Colorado Springs Business Investment: Determining a Demographic

Introduction

Recent circumstances have provided the opportunity to invest in a new business in Colorado Springs City, Colorado.  Debate over specific investment opportunities having the most potential has prompted the need for investigation. Varying population groups within Colorado Springs have significant influence on the investment decision. Population groups concerning age, particularly young children opposed to retirees being in question, as well as considering the surge in the Hispanic population. In order to develop a business model that fits the needs of the population demographic with the most potential in Colorado Springs, several factors must be examined. Understanding the age structure as well as the overall population breakdown of Colorado Springs compared to both the state and country as a whole are the main goals of investigation. Beyond examining the population structure of Colorado Springs it is necessary to understand the overall cultural service sectors of the city. 

Methods

The first factor in question concerns the age structure of Colorado Springs. A population pyramid, created with data from the United States Census Bureau, can be used to interpret the most predominant age groups in Colorado Springs which should be considered in the investment.

In combination with the population pyramid calculating a dependency ratio assists in identifying significant age groups. The dependency ratio is a statistic displaying the ratio of dependents (ages younger than 15 and older than 65) to the working population (age 15 to 64). Calculating the dependency ratio for Colorado Springs city, and Colorado state will determine whether or not a large number of dependents exist in those areas.

Dependency Ratio: 100(population 0 to 14 + population 65 and older) / (population 15 to 64)

•  Colorado Springs: 100(87715.83 + 46412.745) / (291676.425) = 45.99
•  Colorado: 100(1028985.129 + 588722.835) / (3501621) = 46.2

In addition to the population pyramid and the dependency ratio, calculating a location quotient also provides valuable information concerning population demographics.  The location quotient is a statistic calculating the difference between certain factors across two locations, with a value of one meaning there is no difference. A location quotient was calculated for several factors including the age group 0  to 14, the age group 65 and older, as well as the Hispanic and white populations. Data for each of these factors for Colorado Springs, El Paso County, and Colorado where calculated in comparison to the data for the United States.

• LQ (Pop. 0-14)   Co. Springs = 1.05 County = 1.1 State = 1.03
• LQ (Pop. 65.+)   Co. Springs = 0.81 County =0.78 State =0.86        
• LQ (Hispanic)    Co. Springs =1 County = 0.93 State = 1.25             
• LQ (White)         Co. Springs = 1.08 County =1.1 State = 1.14

The final crucial factor for examination is the structure of the service industries in Colorado Springs. Obtaining percentages of service industries for both Colorado Springs and Colorado as a state allows for interpretation concerning more popular industries in these areas, as well as further comparison through another location quotient.

Service Industries	% Total State Industries	% Total Colorado Springs Industries	Location Quotient
Finance	7	6.8	0.97
Professional	13.2	13.2	1
Educational	20.3	21.6	1.06
Arts	10.7	11.4	1.07
Other	5.1	6.2	1.22
Public Administration	5	6.4	1.28

Conclusions

Based on the results from the various forms of data several conclusions are provided. The population pyramid, being the first form of data, shows the largest age group present in Colorado Springs is the age group 20 to 29 at around 16% of the total population, followed by the age group 45 to 54 at around 14% of the total population. This interpretation of the population pyramid when used in correlation to the dependency ratio portrays similar results. The dependency ratio for Colorado Springs indicates that only 45.99% of the population is considered a dependent. Thus, more than half of the population in Colorado Springs is considered to be working age which is reflective of the predominant age groups identified by the population pyramid.

When considering the location quotients for the age groups it is apparent that Colorado overall is very similar to the entire United States in regards to the amount of 0 to 14 year olds. The age group of 65 and older for Colorado overall is considerably less than the entire United States. Therefore, these statistics also indicate these two demographics to be rather insignificant in terms of being principal age groups in Colorado.  

The location quotients for the race demographics showed Colorado to have slight differences in terms of the white and Hispanic races compared to the United States. When considering the white population in Colorado, the location quotient of 1.14 shows that the state as whole has a slightly larger white demographic than United States. However, the location quotients for the Hispanic demographic appear much more significant. Although the location quotient at the city and county level show the Hispanic population in Colorado to be very similar to the United States, the location quotient of 1.25 for the state as a whole indicates Colorado has a significantly higher Hispanic population compared to the United States. The results produced by the location quotients regarding the race demographics indicate the Hispanic population in Colorado as a potential demographic in a business investment.

The last piece of data concerning the service sectors in Colorado Springs and Colorado display an exceptional percentage of service industries affiliated with education at over 20 percent. Not only is education the leading industry in the entire state of Colorado, but the location quotient indicates Colorado Springs has a greater percentage within the industry compared to the entire state. The importance of the education industry within Colorado Springs has a significant influence regarding an investment decision.           

Recommendations

When considering the conclusions made from the various forms of data proposals regarding an investment decision can be made. The conclusions established through the dependency ratio and location quotients for the two age groups identify the working class as being the demographic with the most potential in a business investment. In addition to establishing the working class as a potential demographic in Colorado Springs, the population pyramid further identifies the ages of 20 to 29 within the working age group as an even more specific age demographic.  

The age group of 20 to 29 in correlation with Colorado Springs educational industry establishes a specific demographic as having the most potential for a business investment. The importance of the education industry in Colorado Springs is likely derived from the abundance of colleges and technical schools in the area. The extensive amount of schools not only explains the popularity of the education industry, but is reflective of the leading age group being 20 to 29 as much of the group is likely composed of students. Therefore, the demographic in Colorado Springs showing the most potential for a business  investment are college students ages 20 to 29.