CONTENTS
* Introduction - Editor's Comments
* What's New at www.gdsourcing.ca
* Statistics Canada releases
* What can be learned from household spending data?
* Small Business Stats Facts
RETURN
TO ARCHIVES
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INTRODUCTION - EDITOR'S COMMENTS
Hello,
Welcome to 2002 and the fifth volume of the BR Newsletter.
We are happy to report that Canadian entrepreneurial activity (at least
from our point of view) has returned to 2001 levels. While we were still
quite busy in the 4th quarter of 2001 we had noticed a significant drop in
small business research requests. This observation appears to have been a
short-lived trend likely linked to 9/11 and economic forecasts of a deep
recession.
We are looking forward to an excellent 2002. (After all it is our fifth
anniversary!)
I hope you find this issue helpful.
Sincerely,
John White
Editor
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WHAT'S NEW AT www.gdsourcing.ca - MAGS, STOCKS &
ASSOCIATIONS
The following web sites were added to the GDSourcing index over the
last four weeks. GDSourcing is a reference point for free Canadian
statistics on-line.
INTERNATIONAL FEDERATION OF STOCK EXCHANGES
Site: http://www.fibv.com
GDSourcing Site Summary:
https://www.gdsourcing.ca/works/StockX.htm
This site provides data on stock exchanges around the world. Canadian
exchanges covered are Toronto Stock Exchange, Montreal Stock Exchange,
Canadian Venture Exchange.
MASTHEAD ONLINE
Site:
http://www.mastheadonline.com/
GDSourcing Site Summary:
https://www.gdsourcing.ca/works/Masthead.htm
Top 35 Canadian Magazines by Revenue
Magazine Salary Survey
LEVERUS INC
Site: http://www.leverus.com/
GDSourcing Site Summary:
https://www.gdsourcing.ca/works/InternetLeverus.htm
Non-profit organizations and their use of the Internet
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STATISTICS CANADA RELEASES
The following statistics were release by Statistics Canada over the
last four weeks. We have listed those releases we feel are of the most
interest to Canadian entrepreneurs.
Very few of these statistics are available on-line. The URL listed is a
direct link to the press release associated with the data. It provides
contact and ordering information.
If you want to purchase any publication related to these releases
please see our web site:
https://www.gdsourcing.ca/works/StatCan.htm
We offer a 20% discount on most Stats Can publications and a 10%
discount on Stats Can electronic products. For more information you can
reach us at [email protected]. Put "StatsCan" in the subject line of
your e-mail.
We have identified below which releases have a FREE publication
associated with them.
AGRICULTURE
Farm business cash flows 1998, 1999 and 2000 (revised)
http://www.statcan.ca/Daily/English/020116/d020116d.htm
Agriculture value-added account 1998, 1999 and 2000 (revised)
http://www.statcan.ca/Daily/English/020116/d020116e.htm
Balance sheet of the agricultural sector at December 31 1998, 1999 and
2000 (revised)
http://www.statcan.ca/Daily/English/020116/d020116f.htm
Potato production 2000 and 2001 (revised)
http://www.statcan.ca/Daily/English/020117/d020117e.htm
ARTS,ENTERTAINMENT & RECREATION
Arts, entertainment and recreation services 1999
http://www.statcan.ca/Daily/English/011220/d011220k.htm
BUSINESS SERVICES
Annual Survey of Service Industries: Management, Scientific and
Technical Consulting 1999
http://www.statcan.ca/Daily/English/011220/d011220n.htm
Specialized design services 1999
http://www.statcan.ca/Daily/English/011220/d011220m.htm
CONSTRUCTION
Real estate agents, brokers, appraisers and other real estate
activities industries 1999
http://www.statcan.ca/Daily/English/011220/d011220l.htm
ECONOMIC INDICATORS
Employment and hours worked of National Accounts 1997 and 1998
http://www.statcan.ca/Daily/English/011221/d011221r.htm
EDUCATION
Youth in Transition Survey 2000
http://www.statcan.ca/Daily/English/020123/d020123a.htm
School board revenues and expenditures 1998
http://www.statcan.ca/Daily/English/020103/d020103b.htm
GOVERNMENT
Federal government employment in census metropolitan areas September
2001
http://www.statcan.ca/Daily/English/011220/d011220i.htm
Provincial and territorial government enterprises finance
Fiscal year ended nearest to December 31, 1999
http://www.statcan.ca/Daily/English/020121/d020121b.htm
Federal government enterprises finance
Fiscal year ended nearest to December 31, 2000
http://www.statcan.ca/Daily/English/020121/d020121c.htm
HEALTH
Cancer incidence 1999 (preliminary)
http://www.statcan.ca/Daily/English/020111/d020111f.htm
Therapeutic abortions 1999
http://www.statcan.ca/Daily/English/020118/d020118d.htm
MARKET
Demographic statistics October 1, 2001 (preliminary)
http://www.statcan.ca/Daily/English/011220/d011220d.htm
SMALL BUSINESS
Financing of small- and medium-sized enterprises 2000
http://www.statcan.ca/Daily/English/020115/d020115b.htm
TRADE
Annual store and chain surveys 1999
http://www.statcan.ca/Daily/English/011220/d011220o.htm
Annual Non-store Retail Survey 1999
http://www.statcan.ca/Daily/English/011221/d011221q.htm
TRANSPORTATION
Canadian Aerospace and Defence Sector Survey 2000
http://www.statcan.ca/Daily/English/011221/d011221o.htm
For-hire motor carriers of freight annual supplement: Financial
statistics 2000
http://www.statcan.ca/Daily/English/011221/d011221p.htm
Air charter statistics Fourth quarter 2000 and annual 2000
(preliminary)
http://www.statcan.ca/Daily/English/020121/d020121g.htm
Aircraft movement statistics 2000
http://www.statcan.ca/Daily/English/020122/d020122f.htm
Domestic and international shipping 2000 (preliminary)
http://www.statcan.ca/Daily/English/020116/d020116c.htm
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WHAT CAN BE LEARNED FROM HOUSEHOLD SPENDING DATA?
The Statistics Canada Survey of Household Spending is the only
comprehensive Canadian consumer survey that is accessible to new
entrepreneurs and small businesses.
There are certainly a number of other more detailed and brand specific
databases but all of them are priced for the corporate market. Some charge
more than double the entire advertising budget of a small business.
While market data is valuable for assessing market conditions and
planning business expansion, it is not prudent or effective to spend your
entire advertising budget on research!
The rule of thumb for marketing research budgets in Canada is 3%-4% of
your entire advertising budget. On average Canadian Small Businesses spend
$5000 on advertising annually and so their research budgets should be in
the $150 - $200 range. What can you get for $200? Not much!
It is therefore important for small businesses to spend their limited
budgets wisely. Fortunately the Statistics Canada Survey of Household
Spending provides an economical way to access consumer spending pattern
data. Combined with other easily available market data an entrepreneur can
compile a detailed assessment of their local market size and potential.
First and foremost the survey provides you with the percentage of
households that reported purchasing your product or service.
As an example we will assess the market potential for the photographic
film and film processing business in Sidney B.C. Both nationally and in
B.C., the percentage of households reporting such a purchase has remained
relatively stable over the last three years. However in the metropolitan
area of Victoria there has been a significant decline in the % of
households reporting a purchase.
.PERCENTAGE OF HOUSEHOLDS REPORTING . .. .. .. .
. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .
. .. .. .. .. .. Canada .. B.C. .. Victoria CMA
1998 .. .. .. .. 67.6% .. 74.0%.. .. . 76.8%..
1999 .. .. .. .. 67.6% .. 75.2%.. ... . 77.3%..
2000 .. .. .. .. 67.9% .. 73.0%.. ... . 71.7%..
. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..
Using the Victoria Census Metropolitan Area figures (the most
appropriate for Sidney B.C.), we can therefore expect that approximately
71.7% of households in Sidney will make a photographic film and film
processing purchase in a year. According to the publication "Canadian
Markets" (by the Financial Post), Sidney has 5583 households in 2002. That
means that the potential market size in households can be estimated at
4003. The publication "Canadian Markets" is available in many major
libraries and business resource centres.
For household estimates covering sub-municipal areas use the Canada
Post household counts database:
http://www.canadapost.ca/cpc2/addrm/hh/home.html
In addition to the percentage of households that make a purchase the
Survey of Households Spending also tells us how much on average households
spend in a year on photographic film and film processing.
. AVERAGE ANNUAL EXPENDITURE OF ALL HOUSEHOLDS ..
. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..
. .. .. .. .. .. Canada .. B.C. .. Victoria CMA
1998 .. .. .. .. $76 . .. $90 .. .. . $103 . ..
1999 .. .. .. .. $80 . .. $99 .. .. . $106 . ..
2000 .. .. .. .. $79 . .. $94 .. .. . $83 . ..
. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..
This figure represents the average of all households whether they made
a purchase or not so be aware it can oftentimes appear a little low. In
other words on average every household in Sidney spends $83 a year on film
and film processing.
You will note that in addition to the drop in the % of households
reporting, there has also been a substantial drop (-19.4% or $20) in the
average annual expenditure per household over the last three years.
Between 1997 and 2000 the photographic film and film processing market in
Victoria has weakened dramatically.
If we want to determine the overall the market size for a local area,
simple take this average of all households ($83) and multiply it by the
total number of households in the market (5,583). The film and photo
finishing market in Sidney is therefore estimated at $463,389 ($83 x
5,583)
Beyond the average expenditure of all households the Survey allows us
to further examine the average expenditure of only those households who
reported a purchase.
. AVERAGE ANNUAL EXPENDITURE OF HHLDS REPORTING .
. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..
. .. .. .. .. .. Canada .. B.C. .. Victoria CMA
1998 .. .. .. .. $112 .. $122 . .. . $134 . ..
1999 .. .. .. .. $118 .. $132 . .. . $138 . ..
2000 .. .. .. .. $116 .. $129 . .. . $116 . ..
. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..
Therefore the average actual customer in the metropolitan area of
Victoria will spend $116 a year on film and film processing. This figure
helps us to estimate the number of regular customers we will need for our
store to be even viable.
If we look at the Performance Plus database at the Industry Canada web
site ( http://www.sme.ic.gc.ca/) we
see that the most profitable small business Camera and Photographic Supply
Stores fall into the $102,000 - $259,000 range. This means that to earn
$180,000 (average of revenue range) in revenue ($11,000 profit), we need
1551 regular customers annually. (Total Revenue ($180,000) / Average
Annual Customer Expenditure ($116))
You can then compare this figure with the number of purchasing
households in your market and the number of competitors currently
servicing them. Continuing with our Sidney example we know from the above
calculation that there are potentially 4,003 (All households (5,583) x %
reporting a purchase (71.7%)) households that purchase film and film
processing services in this market.
We now need to look at the revenue sizes of our competitors. By using a
business directory such as InfoCanada (
http://www.infousa.com) which provides sales-range estimates of
specific businesses we can get an idea of the market share of our
competitors. Please see BR Newsletter Vol 4 No 10 (
https://www.gdsourcing.ca/newsletter/newsletter4-10.htm) for more details on
counting competitors with this database.
We find that there are two businesses in Sidney with photo-finishing as
a primary or secondary line of business. One has a revenue size of $30,000
to $500,000 while the other has a revenue size of $500,000 to $1 million.
Using the average annual expenditure of $116 their potential combined
market coverage is between 4,568 (($30,000 + $500,000)/ $116) and 12,931
(($500,000 + $1 million)/ $116) households.
Of course the above calculation is somewhat deceptive in the case of
film and photo finishing because both businesses have more than photo
finishing as a source of revenue (e.g. camera equipment sales, frames,
other photographic supplies etc.). Other expenditure categories included
in the Survey of Household Spending match business types more closely
allowing for this calculation to be more representative (e.g. hair
grooming, childcare, women’s clothing etc.).
Despite the over-estimation of market coverage, it still appears that
this market is currently well served. This does not necessarily mean that
a new business is not viable but it does suggest that a new start-up will
face strong competition and market challenges.
WHAT WE KNOW SO FAR:
FILM & FILM PROCESSING MARKET IN SIDNEY B.C.
Number of Households in Market: 5583
Number of Purchasing Households: 4003 (71.7%)
Estimated Market Size (value): $463,389
Market Growth in households (1997-2000): drop of 5.1% of households rpt
Market Growth in Average Annual Expenditure (1997-2000): -19.4%
Number of Regular Customers needed to earn $180,000: 1551
Number of primary competitors: 2
Percentage of market under-served: likely 0%
Please note: all of these figures are not meant as exact numbers. They
cannot be taken as such because they are based on averages and estimates.
However they can be used as a quick and inexpensive test of market
viability and opportunity.
If your market is located outside on a major metropolitan area, use the
most appropriate provincial averages.
Beyond an overall market profile, the Survey of Household Spending can
also reveal more information on the best customers in your market. First
of all it allows for segmentation by income quintile. A quintile is
arrived at by dividing all households into 5 equal income groupings.
So for example in B.C. each quintile has 303,410 households. The annual
income ranges of each quintile are as follows:
Lowest: Less than $20,400
Second: $20,400 - $36,300
Third: $36,300 - $55,320
Fourth: $55,320 - $81,000
Highest: Over $81,000
Data for average household expenditures on films and film processing
and the percentage of households reporting a purchase is available for
each quintile at a provincial level:
EXPENDITURE BY HOUSEHOLD INCOME, B.C. (2000)
. .. .. .. .. .. .. .. .. .. .. .. .. .. ..
. .. .. .. .. .. Ave Exp.. % Rpt .. .. ..
Lowest .. .. .. .. $30 .. .. 43.8% . .. ..
Second .. .. .. .. $59 .. .. 65.6% . .. ..
Third .. .. .. .. $90 .. .. 78.9% . .. ..
Fourth .. .. .. .. $131 .. .. 88.8% . .. ..
Highest.. .. .. .. $160 .. .. 87.8% . .. ..
.... .. .. .. .. .. .. .. .. .. .. .. .. ..
Clearly for this particular expenditure category income is a very
influential factor as to whether or not households make a purchase and how
much on average they spend. Nearly 9 out of 10 households with income over
$81,000 purchased film and film processing with the average expenditure
for this income range being $160 a year or more than one and a half times
that of the average household in B.C.
You will find for nearly every expenditure category that households
with higher income spend more. The key piece of information you are
looking for is the discrepancy between the 5 quintiles as well as the
market share by value and number of households. For film and film
processing there is a very significant jump in the % reporting as well as
average expenditure between the 3rd and 4th/5th quintiles. (e.g. $90 vs.
$131/$160 & 78.9% vs 88.8%/87.8%)
This discrepancy is further reflected in income quintile market share
by value:
Lowest .. .. .. .. 5.8%
Second .. .. .. ..11.7%
Third .. .. .. ..20.1%
Fourth .. .. .. ..26.1%
Highest.. .. .. ..36.3%
E.g. for every dollar spent on film and film processing, 36.3 cents are
from households in the highest quintile income range.
The market share in number of households is as follows:
Lowest .. .. .. .. 10.6%
Second .. .. .. .. 17.6%
Third .. .. .. .. 22.1%
Fourth .. .. .. .. 23.8%
Highest.. .. .. .. 25.9%
E.g. for every 100 households that purchase film and film processing,
one quarter (25.9%) are from the highest quintile income range. Keep in
mind that a quintile divides all households into 5 equal groupings.
Therefore for a product such a groceries the household market share is 20%
for all quintile groupings because all households report groceries as a
purchase.
You now want to compare this data to the demographics of your market.
Current household income data can be challenging to find. 2001 Census
data will not be fully released until the end of 2003 so for the time
being 1996 Census figures are the best we have available.
Looking at the data for Sidney it is clear that households tend towards
the bottom three quintile ranges. This suggests that the income resources
of this market are too thin to support another film and film processing
firm .
# OF HOUSEHOLDS IN SIDNEY B.C. - 1996 CENSUS
Less than $20,000:... 1,055 (21.2)
$20,000 - $40,000: ... 1,505 (30.2)
$40,000 - $60,000: ... 1,205 (24.2)
$60,000 - $80,000: ... . 640 (12.9)
$80,000 plus: ... ... . 575 (11.5)
You can locate 1996 Census data in most major libraries. Some municipal
web sites also have data online. In B.C., detailed community profiles are
available at the B.C. Stats web site:
http://www.bcstats.gov.bc.ca/DATA/CEN96/C96INDEX.HTM
Ideally you want your local market to have a higher than average
representation in the best income quintiles for your product/service.
Remember the overall provincial standard is that each income quintile has
the same number of households. The bottom three quintiles should therefore
represent 60% of the market. However in Sidney they represent 75.6%
Put another way, according to the market share table above, 49.7% of
the total number of the film & film processing households are in the top
two income quintiles, yet in Sidney, these quintiles represent only 24.4%
of households.
Of course before we make too many conclusions from 1996 Census data we
need to assess more current income levels in Sidney
The Financial Post publication Canadian Markets does not provide
household income range data, however it does indicate average household
income. In 2002 it is estimated that the average household income in
Sidney is $47,500. The provincial average is $55,000. According to the
1996 Census the average household income in Sidney was $45,001 while for
B.C. it was $50,667.
The income resources of Sidney have not strengthened significantly
since the 1996 Census. In fact while the provincial average household
income grew by 8%, Sidney lagged behind at 5% growth. We should therefore
not anticipate that income conditions of this market have improved since
1996.
In addition to income data, the Survey of Household Spending provides
household type segmentation. This is yet another tool to help identify
your best customers and estimate local market potential.
The value and number of households market share for film & film
processing breaks down as follows:
.. .. .. .. .. .. .. .. .. .. .. .. ..
............................Value . .. # of Households
Husband-Wife Family with Children.. .. . 45.1% .. .. .. 39.9% .. .
Husband-Wife Family without Children . . 23.4% .. .. .. 24.6% .. .
One Person Households. .. .. .. .. .. .. 11.6% .. .. .. 14.6% .. .
Lone Parent Households .. .. .. .. .. .. 7.4% .. .. .. 9.1% .. .
Other.. .. .. .. .. .. .. .. .. .. .. .. 6.5% .. .. .. 6.2% .. .
Clearly (and not surprisingly) husband-wife families with children
control the highest market share both in value and sheer numbers of
households. 45.1 cents of every dollar spent on film and film processing
is by a husband-wife with children household. They also represent 39.9% of
all customers. In fact 83.8% of husband-wife with children households
reporting a photographic film & film processing expenditure in 2000. On
average they spent $110 per year ($131 per household actually reporting a
purchase).
Using the 1996 Census we find that the households make up of Sidney is
as follows:
Husband Wife No Children: .. .. .. 1807 (36.3%)
Husband Wife with Children:. .. .. 1008 (20.3%)
Single Parent:.. .. .. .. .. .. .. 350 (7.0)
Single Person & Other Households:. 1813 (36.4%)
Again the Sidney market segmentation does not encourage the opening of
a new film & film processing business.
The Financial Post publication "Canadian Markets" does not estimate the
number of husband-wife families with children in 2002 but it does indicate
the average number of sons/daughters at home: 0.7. This figure is
identical to Census average in 1996. Therefore there is no reason to
assume there has been an increase in the husband-wife with children
segmentation.
In addition to a lack of husband-wife families with children, Sidney
also has a high percentage of singles senior households. In fact in 1996,
19.8% of all households in the community had a senior living alone.
While there are many product/service categories which are frequently
used by seniors, the Survey of Households Spending reveals that
photographic film and film processing is not one of them. In 2000, only
29% of one person senior households reporting making such a purchase with
an average annual expenditure of $18. Husband-wife senior households
reported higher purchase levels (61.2% reporting a purchase with a $49
average annual expenditure) however they are still far below the Victoria
metropolitan area average (71.7% reporting a purchase with $83 average
expenditure).
In 1996, seniors represented 31% of the population of Sidney. In 2002,
"Canadian Markets" estimates that this figure has dropped to 26.5%. While
this suggests an improvement in film and film processing market
conditions, the lack of increase in the presence of children is not
encouraging.
(NB: age segmentation is limited to seniors and non-seniors in the
Survey of Household Spending.)
When we look further at the PSYTE psycho-demographic categories in the
"Canadian Markets" publication we find that our suspicion of an older,
average to lower income market is confirmed.
The following categories segment the population of Sidney in 2002:
Nesters and Young Homesteaders: (30.8% of Sidney population)
Old singles and couples, some younger couples and small families. Older
neighbourhoods in towns and smaller cities outside of Quebec. Dwellings
are mixed row housing and low-rise, single-detached. Mostly rented.
High-rise Sunsets: (18.3% of Sidney population)
Older households, empty nesters and retired, living in high-quality,
high-rise apartments on arterial roads in larger urban areas across
Canada. A good proportion are singles
Old Leafy Towns: (16.0% of Sidney population)
Established stable neighbourhoods of older, single-detached, owned
dwellings in the nicer residential areas of towns and townships.
Maintainer age has a strong skew to 55+. Education and occupational status
are quite mixed. Younger families with children are starting to move in.
Small City Elite (16.0% of Sidney population)
Small, traditional families and older couples headed by middle-aged,
well-educated managerial/executive maintainers. Children are typically
over 6.
Aging Erudites: (14.5% of Sidney population)
Older, well-educated singles, couples and small families. Managerial
and upscale white collar occupations. Single-detached and other
predominantly '50s dwellings; 68% owned; 10% apartments. Mortgages are
small. These people soak up culture.
Aged Pensioners: (4.5% of Sidney population)
Largely very old singles, some couples, renting small apartments, flats
and other dwellings in in-town areas of small and medium-sized Canadian
cities.
CONCLUSION
While a market certainly exists for photographic film and film
processing in Sydney B.C. it appears that there is not a great deal of
potential for a new business to open. The two existing businesses can
clearly cover market demand. The age of the population, lack of
husband-wife families with children and the community’s financial
resources do not encourage a new start-up in this market. The only
opportunity would be if there was a great deal of market dissatisfaction
with both competitors. Even then considering that the overall market has
dropped between 1997 and 2000 both in average expenditure and % of
households reporting caution would be strongly advised.
As you can see from the above example, the Survey of Household Spending
is a wealth of information. Once it is compared with existing data such as
that provided by the 1996 Census and the Financial Post publication
"Canadian Markets" (both of which are available in most major libraries) a
detailed assessment of local market potential can be made.
For more information on this database please see our web site at:
https://www.gdsourcing.ca/CMEinfo.htm
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SMALL BUSINESS STATS FACTS
1. What percentage of Canadian businesses with 1-4 employees sought
debt financing in 2000?
23%
Source: Statistics Canada (Jan 2001)
2. What percentage of Canadian businesses with 1-4 employees received
debt financing in 2000?
79% of those which sought it.
Source: Statistics Canada (Jan 2001)
3. Which sectors had the lowest loan authorization rate?
(% of those who sought a loan who received approval)
Knowledge-based industries.. ..70%
Wholesale and retail trade.. ..71%
Manufacturing .. .. .. .. .. ..77%
Other sectors .. .. .. .. .. ..80%
Professional services.. .. .. .85%
Primary .. .. .. .. .. .. .. ..88%
Agriculture .. . .. .. .. .. ..93%
Source: Statistics Canada (Jan 2001)
4. How many home-based businesses were there in Canada in 2000?
1,369,000
Source: Statistics Canada (2001)
5. What % of home-based businesses have pre-school age children?
10.2%
Source: Statistics Canada (2001)
RETURN TO TABLE OF CONTENTS
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