Methodology & Sources

Last Updated: November 29, 2025

At LocalNichePro, we believe that trust is built on transparency. We don't use "proprietary black box algorithms" or rely on subjective opinions.

Our platform is an engine that aggregates, cleans, and synthesizes official United States government data into clear, actionable insights for entrepreneurs.

This page explains exactly where our data comes from and how we calculate the metrics you see in our reports.

Our Official Data Sources

We rely exclusively on administrative records from the U.S. Census Bureau. We do not use third-party scraping, user-generated reviews, or unverified private surveys.

ACounty Business Patterns (CBP)

What it is: The official annual count of establishments with paid employees.
What we use it for: Tracking the size, payroll, and growth of employer-based businesses (teams) in your city.

BNonemployer Statistics (NES)

What it is: Tax return data for businesses that have no paid employees (solopreneurs, freelancers, independent contractors).
What we use it for: Calculating the "Solopreneur Ratio" and estimating revenue potential for solo founders. This is critical for understanding the "Gig Economy" and independent consultant market.

CAmerican Community Survey (ACS)

What it is: The premier source for detailed population and housing information.
What we use it for: Providing the "Macro Context" for your market—specifically Total Population and Median Household Income, which helps gauge the buying power of your potential customers.

How We "Synthesize" the Answers

Raw government data is messy, complex, and often overwhelming. Our "Synthesis Engine" turns that raw noise into a clear signal through a simple three-step process:

Step 1: Aggregation & Cleaning

We download millions of rows of data for over 380 U.S. metro areas. We then remove industrial outliers (like "Nuclear Power Generation" or "Heavy Manufacturing") that aren't relevant to local small business owners.

Step 2: The "Viability Filter"

To protect you from bad data, we hide any niche that is too small to analyze reliably.

  • •The Rule: A niche must have at least 10 active establishments in a metro area to appear in our reports.
  • •Why? If a niche has only 1 or 2 businesses, growth percentages become misleading (e.g., 1 new business looks like "100% Growth"). We filter these out so you only see stable, proven markets.

Step 3: Benchmarking

We don't just look at local numbers in a vacuum. We compare your city's data against the National U.S. Baseline. This allows us to tell you if a market is "Oversaturated" or "Underserved" relative to the rest of the country.

Explaining the Metrics

Here is a plain-English guide to the key terms you will see on our Metro Reports.

"Market Density" (Location Quotient)

The Technical Term: Location Quotient (LQ).
What It Means: This measures how "crowded" a market is compared to the national average.
How to Read It:
  • < 1.0(Underserved): There are fewer businesses here than average. This suggests a "Supply Gap" and a potential opportunity.
  • > 1.0(Saturated): There are more businesses here than average. This suggests high competition or a specialized local hub.

"Solopreneur Intensity"

What It Means: The percentage of businesses in a specific niche that are run by a single person (Non-Employers).
How to Read It:
  • •High %: Ideally suited for freelancers, consultants, and solo founders. Low barrier to entry.
  • •Low %: Typically requires a team, office, or significant capital to start.

"Revenue Potential"

What It Means: The average annual receipts (revenue) reported by businesses in this sector.
Note: We separate this into "Solo Revenue" (for Non-Employers) and "Payroll per Location" (for Employer businesses) so you can set realistic expectations based on your business model.

"Growth Trend"

What It Means: The percentage change in the number of active establishments over the last 5 years.
How to Read It:
  • +(Positive): More businesses are opening than closing. Demand is likely rising.
  • -(Negative): The sector is consolidating or shrinking. Proceed with caution.

A Note on "Real-Time" Data

It is important to understand that there is no such thing as "Real-Time" Census data. The rigorous process of government data collection and auditing takes time.

  • •Our Promise: We update our database annually as soon as the U.S. Census Bureau releases new files.
  • •The Lag: The most current "Official" data is typically 12-18 months behind the current calendar date. This is the industry standard for economic analysis.

While our data provides the most accurate structural picture of the economy, you should always verify current conditions with on-the-ground primary research.

Still have questions?

If you want to know more about a specific calculation or data source, please contact us at:

support@localnichepro.com