Industry:All businesses fall under the umbrella of an industry. It is therefore imperative that you understand the industry to which your business belongs.

North Industrial Classification System (NAICS) codes and Industry ResearchOne of the first ways to get started in researching your industry is to find out what NAICS code or codes are relevant to your business.

A NAICS code is an industry code developed and used by the federal government to classify and keep track of all business and economic activity in the United States. Along with the Economic Census, which we will be discussing later, the NAICS code system is revised every five years in years ending in 2 or 7. So, the next revision will be in 2012. Most NAICS codes are rarely, if ever revised, but occasionally they are. You will be able to tell by going to the section containing the NAICS codes. There will be a record of 15 years, or 3 revision records, for each NAICS code.

Finding your NAICS code can be done in two (or more) ways: either by means of the Census website or by the NAICS print directory located at most public libraries. To find your NAICS code on the Census home page, look under the “Business” tab. Here you will find the code directory.

Each code begins with two digits: 44, 45, etc. Each double digit is accompanied by a text description explaining the major industry that each code represents. In the case of 44 (Retail) you will find businesses relevant to retail. As your search gets more specific each double digit code expands, finally reaching a maximum of 6 digits: the longer the digits, the more specific the designation. Therefore, if you were looking up “Convenience Stores,” your NAICS code progression would go from 44-45 to 445 to 4451 to 44512 to 445120, which is the final code for “Convenience Stores.” Using the print directory is similar. You can use the index as a keyword search in the print version.

The importance of NAICS codes are found in the following four main points:a) Federal, state and, sometimes, local governments use NAICS codes as a means to attract

qualified companies to bid on contract job offerings. In order to be qualified as a government-certified contractor your business must have the relevant NAICS code or series of codes in order to qualify to bid on government contracts. In other words, the certification process requires NAICS codes.

b) In order to secure a business loan from a bank or attract an investor to invest in your business, you will need to identify the NAICS codes that are relevant to your business and include them in your business plan. There are two main reasons for this: first, when a banker is reviewing your business plan he or she will be interested in comparing your financials with those of the national average. The banker will do this by referring to the RMA (Annual Statement Studies: Financial Ratio Benchmark), published by Risk Management Association, which measures national

financial averages and ratios for each business class. This resource is organized by NAICS code. Therefore, if you don’t have a NAICS code identified, the banker will be unable to make the necessary comparisons. And, secondly, remember that the bottom line for a banker is that you will be able to pay off your business loan; the business plan should be a persuasive document assuring the lender that you will be able to live up to your financial responsibilities. One way the banker will be persuaded that you are as prepared as possible to run a successful business is if you demonstrate a deep knowledge of your business, its industry, and the information pertinent to both. Knowing your codes is only a small but necessary step in the process.

c) Knowing your NAICS codes early on in your research will allow you to efficiently find information in both print and online resources. As mentioned above, the RMA is organized by NAICS code. Many online databases also use the NAICS to allow for efficient search capabilities. It is just a way to easily wade through the vast amount of information.

d) And finally, the last important factor is that by knowing the description of your NAICS code you know the definition of your industry. The words used in the definition may be useful as keyword terms for executing searches in government websites and online Internet searches.

Federal and State Industry Research ResourcesThe next step in researching your industry is also located on the Census Web page at www.census.gov. This free website, produced by the federal government, will not only be useful for finding industry information but also for finding economic and demographic information pertaining to your business.

Look for “Business” under “Topics” for this page.

Two main sections are useful for finding industry information on the Census website: the first is the Economic Census and second is the County Business Patterns1 page, both accessible via the Census homepage. The Economic Census is arranged categorically by NAICS code. This is another example of why already knowing your NAICS code is going to help you find information. Like the NAICS code, the Economic Census is done every five years in years ending in 2 or 7. The new Census was completed in the year (2012), and the information is beginning to be released. 2015 – early-2016 is the year all 2012 Economic Census information will be released. (By the way, Census information is never released all at once; there is a schedule on the Census page that shows when each piece of information will be released. SEE http://www.census.gov/econ/census/schedule/ ).

You can see that after five years the current Census becomes dated. There are ways to take that into account and buffer the information with more current information. We will get to these resources shortly.

A Note about the Currency of NAICS Codes:

1 “Annual series that provides subnational economic data by industry. The series is useful for studying the economic activity of small areas; analyzing economic changes over time; and as a benchmark for statistical series, surveys, and databases between economic censuses. Businesses use the data for analyzing market potential, measuring the effectiveness of sales and advertising programs, setting sales quotas, and developing budgets. Government agencies use the data for administration and planning.” (Data.gov, County Business Patterns).

Beware that NAICS Codes can change with each new census. An example of this is listed below. One way to determine if it has changed is to look at the concordance on the NAICS code page of the Census. As we can see, the code in the right-hand column was the 2007 code for Seafood Canning, which has now been subsumed into a broader code designation, i.e. 311710 for Seafood Product Preparation and Packaging.

311710 Seafood Product Preparation and Packaging

311711 Seafood Canning

The Economic Census provides you with a lot of information; It is something you may want to explore further, e.g., by looking at the Survey of Manufacturers2 if you a starting a manufacturing business. However, for the typical needs involved in writing a small business plan, the only information that will be truly essential to you will be found in the, “Industry Snapshot.” The Industry Snapshot is a great tool for determining growth projections of each business as well as overall health of the industry.

For example, the information contains stats from the prior Economic Census and the current one, allowing statistical comparisons in categories like number of establishments, sales, and annual payroll. It may be the case that for one business, such as Convenience Stores, the number of establishments has decreased over a five year period, but the total revenue has increased; this may be due to consolidation of establishments that are at the same time generating more revenue. If this is the case, then it may be interpreted as the business having growth potential. The “annual payroll3” is a measure of what role the business plays in the economy as well as a way of determining the size of a business. When a worker gets paid, the worker typically spends his or her paycheck, thereby putting the money back into the economy. This is another way of determining the health and growth potential of a business. Other indicators on this page are self-explanatory, such as total employment and revenue per establishment.

Navigating the Economic Census:

2 “The Annual Survey of Manufactures (ASM) provides key intercensal measures of manufacturing activity, products, and location for the public and private sectors. The ASM provides the best current measure of current U.S. manufacturing industry outputs, inputs, and operating status, and is the primary basis for updates of the Longitudinal Research Database (LRD). Some of the many uses of this data by federal, state, and local governments are measuring productivity, updating producer price indexes, evaluating and forecasting future industrial activity, benchmarking current data on manufacturing shipments and inventories, economic policymaking and forecasting, and preparing annual updates of the GNP and GNP weight deflators.” (Data.gov, Survey of Manufacturers)3 “Payroll includes all forms of compensation, such as salaries, wages, commissions, dismissal pay, bonuses, vacation allowances, sick-leave pay, and employee contributions, to qualified pension plans paid during the year to all employees. For corporations, payroll includes amounts paid to officers and executives; for unincorporated businesses, it does not include profit or other compensation of proprietors or partners. Payroll is reported before deductions for social security, income tax, insurance, union dues, etc.” (Census.gov, Glossary)

Navigating the Census page can be daunting, but getting easier with each iteration design the Census produces. There are usually a number of redundancies on the site to get the researcher to a spot. For instance, if the researcher is interested in looking at Industry Snapshots he or she can get there by looking at the left-side menu on the Economic Census homepage; or, on the “Finding Data” tab at the top the researcher can locate a link to the Industry Snapshot page. The “Finding Data” tab at the top of the page is probably the best way to find a centralized location to access industry information in the Census. (As of 5/19/2014)

Industry Snapshots:

Industry Snapshots are a “static” picture of industries taken during an Economic Census year. The information contained in an industry snapshot is very useful for looking at the state of an industry as well as making projections and looking for trends. In a trend analysis, the researcher can look at historical snapshots and look for these trends. Is an industry growing? Is it stagnant? Is it declining? Looking at Sales, Payroll and Number of Establishments over time can say a lot about the state of an industry and its future potential.

All industry snapshots are arranged by NAICS code or by type of industry, e.g., Mining. Clicking on any one of the “Go to” icons will lead to another page providing a more detailed focus to the person’s research.

Once at the final page for the industry in question, the researcher will find information in both table and graphic form. Information on sales, payroll, number of establishments, total employment and more are available.

Industries arranged by NAICS Code or type of industry.

Beta: Bound to change over time, soon.

On the same page as listed above the researcher can also go further than the Industry Snapshot by following the Industry Sampler link to the following page:

Survey of Business Owners http://www.census.gov/econ/sbo/

Like the Economic Census, the Survey of Business Owners (SB0)4 is done every 5 years. Unlike the Econ Census, it is only a survey. The 2007 is still the most recent release of data; however, the 2012 data will be released throughout the 2015 year.

4 “Provides the only comprehensive, regularly collected source of information on selected economic and demographic characteristics for businesses and business owners by gender, ethnicity, race, and veteran status.” (Data.gov, Survey of Business Owners).

“The Survey of Business Owners provides the only comprehensive, regularly collected source of information on selected economic and demographic characteristics for businesses and business owners by gender, ethnicity, race, and veteran status. Title 13 of the United States Code authorizes this survey and provides for mandatory responses.” (Citation: http://www.census.gov/econ/sbo/about.html)

When using the SBO, the researcher can access historical data. For instance, he or she can find survey data from 1992 – 2002 in addition to newer data from 2007 and eventually 2012. This allows for comparisons or trend analysis. Some of the categories measured by the survey are characteristics of businesses and characteristics of business owners. In other words, both demographic and business information is available to the researcher. All information is contained in American FactFinder (AF), so when the researcher clicks on a link he or she will be taken to the American FactFinder’s tables. Of course, you can also find this information by directly doing searches in AF, but it is much easier to go through the SBO page.

To access this information, open up the homepage for Business & Industry by clicking on the Business tab at the top of the Census.gov page. Then open up the following link: (As of 5/19/2014)

Small Business on the Economic Census: http://www.census.gov/econ/smallbus.html

The Economic Census does not specifically track small businesses qua small businesses. In other words, they do not distinguish a small business from a large one. Instead they simply keep track of businesses

by statistics such as how many employees work for a business, &c. If a patron or researcher is looking for information on businesses—say, with only between 1 and 4 employees, he or she can find that information in one of several ways. The easiest to remember if the researcher is specifically interested in small business research is to go to the business tab at the top of the Census page and look at the drop down menu for “Small Businesses.” This link takes the researcher to the section of the Economic Census that shows data by business size. (As of 5/19/2014)

As mentioned before, since there is a waning timeliness component to the Economic Census there are several ways to obtain current information to allow you to make growth projections. The County Business Patterns is an annually collected census of businesses in the United States. This census is staggered for release to the public by two years. Every July a new edition of the Business Patterns is released. So, if you were researching in the year 2012 during the month of July, you would have access to the Business Pattern census for the year 2010. This census does not give as much information as the Economic Census; basically, all it measures is annual and 1st quarter payroll5, number of establishments and number of employees. However, this can still be used as a means to see economic activity relative to a specific business and location. One useful feature of this resource is that you can look at the stats by year to get an idea of what trends the last ten years or so demonstrate.

5 1st Quarter Payroll measures the time period from January through March. Looking at the 1st Quarter and Annual Payroll comparatively is one way economists can determine how the industry is doing.

This page shows national stats, but you can narrow it down by state and industry.

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If you are doing a zip code search, the payroll information will not be disclosed by NAICS code or employment size. The only disclosure of economic information will be the zip code area as a whole.

Census Explorer

CE Is a new data visualization tool being offered by the Census Bureau. It allows, at this point, the researcher to choose from the data that is offered, e.g. information pertaining to county business patterns and specified demographics and have the data rendered in a graphic way. The two main sources of information used in the Census Explorer are the, 1990/2000 Decennial Census, American Community Survey (ACS)6 and the County Business Patterns. (As of 5/19/2014)

6 “The American Community Survey (ACS) is a nationwide survey designed to provide communities a fresh look at how they are changing. The ACS replaced the decennial census long form in 2010 and thereafter by collecting long form type information throughout the decade rather than only once every 10 years.

Questionnaires are mailed to a sample of addresses to obtain information about households -- that is, about each person and the housing unit itself.

The American Community Survey produces demographic, social, housing and economic estimates in the form of 1-year, 3-year and 5-year estimates based on population thresholds. The strength of the ACS is in estimating population and housing characteristics. It produces estimates for small areas, including census tracts and population subgroups.

Although the ACS produces population, demographic and housing unit estimates, it is the Census Bureau's Population Estimates Program that produces and disseminates the official estimates of the population for the nation, states, counties, cities and towns, and

Here you can choose the county of interest as well as choose the year going back as far as 1998. The years are released in July of each year with a two year delay. That is why 2011 is the most recent.

“D” stands for withholding information due to chance of improper disclosure of private information on a particular company.

One very useful way of looking at data in the Census Explorer is to do an address search first. This will bring up a map that delineates geographic locations by census tract, state, or county. Using the census tract feature will allow you to locate the address and then choose which data set to overlay over the tract.

E-Commerce

The e-Commerce industry is tracked by the Annual Survey of Manufacturers, Service Annual Survey7, Annual Wholesale Trade Survey8, and Annual Retail Trade Survey9. What this means is that when

estimates of housing units for states and counties.

For 2010 and other decennial census years, the Decennial Census provides the official counts of population and housing units. (Census, Glossary)

7 “Provides estimates of revenue and other measures for most traditional service industries. Collected data include operating revenue for both taxable and tax-exempt firms and organizations; sources of revenue and expenses by type for selected industries; operating expenses for tax-exempt firms; and selected industry-specific items.” (Census, Glossary)8 Provides data on sales, inventory, and operating expenses for merchant wholesalers and manufacturers.9 “Provides national estimates of total annual sales, e-commerce sales, end-of-year inventories, inventory-to-sales ratios, purchases, total operating expenses, inventories held outside the United States, gross margins, end-of-year accounts receivable for retail

Data tab from the Census homepage. Dropdown then Data Tools and Apps. Look for Census Explorer.

looking at e-Commerce reports on the Census page the researcher will find statistics for all four sectors of the economy. Below is a screenshot of the e-stats page showing access to the overall e-Commerce report as well as the four different spreadsheets from each aspect of e-commerce measurements. e-Commerce data is becoming more and more integral to a business owner’s interest. It’s interesting, however, to notice in the March 13, 2014 report on e-Commerce that it is manufacturing, not service or retail that makes up the lion’s share of e-Commerce activity with wholesale coming in second. Nonetheless, retailers are relying on e-Commerce as part of their business model. The report above demonstrates this with a 16.4% increase in e-Commerce sales from 2010 to 2011.

Another measure of e-Commerce can be found in American FactFinder, which is also navigable via the Survey of Business Owners page at http://www.census.gov/econ/sbo/

businesses, total operating expenses, and e-commerce sales for accommodation and food service firms located in the United States.” (Census, Glossary)

Using American FactFinder to get Economic Census and Selected Economic Survey Information:

Since American FactFinder culls all information from the Economic Census and selected Surveys, it may be useful and less daunting to use it to find information. However, if the researcher knows exactly what information is needed, it may be more useful simply to go straight to the Economic Census or Survey to get the information. Where AF comes in handy is when the researcher is not sure exactly what he or she needs. AF allows for a better “browsing” experience. The following is a search of industry information using AF. (As of 5/19/2014)

Searching for general industry information according to industry and geography:

After selecting “Industries” from the Economic Series option. Select Geographic criteria. And the results are:

The Economic Series can be used to find Industry info. The geographic criteria will allow you to locate the area, whether it’s an MSA, region, state, or countrywide search.

Finally, a way to supplement the aging nature of the information in the Economic Census, the Bureau of Economic Analysis (BEA)10 offers current industry analysis press releases describing in broad terms the fluctuations of the economy, e.g., contributions of the manufacturing of durable goods, professional and scientific industries and others to the GDP.

The State of Maryland: Department of Business and Economic Development: ChooseMaryland www.choosemaryland.org has a website devoted to economic development in the state. While most of the information contained on this website is about demographics, you can find some basic statistics on industry. You will find this under the “Stats and Facts” tab. The industry information is contained in the section on Economy. Some of the categories available include which industries are the largest in Maryland. You can also find which industries are adding the greatest amount to the state’s GDP as well as which are adding the most jobs to Maryland. You can also access Maryland Data Explorer & Maryland Industry Snapshots from this homepage.

10 “A bureau within the U.S. Department of Commerce that produces economic accounts statistics that enable government and business decision-makers, researchers, and the American public to follow and understand the performance of the Nation's economy. The BEA provides Balance of Payments adjustments to the international trade in goods data and data on international trade in services.” (Census, Glossary)

A search on industry and region only brought up information on the northeast region and only that relating to the construction industry for the 2007 EC. This is a good example of the fact that there is a lot of seemingly incomplete info on the EC.

Demographics

Demographics are an important next step in researching information to include in the business or marketing plan. There are two types of target markets typically relevant to potential business owners: individuals and business-to-business, otherwise known as B2B. Conducting research to determine a target market for businesses that cater to individual consumers you should access the Census page; in this case, American FactFinder, Quick Facts (about states), and American Community Survey are the most relevant censuses and surveys for your purpose.

Select Maryland Industry Snapshots located at bottom of homepage.

These are the two primary locations for business information, e.g. loans, “grants,” business incentives, industry, demographics, &c.

Federal and State Resources for Demographic ResearchThe American FactFinder combines information from the following federal statistical providers: Decennial Census (DC), American Community Survey (ACS), Puerto Rico Community Survey, Economic Census (EC), and Population Estimate Program. The questions on the Decennial Census, as of 2010, have been greatly truncated to cover only the basic demographic makeup of the country, leaving the more detailed analysis of the country to the ACS. The ACS is a survey rather than a census so its measurements are only statistically approximate. It is conducted every year nationwide. The ACS, because of its timeliness, gives businesses and policymakers the ability to make decisions based on current information.

Surveys and Data on American FactFinder:

1) American Community Survey (ACS)a. Yearly survey with approximately 3.5 million households survey per year.b. 1 Year Estimates with a geographic population of 65,000 or more.c. 3 Year Estimates with a geographic population of 20,000 or more.d. 5 Year Estimates are the results of small geographic areas collected during the year span

of 2005 – 2009. e. Puerto Rico Community Survey is the PR version of the ACS.

2) American Housing Survey (AHS)a. Conducted biennially in odd-numbered years.b. Collects information of a wide range of housing characteristics, such as vacancies,

condition of homes, occupancies, &c.3) Annual Economic Surveys

a. There are over 100 different surveys occurring throughout the year at the Census Bureau. The American FactFinder culls information from three of those surveys.

i. Annual Survey of Manufacturers.ii. County Business Patterns/Zip Code Business Patterns.

iii. Non-employer Statistics. 4) Commodity Flow Survey

a. Measures flow of goods originating in the United States and information shipped from the United States.

5) 2010 Decennial Censusa. If you are looking for information from the 1990 through 2000 Census, try the Census

Explorer function. 6) Economic Census

a. Conducted every five years in years ending with a 2 or 7.b. Also contained in this function is the Economic Census of Island Areas, and;c. Survey of Business Owners (SBO)

7) Equal Employment Opportunity Tabulation (EEO)

a. A tabulation based on information from the 5 Year ACS designed to analyze compliance with EEO laws.

8) Population Estimates Programa. Estimates population for the United States (towns, cities, counties and states) along with

Puerto Rico and its municipios. 9) For a comprehensive list of surveys conducted by the Census: SEE

http://www.census.gov/aboutus/surveys.html

Most demographic searches are structured the same. American FactFinder has a criteria menu on the left side of the page. It is here that you will be able to access all of the Census and Survey stats that were listed above. One of the more important things to keep in mind is the distinctions between ACS, 1, 3, and 5 Year stats. Remember that the 1 Year is for estimates exclusive to cities with a population over 65,000 or over; the 3 Year is for estimates with cities/towns with a population of 20,000 or over; and, the 5 Year includes all areas, even those below 20,000 in population. Below is an example of a typical demographic search. (As of 5/19/2014)

And,

And;

The ACS and DC are likely going to be the most useful resources for researching the business demographics provided by the Census Bureau. As we’ve already covered concerning the Economic Census, keep in mind that you can use AF to acquire EC stats as well. The government provides very

Notice that there is an option to narrow down the search to census tract. You can even narrow it down by zip code. Also notice that when choosing county Baltimore will bring up both Baltimore County and Baltimore City.

In this search there were 127 different tables. The best way to look for specifics is to use the “Refine” your search field. Each table is labeled according to subject and dataset, i.e. ACS, EC, &c source.

detailed demographic information that can be parsed by Topic, Geography, Race/Ethnicity, and Industry Code (if you are doing industry research). For help in learning how to use American FactFinder, go to their tutorial Web page at http://factfinder2.census.gov/legacy/topic_search.html. Following the specific steps in the process will ensure that you receive the desired results.

Quick Facts is simply a useful way to get quick demographic sketches of places in the United States. It is self-explanatory and easy to use. It can be accessed from the Census home page.

Bureau of Labor Statistics: Consumer Expenditures and Time Use

The Bureau of Labor Statistics has a section on their website outlining demographic information, such as American Time Use Survey11, Geographic Profile of Employment and Unemployment, Consumer Expenditure Survey12, and an interesting study called Longitudinal Studies: National Longitudinal Surveys, which tracks a group of men and women in the market at different points in their lives in order to measure change in market behavior over time. Below is a graphic representation of how to access these datasets: http://www.bls.gov/home.htm (As of 4-22-2014)

11 “The American Time Use Survey (ATUS) measures the amount of time people spend doing various activities, such as paid work, childcare, volunteering, and socializing.” (Data.gov, American Time Use Survey).12 “The Consumer Expenditure Survey (CE) program consists of two surveys, the quarterly Interview Survey and the Diary Survey, that provide information on the buying habits of American consumers, including data on their expenditures, income, and consumer unit (families and single consumers) characteristics. The survey data are collected for the Bureau of Labor Statistics by the U.S. Census Bureau. The CE collects information on all spending components including food, housing, apparel and services, transportation, entertainment, and out-of-pocket health care costs including insurance premiums.” (Data.gov, Consumer Expenditure Survey).

"The Consumer Expenditure Survey (CE) program consists of two surveys, the Quarterly Interview Survey and the Diary Survey, that provide information on the buying habits of American consumers, including data on their expenditures, income, and consumer unit (families and single consumers) characteristics. The survey data are collected for the Bureau of Labor Statistics by the U.S. Census Bureau.

The CE is important because it is the only Federal survey to provide information on the complete range of consumers' expenditures and incomes, as well as the characteristics of those consumers. It is used by economic policymakers examining the impact of policy changes on economic groups, by businesses and academic researchers studying consumers' spending habits and trends, by other Federal agencies, and, perhaps most importantly, to regularly revise the Consumer Price Index market basket of goods and services and their relative importance." (Citation: http://www.bls.gov/cex/ )

At the bottom of the page is the newest Consumer Expenditure report. In this case, as of this writing 5/19/2014, it is the year 2012 report.

Click the Subjects dropdown to access both the Consumer Expenditures and How Americans Spend Time datasets.

"The American Time Use Survey (ATUS) measures the amount of time people spend doing various activities, such as paid work, childcare, volunteering, and socializing." (Citation: http://www.bls.gov/tus/)

The following report was released on June 30, 2013. Notice the stats on reading times for young adults compared to elderly people! How would this help an entrepreneur? How could this kind of information be used to aid business owners in making decisions?

Other activities measured are how much time do Americans spend working, shopping, in leisure, reading, traveling back and forth to work, and much more.

Time spent reading for personal interest and playing games or using a computer for leisure varied greatly by age. Individuals age 75 and over averaged 1.0 hour of reading per weekend day and 20 minutes playing games or using a computer for leisure. Conversely, individuals ages 15 to 19 read for an average of 7 minutes per weekend day while spending 1.0 hour playing games or using a computer for leisure. (See table 11.)

Maryland’s Business and Economic page, www.choosemaryland.org on demographics.

The State of Maryland’s ChooseMaryland (see page 16 for more detail) www.choosemaryland.org has a Web site devoted to economic development in the state. Under the heading “Facts and Stats” you will find a variety of choices. The section on demographics offers basic demographic profiles of cities in Maryland as well as the state. The information is very basic, but once on the demographics page you can access information concerning populations and population projections based on the Decennial Census all the way through the year 2020. Interestingly, Baltimore city is projected to grow by 2.2% even though this Decennial Census shows a decline in population since the last Census in 2000. Apparently, nearly 90 percent of Maryland's 5.8 million residents live in the densely populated corridor between Baltimore and Washington, D.C. If you are looking to locate a business based on demographic density, this area is the obvious choice.

For those engaged in a B2B business, Choose Maryland has a section entitled, “largest employers in Maryland” and you can search these by county. If you are looking to target large employers or those who play a major role in Maryland’s economy then this statistical page is useful.