Assignment One: Population Dynamics

Colorado Springs, CO Investment Inquiry

1      Why Colorado Springs?

Colorado Springs, Colorado is the center of the fast paced El Paso County which offers ample business opportunities. With the right target demographic, a successful business venture is on the horizon. We can identify this potentially untapped source of profits by taking a look at the population structure and the dependency ratio of Colorado Springs, as well as the location quotients of the bustling city compared to the rest of the state of Colorado and the United States.

2      Age Structure

The Colorado Springs area features a population that differs from the rest of the United States. Only 10.9% of the populations is 65 and older, compared to 13.4% for the rest of the country. Colorado Springs also has a somewhat larger group of young people than the average U.S. city, with 20.6% of people under the age of 14 for the former and 19.6% for the latter. Colorado Springs population numbers mirror nicely with the rest of the state as a whole. 

The following graphic shows the distribution of the current population of Colorado Springs into 5-year age cohorts.

The dependency ratios of both Colorado Springs and Colorado clock in at 46.1 and 46.2, respectively. We can find the dependency ratio of a certain location by taking the number of people under 14 and over 65 and adding them together. We can take this new number and divide it by the rest of the population, who we consider part of the working population. So we found the dependency ratio for the city of Colorado Springs and the state of Colorado as seen below.

Colorado Springs:                                              Colorado:

0 - 14 years old: - 87,715.83                               0 – 14 years old: - 1,028,985.13

65+ years old: - 46,412.745                                65+ years old: - 588,722.835

15 – 64 years old: - 291,676.425                         15 – 64 years old: - 3,501,621.04

134,128.575 / 291,676.425                                 1,617,707.97 / 3,501,621.04

Dependency Ratio = 46.1                                   Dependency Ratio = 46.2

3      Location quotients

Our final piece of analysis will take a look how the demographics and service sectors of Colorado Springs compare with the other potential investment areas. The following location quotients are for certain demographic categories. We found them by taking the certain area of interest’s category and dividing it by the United States same category.

-Location Quotient: (Pop. 0-14) Co. Springs = 1.05 County = 1.10 State = 1.03

-Location Quotient:  (Pop. 65+) Co. Springs = 0.81 County = 0.78 State = 0.86

-Location Quotient:  (Hispanic) Co. Springs = 1.00 County = 0.92 State = 1.25

-Location Quotient: (White)      Co. Springs = 1.24 County = 1.10 State = 1.14

We can then take a look at how six service sectors of Colorado Springs compare with the rest of Colorado. These location quotients are found the same way the demographic categories were previously.

-Location Quotient: (Educational) = 1.06

-Location Quotient: (Professional) = 1.00

-Location Quotient: (Arts) = 1.07

-Location Quotient: (Finance) = 0.97

-Location Quotient: (Public Administration) = 1.28

-Location Quotient: (Other) = 1.22

4     Conclusion

At the beginning of this inquiry, three suggestions were presented to our investment group. One suggestion was going after retirees in the city. Another suggestion was identifying a business model that could target the Hispanic population of Colorado Springs. The final suggestion was catering to families with young children.   After my report, I am confident we can identify a potential revenue stream that would yield the best results.

First we need to discount the business model that would serve retirees. As most people who retire are around 65 or older, an ideal location would have a sizable population of older people. Colorado Springs does not fit this description. When compared to an average American town, Colorado Springs has almost 20% less people who are over 65. If maximized profits are the goal, targeting sub-optimal population groups are not the answer.

The second suggestion was one that would attract a surging Hispanic population. While Colorado Springs’ Hispanic population is by no means small (it actually exactly mirrors the United States with 16.6% people identifying as Hispanic), it is dwarfed when compared to the rest of the state of Colorado. Colorado’s Hispanic location quotient is 1.25, much larger than Colorado Springs 1. Hispanics in Colorado Springs aren’t as heavily concentrated in the city, especially when compared to the 91.8% people who identify as white in the city.

The best option for a new business is one that would cater to a larger than average young population. With a location quotient of 1.05, the population under 14 is bigger in Colorado Springs than the average U.S. city. The potential for growth is also there. With a large section of the population falling into the 20 - 24 and 25 – 29 age groups, these people will soon start to create young families of their own. The perfect sector to appeal this group would be the Finance sector, which also includes real estate. The location quotient of this sector in Colorado Springs is 0.97 when compared to the rest of state. It is the only sector that isn’t over saturated in the city of Colorado Springs.

Therefore, my final recommendation going forward is to invest in real estate. Especially neighborhoods or apartment complexes that would be attractive to families with young children.