A piano tuner recently moved to Buffalo, NY, and would like to assess the business possibilities for him in his new home. He plans to estimate how many piano tuners the greater Buffalo area can support, and compare that to the number listed in the phone book. How do we advise him as to how to estimate the "right" number of tuners for the area?
One approach is simply to guess. Would it be 1, 10, 50, or 100? Are you comfortable with this approach? I am not. An approach I would be comfortable with would be to search for data on estimates of how many piano tuners per capita there are in the U.S., and apply that ratio to the Buffalo area population (let's use 1.3 million). Is data on this likely to be available? Test your resourcefulness by trying to find it.
Assuming that data is not available, we must go to the "some assembly required" approach to estimating, that is, deriving the estimate from data which is available modified by related local and national data, norms, and "rules of thumb." While this seems so indirect as to be little better than just guessing, it can be a very useful exercise. If nothing else, it causes us to identify some important variables and how they relate to our business of interest. The inaccuracies of compounding estimates can be minimized by working in ranges to give us a "ballpark" figure.
How can I derive a meaningful estimate from generally available information? It would be interesting to know what percentage of American households own a piano, and how often they get it tuned. If the data is national, we may need to apply some local adjustment factor. Given the annual number of piano tunings, we can divide by the annual capacity of a tuner to determine how many are needed.
I will do an "off-the-top-of-my-head" calculation to illustrate the method, then leave it to you to provide real values:
Buffalo has about 400,000 households population divided by 3 members average); 8% of American households own pianos. I can think of no reason to apply any local adjustment to this figure, so we are talking about roughly 32,000 pianos. My guess is that two-thirds of all pianos are merely furniture, so that the remainder of about 11,000 are played regularly and in need of tuning. Tuners recommend that a piano be serviced twice a year, but my guess is that the average is probably once a year for active pianos, or 11,000 tunings per year.
A tuner can service 2 to 4 pianos a day; let us say 3 per day, 5 days a week, 50 weeks a year, or 750 tunings per year per tuner. To provide Buffalo's 11,000 annual tunings would require almost 15 tuners. The phone book lists 9. Sounds promising!
How do you like this? How many would you have guessed without this analysis? Does the result seem reasonable? Enough on which to base the opening of a business?
Could it have been done more scientifically? How? Would discussions with piano tuners and music stores have been useful? Are there any journals worth consulting? Would a survey have helped?
Are pianos in places other than homes? Are there tuners not listed in the yellow pages?
The Census of Retail Trade provides the average number of stores per capita for a variety of retail outlets. Based on their data, we can determine how well our proposed market area is served on a relative basis for the type of business we plan to start. For example, there is, on average, a stationery store for every 33,000 people; for every 26,000 people there is one bookstore and one nursery and garden supply store. The population can presumably support a barber shop for every 2,200 residents, and a furniture store for every 3,000.
John B. Vinturella, Ph.D. has almost 40 years experience as a management and strategic consultant, entrepreneur, author, and college professor. For 20 of those years, Dr. Vinturella was owner/president of a distribution company that he founded. He is a principal in business opportunity sites jbv.com and muddledconcept.com, and maintains business and political blogs.
With the help of balanced scorecard strategy map, it is... Read More
Writing a business plan can be tricky when all the... Read More
Microsoft Great Plains does wonderful ERP job for horizontal markets... Read More
Does the competition drive you crazy?Are they relentless about taking... Read More
Ask Yourself three simple questions that affect your strategy planning...... Read More
Experts estimate that 90 percent of Australian businesses are overspending... Read More
One of the most powerful driving forces in human nature... Read More
The boom of the dot-com era in 1999 brought the... Read More
Succession planning requires the owner of a small or medium-sized... Read More
If you are a successful franchise of a large franchise... Read More
Succession planning, like any business acumen, is both an art... Read More
Twice a year, Bill Gates goes to a remote island... Read More
Scenario OneDuring a recent presentation, a business owner was given... Read More
Too much goal setting and strategic planning can leave you... Read More
So what makes a vision successful? Everyday companies try to... Read More
The time when a website was just a simple set... Read More
Every decade we seem to come up with a buzz-word... Read More
We all know that nothing runs without a plan, and... Read More
There are no "rules of thumb" in the pursuit of... Read More
I recently took an organizational behavior class where my professor... Read More
Why do so many companies languish and watch as their... Read More
A survey released by the American Institute of Certified Public... Read More
Is there really anything as a problem? Does chaos or... Read More
Every new business owner knows that a business plan is... Read More
With a heightened awareness of opportunity, ideas can often be... Read More
Many of us are discouraged by the networking events that... Read More
More than $117 billion passed hands from Internet shoppers to... Read More
Much of what we heard in the mass media about... Read More
Diversify - to make diverse, give variety, to balance, to... Read More
Business seems to drop, slow or even stop during the... Read More
One Research Scientist at the Hewlett-Packard (HP) Imaging Systems laboratory... Read More
Whether you are seeking capital for your company or are... Read More
How often does your company make a quantum leap forward?... Read More
I'm not talking about posting the HBO schedule on your... Read More
This week I coached a wonderfully lovely woman I'll call... Read More
When someone mentions business planning we have been conditioned to... Read More
Here is an abstract thought on studying nature and the... Read More
When looking at Akron carefully one cannot help but notice... Read More
A menu is the foundation of any restaurant; Guests will... Read More
A business plan precisely defines your business, identifies your goals,... Read More
I. INTRODUCTIONThe term resilience, which is of frequent use in... Read More
Last week we talked about a few of the ways... Read More
The decision to sell, or not to sell your business... Read More
What gets measured gets done.How do you keep your business... Read More
Business rises and falls on leadership. According to business guru,... Read More
If you own a mobile franchise business and wish to... Read More
Have you ever done a SWOT analysis? No, it's not... Read More
With the help of balanced scorecard strategy map, it is... Read More
How are you feeling today? Good, not so good, great?... Read More
If you are a successful franchise of a large franchise... Read More
When you start your program to purchase your "ideal" company,... Read More
I read once that something like 30 percent of all... Read More
The current state of the available technology at the disposal... Read More
Franchised companies often require what some believe to be excessive... Read More
If you own a mobile car wash business or auto... Read More
Succession planning, like any business acumen, is both an art... Read More
Writing a business plan is not an easy endeavor, nor... Read More
How important is a vision statement to your company or... Read More
Cassy was an employee of a nonprofit who had been... Read More
There are no "rules of thumb" in the pursuit of... Read More
Why do so many companies languish and watch as their... Read More
Writing a business plan is no easy task, sure you... Read More
Many of Ohio's downtown areas are in need of upgrading... Read More
Storytelling and writing a business plan actually go hand in... Read More
If you are a manufacturer wanting to use your business... Read More
We all agree Strategic Planning is a critical part of... Read More
Strategic Planning |