You’re excited about the idea of owning a franchise in your area. You’ve already determined that the franchise will be profitable, but now there’s one other important consideration to make: How does the market feel?
When you open your doors for the first time, you want to open to a crowd of eager customers. Unfortunately, if the market isn’t ready for your franchise to take root in their community, you could be met with a lackluster response.
Before you buy a franchise and set up shop, it’s important to analyze the market you’re about to enter. Here’s how.
A SWOT Analysis
If you ever took a marketing class in school, you probably learned about SWOT analyses. This traditional analysis measures your specific strengths, weaknesses, opportunities, and threats.
Although it’s been in practice for years, the SWOT analysis continues to turn up new information for businesses – so much so that many companies, large and small, conduct an analysis annually. It’s a worthwhile exercise for you too as you decide whether your market is ready for the franchise you’re considering.
Here’s what to consider while filling out your SWOT analysis:
- Strengths: What does the franchise you’re considering excel at above others in your industry?
- Weaknesses: What might be lacking from the specific franchise you’re considering starting that could hold you back from breaking ground in your market?
- Opportunities: What opportunities are available to you to expand? For example, business partnerships in your area present a strong opportunity for fast growth.
- Threats: Are there any other franchises that have dominated your market and pose a potential threat to your growth?
Make your list for each of these four areas and you’ll get a more accurate glimpse into the current state of your market. If you have more strengths than weaknesses, and more opportunities than threats, you’re in a prime position to start a franchise. If it’s evenly balanced, you might need to do more analysis. More specifically, you might need to do a little more investigating into your competition.
The Competitive Landscape
If you have a long list of businesses in your threats column, it’s time to take a closer look at who those organizations are and why they could stop your franchise from growing.
To analyze the competition in your area, you’re going to have to put on your investigator’s hat and start gathering evidence to support your theories. Here are a few good places to start:
Review Sites
What are consumers saying about your competition? If all the reviews are negative, the company might not be a threat after all.
Social Media
How engaged is the community? If the company isn’t doing a lot to get their customers excited, you might have a bigger opportunity to steal a portion of their customer base, making them less of a threat.
Google
Run a quick search on Google for your competition. See what pops up. Sometimes, other businesses are knee-deep in lawsuits or fighting poor publicity, which means your market is actually ripe for a new company to enter the market.
Local Groups
How involved is the competition in local groups, such as the local Chamber of Commerce? If they’re not active participants, you might have a good opportunity to tap into the partnerships and relationships those organizations afford, giving you a leg up on the competition.
Analyzing the Market
The more you research, the better idea you’ll get about the market you’re considering entering. This is an important step to take before you buy your franchise. Dig deep. You never know what you’ll uncover and what exciting potential awaits you.
Susan Payton is the President of Egg Marketing & Communications, a marketing firm specializing in content writing and social media management. She’s written three business books, including How to Get More Customers With Press Releases, and frequently blogs about small business and marketing on sites including Forbes, AllBusiness, The Marketing Eggspert Blog, and Tweak Your Biz. Follow her on Twitter @eggmarketing.