoods, getting the right location for the right price can be one of the most challenging issues facing small business. There is always demand and the landlords are not worried about losing business since there is always someone else who will come along.
Conversely in the event your target market has a lot of homes that are valued at below say $149k and that percentage of homes in that category is a lot more than the State average, it implies that your target market is most probably a working class to low income neighborhood. While you should be able to find real estate more readily and at better terms than in an upscale real estate market, you will likely have to shell out extra for security and insurance. In the event you have a storefront you may take the business decision to tone down your expenditure on interior decorations and not make your establishment look too affluent and make sure that it blends into the neighborhood. We have many affluent small business owner clients who own business establishments in the inner city neighborhoods and they make it a point to drive a fairly humble car when they drive in to work, and also keep the physical profile of the business relatively low so as not to attract too much attention from possible miscreants!
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