Here’s how the chart works: The horizontal line is the average
Success Metric across the population scale. If population had an impact on the success metric we’d see the line at an angle.
We examined things such as popu-
lation, and the median income of the city… and the state. We also looked at the shop in terms of how long it was in business. It seemed reasonable that an established business would be more profitable than a startup, or one that was only open a few years. So the 2009 study focused on
things outside the control of the shop owner. Was it dumb luck that the shop happened to be in a great place where business thrived or was it something else?
First let’s look at the locations of
the shops that participated in the study. The map in figure 1 shows a colored dot for every participant. If you recall from previous What’s Working articles, we used a Success Metric to score the businesses. The Success Metric ranks a business from zero, the lowest, to 20, the highest. The colored dots on the map rank like this:
• Red — Success Metric from 0 to 5 • Orange — Success Metric from 6 to 10 • Blue — Success Metric from 11 to 15 • Green — Success Metric from 16 to 20
Next we looked at the popula-
tion where these shops were located. Figure 2 shows a scatter plot of the results. Here’s how the chart works: The horizontal line is the average Success Metric across the population scale. If population had an impact on the success metric we’d see the line at an angle. The line is virtually horizontal,
with maybe a slight downward trend as the population increases, which means
GEARS May/June 2010
Figure 3
Figure 4
that the city population has little role in the success of the business. When we narrowed it down to smaller cities (figure 3) it flattened out completely. This further supports our conclusion that city population isn’t a factor in business success. How about the income level of
the city? Figure 4 shows a scatter plot of city median income. The income is shown at the bottom and the Success Metric on the left. Just like the popula- tion chart, the line represents the aver- age Success Metric across the income scale and the angle of the line will indicate any change in Success Metric as the income changes. Here again, the line is pretty flat.
Most of the shops are in areas with a $30,000 to $60,000 income range,
but as you can see there are plenty of shops in the higher Success Metric, and just as many in the lower Success Metric. When it came to how long these
shops were in business we were really surprised. We looked at the range of shops that participated and eliminated those that were close to the average in terms of years in business (figure 5, shaded in red). This left us with shops having been in business 11 years or less, and those having been in business 38 years or more. If years in business were a factor this chart would reveal it.
The more established shop had a
slight edge — the results were more concentrated toward the average — but in terms of Success Metric they
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