If your business is one where clients or customers come to your place of business, you need to make sure there’s a large enough population base to support it. If you are located in a major metropolitan area, do some research to discover how many people live within a three-to-five mile radius of your operation or intended operation. (Your local library is a good place to start.) A population base of 20,000–30,000 people will provide a strong marketing base for most businesses.
In lightly populated rural areas, people are not averse to driving long distances. They do it every day to get to the store or to work or to school. In such an area, it’s possible to stretch the population base to a 15–20 mile radius from your location to achieve the necessary number of people to sustain a profitable business.
If yours is the only business of your type in your chosen area, you have the potential to capture a 100% share of your available population base. For instance, if you were to open a golf instruction business in a town of 30,000 people, you would have close to 3,000 potential students since about 10% of the US population plays golf. If you were to open a martial arts school, you would only have 300 potential students since about 1% of the population is interested in martial arts. If you were to open a restaurant, your potential market share might be 2,400 diners.
What percentage of the population in your area has a need for, or interest in, your product or service?
How far will they be willing to drive to get it?
How much competition is after the same market?
Are there enough people within your area to provide you with a steady client base?
If your customers come to your site to purchase products or services, you must make these calculations to make sure your business will succeed at any given location.
To make a living, you need to have enough potential customers who will come to your business. Do the math for your business.
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