As you consider a variety of franchise business investment opportunities, you’ll think about what you want to do, what you can afford, and what kind of company fits with your values and lifestyle. You should also scope out the competition.
Do you see a landscaping business doing well? That may or may not mean that another landscape will do equally well.
But seeing that your town already has a landscaping business doesn’t mean that it can’t support another.
You need to know how many competitors you have, relative to the size of the target market in your town. You need to know how many of your competitors offer the same goods and services you do, and how well they’re meeting the needs of the target market. You need to know how the franchise you’re considering is different from the local competing businesses.
That means research.
Here are some online tools that can help you find out details about your competitors:
- Manta, a small business directory, includes guesses about the number of employees and the revenue for most businesses in your town, including franchises. This is a good way to get a working list of competitors. Note how long the companies have been around and see how many are well established and well funded.
- Depending on your town, the local Chamber of Commerce may also give you a good working list. However, companies must join the Chamber to be listed, so you probably won’t find all the competing shops by this method. You probably won’t find inside information this way, either, but it can be a good way to build your list.
- If you’ve never heard of the competing companies before, start with the SEC filings. Publicly held companies must file, and their documents are public.
- Yelp is a review site. They won’t give you much inside information on your competitors, but they will tell you who your competitors are, and share some of their customers’ frustrations. If there are 12 well-loved businesses in your town that all offer exactly the same goods and services as the franchise business you’re considering, you can expect a tougher fight than if there’s just one and it has plenty of negative reviews. Yelp can also help you identify underserved markets.
- Owler is a company information website that crowdsources data about funding, aquisitions, social media, and company CEOs. While many companies have little information available at Owler right now, it keeps track of information that other websites don’t. It also groups competitors, so you may be able to to find competitors you weren’t aware of to add to your list.
- Spyfu is an online-only tool that gives you estimates of website’s traffic and rankings for specific keywords. Thinking of opening a sandwich shop in Milwaukee? Spyfu will help you determine which existing sandwich shop dominates web search for terms like “Milwaukee sandwich shop.” It also tells you, through the ads competitors have bought, how they want to be seen. Sometimes online competitors are different from the physical-world competitors, so this tool can show strengths and weaknesses you might not see elsewhere.
Go visit the businesses on your list, too, or call to get a sense of their customer service. This will give you a clearer understanding of the competitive field.
