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Estimation of number of businesses

Martin

Hi guys, I was wondering do you have some good aproach which could be used to establish the number of businesses in any given country? Sure its not hard to get to the number of households, but how do you do it for businesses?

Thanks, Martin!

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Kevin replied on 03/26/2016

Martin,

An approach I have used in the past is to make an assumption as to what portion of a complete businesses sales are for the household channels, and then size the non-residential portion accordingly. Granted, this is not very accurate but if you assumed that the majority of TV sales were to households (based on positioning as a consumer electronic after all) then if 70% of sales were to households, and you already have the number sold to households, then you can scale up for the other users.

I understood your earlier question to be how many businesses regardless of industry would be in a prticular country and my approach would be to either tackle this bottoms up from number of households, average earnings per household and average spend so much - basically get the size of the economy in some manner, and then assuming an average revenue per business, then you have the numbe rof businesses. This requires a restriction or assumption on foreign investment etc and implies that household spend is entirely directed to local business only, but at least it is a start.

Kevin

Martin replied on 03/26/2016

Hi Kevin, thank you for your thoughts. I like the total sales apporoach that makes a lot of sense. Maybe the interviewer will be fine with that if you say a reasonable percentage of what could go to households and thus what is left for the other markets - but again that will be tough one :/

Martin replied on 03/25/2016

Hi Mark,

thanks for your input! What I am thinking is more like some general approach. For example we know that US has 300 million people, 3 people per household so 100 million households (Most intreviewers should be fine with this). Then lets say every household has on average 1 TV, thus he have 100 million TVs. But now comes the tricky part, how many TVs are outside of these households? So businesses, clubs, fancy golden cars of celebs etc. And again we need some very reasonable assumption such as 3 people per household. So thats where I struggle.

Cheers, Martin!

Mark replied on 03/25/2016

Hey Martin,

That's the main case to find a good approach :D

I always try to find sth similar to the product or business about which we are talking. Than I can put both businesses into relation and compare which one is bigger or not.

Another way would be to think about the product this business is developing. Then you can again try to estimate the market of the product and thus that of the business.

Cheers from Rotterdam ;),

Mark

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