Demographics – noun. The statistical characteristics of a population. This type of data is widely used in sociology, public policy and marketing. And by small business owners. Well, hopefully…
I’ve been reading a report by some American headhunters. They make a fairly obvious point – that as the population in the West ages, Joe Average will move past his peak spending years. This will have serious implications for businesses selling consumer products and services.
Ho hum, you think. Quite obviously, Sherlock. But it won’t make that much difference…
Actually, it will – the figures are startling. As it’s Friday, let’s take drink as an example. In 2009 in the US the average person in the declining 35-44 age group spent $400 per year on non-alcoholic drinks and just over $500 on alcohol. The over 65 group spent $260 and $300 respectively. Figures for food, eating out and shopping showed similar trends – as evidenced now in the States where mall vacancies are at their highest for 11 years.
Of course, you can counter this argument by pointing out (quite rightly) that the over 65’s spend far more on support bandages, homecare, healthcare… And walk a hundred yards in any town centre and you’ll soon realise that there’s no faster growing sector of the economy than mobility scooters.
So it’s six and two threes, right? An ill wind and all that?
In one sense, yes it is. But – and I’m trying desperately not to sound like a Chinese proverb here – you need to know which way the ill wind is blowing. There’s no point waking up one morning and wondering where all your customers have gone, only to find that they’ve moved into sheltered accommodation and they’re not spending with you any more.
Maybe the answer is to carry out a PEST analysis on your business. We’re all aware of a SWOT analysis: strengths, weaknesses, opportunities, threats. But how many people have ever done a PEST analysis on their business? How many people even know what PEST stands for? Political, economic, social and technological.
If you want to see a full PEST analysis there’s a good example here – on the delightfully named businessballs.com
But let’s look at some of the key points as they might affect your business in North Yorkshire.
Political: how is Government policy going to affect you? What about planning laws? If you’re involved in supplying the public sector in any way, what impact are the cuts going to have?
Economic: apart from asking the obvious question – ‘when will the economy recover?’ – you might consider taxation, interest rates, competition from low-wage economies overseas…
Social: the demographics mentioned above come under this heading. As do lifestyle trends, fashion and ethical concerns.
Technology: I barely know where to start with this one. Amazon, Facebook, Twitter…now I see that the NHS are planning to use our phones to treat us. If you don’t keep an eye on technological changes then you’re simply driving the car straight towards the edge of the cliff.
Great, you think. Ed recommends a PEST analysis. Well, hello, Ed. I’m running a business, here. I haven’t got time. Actually, you have. Because I don’t recommend you do a PEST analysis as a one-off exercise and then forget it. I think a PEST analysis is ongoing – the sort of document you can keep on your phone and check when you’ve a few minutes spare. The sort of document you can update when you see a news story or some stats that might impact on your business. (Anyone seen the projected obesity figures this morning?)
I’ll leave you with that – have a great bank holiday. And if you’re 35-44, remember your $500 booze budget has to last another fifty-one weekends!