Profiling Businesses on Nantucket

Sponsor:	Nantucket Island Center for Entrepreneurship
Sponsor Liaison:	Karen Macumber – Nantucket Island Center for Entrepreneurship
Student Team:	Paul Jasmin, Jonathan Palmieri, Naomasa Tanaka
Abstract:	The goal of this project was to assist the Nantucket Island Center for Entrepreneurship (NICE) to benchmark businesses on Nantucket, and to identify and measure the metrics used to define success in each sector of Nantucket’s economy. We identified, refined, and integrated a wide range of business listings and economic data to create a Composite Business List (CBL). We also developed a survey for Nantucket’s Chamber of Commerce members to understand the impact of Nantucket’s economic fluctuations on entrepreneurship, and the metrics used for success by businesses in various sectors. We determined that Chamber membership underrepresents the trades and recommended that NICE develop outreach and survey tools to better understand the needs of this portion of Nantucket’s economy.
Link:	NICE 2021 FINAL REPORT CBL FINAL COPY NICE Final Presentation 2021

Executive Summary

Although businesses in tourist destinations often operate year-round, many businesses in seasonal tourist and resort communities operate only during their peak season, and either downsize or shut down completely during the off season. This creates fluctuations in both the number of operating businesses and employment levels in resort economies.

Supporting and strengthening businesses, regardless of their operational season, is a topic of concern for Chambers of Commerce and local governments across the country. Nantucket is no different. The Nantucket Island Center for Entrepreneurship (NICE), created in 2018 as a subsidiary of Nantucket Island Chamber of Commerce (NICC), works specifically to foster the growth of business and entrepreneurship on Nantucket (Nantucket Island Chamber of Commerce, n.d.). NICE provides entrepreneurs with mentoring services and workshops specialized for the unique business environment on Nantucket, and helps businesses owners and new entrepreneurs grow their business by gaining better insight into the structure and composition of Nantucket’s economy. A foundation of NICE being able to provide support to entrepreneurs is having a detailed database of businesses on Nantucket, along with their size, sector of operation, and other metrics used to define success in each sector. The accuracy of this database is crucial for NICE to identify areas of Nantucket’s economy in which to provide targeted programs aimed at promoting the growth of entrepreneurship.

Goals and Objectives

The goal of our project was to determine how Nantucket’s businesses are distributed by sector, how they can be benchmarked, how success is defined for each sector of Nantucket’s economy, and to present recommendations on how NICE can support the island’s entrepreneurs. To accomplish this goal, we identified the following objectives:

1. Developed an inventory of businesses (e.g. our Composite Business List, CBL) on Nantucket, listing pertinent attributes such as size (e.g., number of employees, payroll, etc.), sector, and period of operation.
2. Investigated best practices to benchmark and measure business success by sector.
3. Researched the types of support programs NICE could implement to aid the Nantucket business community

The integration of the CBL (i.e., Objective 1)  involved incorporating Payroll Protection Program (PPP) COVID relief loan data, Doing Business As (DBA) records, Alcohol License and Food/Lodging Permit records, and data from NICE’s Rock Solid Grant (RSG) program. RSG was, in particular, a program initiated by NICE to help smaller businesses on Nantucket recover from the adverse economic effects of the COVID pandemic. Data integration was conducted by comparing business addresses across each data set as a primary common key and then integrating the final data into one (CBL) data set.

Our survey instrument (i.e. Objective 2) was distributed to all NICC member businesses as a google form URL. The purpose of our survey was to determine the following:

• The primary focus and nature of respondents’ businesses.
• The expected full and part time employment along with months of operation in 2022 of respondent’s businesses.
• Average annual revenue
• Metrics used to define business success
• What programs/initiatives would be beneficial to businesses and entrepreneurs.

CBL Findings

We tabulated 1175 total businesses in our database. That is significantly more than the 726 member businesses of NICC. We categorized each business by the first two digits of its NAICS (North American Industry Classification System) code, which represents the broadest sector categorization possible for a NAICS code. The following percentages represent the breakdown of the businesses in the CBL:

32.8%      Services

13.1%      Restaurants

12.5%      Retail/Wholesale Trade

21.9%      Construction

Table ES 1: Sectoral comparisons of underrepresented sectors between CBL and NICC membership

As can be seen in the table:

• NICC membership significantly underrepresents the construction, real estate, landscaping, and restaurants sectors
• NICC membership is a more accurate representation of accommodations and is less under-representative of retail, and transportation than of construction and the like

Survey and Interview Findings

The retail, services, and healthcare sectors were among the largest shares of our survey sample. The trades (electricians, plumbers, landscapers etc.) make up a very small portion of responses. We acknowledge the distribution of respondents is not completely representative of the known distribution of NICC membership, or Nantucket’s economy overall. We found that ~76% of respondents started their businesses, ~18% purchased their business, and ~6% inherited their business.

We asked respondents to estimate their highest and lowest number of part and full-time employees for 2022. For sectors in which we received 3 or more responses, estimated employment levels were averaged across each sector and represented as a range. Our survey results included the following observations.

• All sectors of the support some number of full-time employees throughout the year.
• Healthcare, services, and restaurants sectors have the highest numbers of full-time employees. Healthcare, restaurants, and personal services also have the highest number and most extensive ranges of part-time employees.
• The number of part-time employees exhibits a bigger fluctuation in more sectors of our survey sample than does full-time employment. This suggests that these sectors take on large numbers of part-time employees to account for the significant fluctuations in Nantucket’s population and economic activity during the summer months.
• Perhaps surprisingly 69/72 (~95%) respondents disclosed their revenue data which fell into a bimodal distribution.
  • ~25% of respondents were in the $50,000-$199,999 range
  • ~26% fell into the $1,000,000-$4,999,999 range

We also asked respondents to identify areas in which they needed more support or guidance in running their business. Among the most common responses were the need for assistance with advertising and marketing, leadership training, and connections to business services. Many respondents highlighted a lack of connections to lawyers, accountants, and contractors to assist their business, and recommended that NICE find a way to make the connection between businesses and those providing necessary business services more seamless. Respondents also highlighted the need for direct financial support through grants and loans to support their endeavors.