Market Opportunity Analysis
These pages enable an entrepreneur to assess whether a market area’s conditions are favorable for opening a new retail tax practice. Our analyses consider four fundamental market conditions: adult population, number of households, number of existing EROs, and the number of returns e-filed filed in the market. Additionally, we’ve identified EROs whose books of business may be available for acquisition and analyzed the competitive structure of the national chains.
Study Market Conditions and Compare Our Exclusive Market Potential Score
For most zip codes in the United States, including Puerto Rico, we’ve gathered data and summarized it with the aim of detecting markets that are fertile territory for new EROs. For each zip code the data we gathered includes
- population over 18 years of age,
- the number of households,
- the total e-filed returns,
- a count of EROs, and
- a count of chain stores.
We further divided the population, households, and number of returns filed by the number of EROs to determine the per ERO population, households, and returns filed.
An increase chain stores may suggest that the big chains consider the territory poised for growth.
Naturally, areas with high population and higher quantities of returns filed per ERO are more favorable for new entrants. A new ERO attempting to open in a market with many existing competitors will face a much more challenging time winning new clients.
We here at ERO Watch have developed a proprietary Market Potential Score. The score is on a scale of 1 to 5, with 5 being the best. The 20% of markets most able to support a new ERO are granted a 5, second highest 20% have a score of 4, and so on.
The data is organized by zip code, and, of course, an ERO is allowed to attract clients from any zip code. Look for a high-ranking territory surrounded by other 4- and 5-ranked zip codes.
See the Top 500 Growth Markets
These are the top 500 markets with the greatest growth potential. All markets are in the highest 20% of households and population per ERO. Most score 5 on the average e-filed returns per ERO metric. The remainder score 4.
If you find a market that interests you, head over to the Site Selection Map, use the search button to find the zip code, and study the suitability of nearby zip codes.
We offer an alternate interface to the Top 500 Growth Markets data set. Both interfaces contain the same information, but they vary in look and feel, particularly in the filters. Visit them both and use the one you like best.
Discover Books of Business Available for Acquisition
Opening a new tax office in an fertile market nevertheless requires an investment of marketing resources and a few years of patience while the business grows. Starting a business in an already saturated market involves extra effort for smaller rewards.
Acquiring an existing book of business is a perfectly legitimate way of bypassing the book-building phase of starting a new tax practice. Practice owners retire or perhaps just want a career change. There are brokers who specialize in introducing accounting practice sellers and buyers, and the brokers do a fine job. But perhaps there are books of business available for acquisition that are not publicized.
This dashboard identifies EROs that were active in the next-most-recent data year, but filed zero returns in the most recent data year. The owners of these businesses may be amenable to passing their books of business to new entrepreneurs or existing competitors.
As you’re studying these listings, use clues in the data to surmise what happened to the business. A gradual tapering off of activity may signal that the owner is contemplating retirement. Some of the tax practices are small, and the owner may simply have decided the business isn’t worth the effort. An abrupt closure of a healthy-looking practice may signal a change in ownership or a legal reorganization, in such a case, the book of business may not be for sale.
In some circumstances you may able to derive some value from a shuttered business even without the owner’s involvement. Once you’ve identified a potential takeover candidate, use Google Street View to ascertain in what type of building the business operated. Their office may be available for rent, and, if their phone number is disused, you may be able to reconnect their phone number as well!
Study Major Brands’ Territories and Regional Ownership Groups
The well known national tax preparation chains apportion territory to minimize competition from stores of the same brand. Some operators own one or multiple stores, while many territories appear to remain under the ownership of the parent company.
This interactive map facilitates understanding these territories. We at ERO Watch have inferred each store’s territory, and further combined territories owned under the same legal name. For each store, we provide a graph of the store’s production, and for each identified ownership group, we’ve provided a graph of the group’s electronic filing volume.
Note that many territories are owned by what appears to be the parent company. Perhaps these territories are available for purchase.
An entrepreneur considering buying a franchise would be interested in the territory’s performance.
ERO Watch is not affiliated with any major chain, and ERO Watch does not have access to proprietary company data.