Estimating Sales: Census Figures

April 13, 2006

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The Bureau of the Census can provide you with a lot of information that can help you to estimate your projected sales revenue. For starters, Census demographic information can tell you the numbers and types of people who live in a specified geographic area, classified by age and sex. It can also tell you the number of households, the average household size, and the average, median, and per capita income levels in a given area.

The Census Bureau also tracks information on sales volume for various business types by geographic location. This information is available in most larger public libraries. It's usually a few years out of date, so if your new business is one that will be greatly affected by the time lag, you will want to make adjustments for it. Remember that any sales figure you come up with will still be just an educated guess.

Along with the sales figure, Census publications will provide other financial details, such as cost of goods sold and payroll.

Here's an example of some information gathered from the Census Bureau for a fictitious submarine sandwich shop in Cedar Rapids, Iowa.

In the Census of Retail Trade publication, it showed that in 1992 there were 284 eating and drinking establishments. The average sales per eating establishment were $548,866.

Based upon other research, it was determined that this is not a realistic number for the planned sub shop. This number needs to be adjusted for other known facts. Assume that the average customer will spend $4.50 per meal. Also assume that the restaurant will have between 150 to 200 customers on an average day. Multiplying the $4.50 times 175 customers (average of 150 and 200) times 365 days, the sales will compute to $287,438 per year.