Estimate the number of companies within a city

marketsizing
New answer on May 15, 2021
3 Answers
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Anonymous asked on Jul 03, 2019

Hi, have been thinking about this for a while and want to seek everyone's approach on how to estimate the number of companies that exists within a city.

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Daniel
Premium
replied on Jul 03, 2019

Hi,

one approach is to estimate the number of inhabitants of a city, who are employed in general. From there you can estimate the number of people who work in the city or commute to a company that is somewhere else; use a percentage of the workforce. Then I would estimate the number of people employed by a single company and from there you can guess the number of companies in the city.
Hope this helps! There are several other ways to do it.

Best,
Daniel

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Vlad
Expert
Content Creator
replied on Jul 03, 2019
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi,

  1. Split the companies into Small, medium, large enterprises and define the average number of employees in each
  2. Define the split between # of companies of each type (e.g. 70% are small businesses, 20% med, 10% large enterprises)
  3. Using the weights of each segment and av # of employees get the exact number of companies from the population

Best!

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Ibrahim T replied on May 15, 2021

In order to know the number of companies within a city, you should calculate two things:

1- Number of employed individuals within the city

2- Average number of employee per company (large, mid, small)

To calculate the number of employees, you can divide the population into households and them estimate the number of people that eligible to work in a household. Then, you need to multiply by the employment rate. Formula: Housholds*Individuals eligible to work per household*(1-unemployment rate).

To calculate the average number of empoyee per company, you should take the weighted average per company size. (Small 70% 5 employee, Mid 25% 50 employees, large 5% 100 employees). After multiplying the number of employees by the percentage, you will get the avg number of employees per company.

When you get the two numbers, divide them and u will get the number of companies in city.

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