MARCH 8, 2007
WILLIAM J. BRUNS
Survey Masters LLC
Natalie Patel and Carlos Lopez met while studying statistics together at Northeastern
University in Boston. After graduation Patel had accepted a position with the largest independent marketing research firm in the United States, and Lopez went to work for Progressive Insurance outside Cleveland as an actuary. At their tenth class reunion in 2003 they met again. Each was somewhat unhappy in their current job, and both wanted to return to the Boston area to live. A casual conversation turned to something more serious as they discussed leaving their jobs to start a marketing research survey consultancy in the Boston area.
Survey Masters was founded as a partnership …show more content…
I used salaries as the basis for dividing the $1,400,000 in overhead expenses. This analysis led to a conclusion that of the $600,000 in estimated income for 2006, $200,000 was generated from the largest 20 projects, and $400,000 was generated from the smallest 100 projects. The results of this analysis are shown in Panel A of Exhibit 2.
This was a little hard for me to believe, so I did a second analysis, shown in Panel B. For the second analysis I looked at the largest 60 projects and the smallest 60 projects ranked by project revenue. This points to a conclusion that the larger and smaller projects are equally profitable, which seems more plausible than the results in Panel A.
But I have a nagging suspicion that neither of these analyses actually presents the information you need to set a direction for Survey Masters in the future. The smaller projects require many more trips
(shorter in time and fewer people), more days of data collection, and more pages of analysis and report than the larger projects. I have summarized these data in Exhibit 3, an activity analysis taken from our records. I have to be away for a few days to care for my mother, who is ill, and I have not had time to complete an analysis based on the activities related to larger and smaller projects. I will do so immediately on my return, but you may want to do such analysis yourselves so that you can proceed to think about whether you want to continue to take all