How to Conduct a Competitive Analysis Before Buying a Business

The Importance of Competitive Analysis in Franchise Ownership: Don't Skip This Essential Step

When exploring franchise ownership, many prospective franchisees dive into brand details, financials, and industry trends. However, one crucial step often gets overlooked: competitive analysis. At Franchise Sidekick, we see this as a vital component of the research process—one that can significantly impact your success.

Why Competitive Analysis Matters

Understanding the competition in your market gives you insights into potential challenges and opportunities. Whether you’re evaluating a franchise in Salt Lake City or elsewhere, knowing who you’re up against helps you anticipate customer needs and identify gaps your business can fill.

How to Research Competitors: Practical Tips

Franchise Sidekick recommends taking an active approach to researching competitors. Here are some of our best strategies for evaluating the competition effectively:

Direct Contact: Start by calling local competitors to understand their offerings, pricing, customer service, and follow-up processes. This approach gives you a firsthand experience of what customers encounter and how your potential franchise can stand out.
Use Social Media Insights: Social media is a powerful tool for assessing a competitor’s reputation. Look for customer testimonials and visual evidence of their work, especially in service industries like fencing or painting. A strong social presence can indicate solid customer engagement and quality.
Evaluate Their Website Experience: A well-designed website that offers a seamless experience can say a lot about a brand's professionalism. When you visit a competitor's website, note the ease of navigation, loading speed, and general user experience. These elements can influence customer perception and satisfaction.
Google Ads and Social Ad Transparency: Dive deeper by using the "Page Transparency" feature on Facebook, which lets you see the ads competitors are running. This can give you insight into their marketing efforts and ad budget.
Analyze Their Market Presence: Determine if competitors are part of a franchise network or independent businesses. National franchise brands may offer more resources, while mom-and-pop businesses may provide more personalized service. Each brings unique advantages and challenges.
Observe Customer Flow: If possible, visit the competitor's location during peak hours to observe the volume of customers and the overall experience. It’s a simple yet effective way to gain a realistic picture of daily operations and customer demand.
Consider Reputation Impact: If a franchise of the same brand already exists in the area, their reputation may affect your business. A well-regarded location can boost your own credibility, while a poorly run one may present challenges.

Beyond the Screen: The Importance of Personal Experience

At Franchise Sidekick, we encourage potential franchisees to go beyond online research. For instance, if you’re considering a fencing business, see if you can observe a competitor’s work firsthand. This kind of practical research offers insights that can’t always be gleaned from a computer screen.

Know Your Market Before Committing

Investing in a franchise is a long-term commitment. Knowing your market well helps ensure that your investment aligns with both customer demand and your business goals. By putting in the effort to understand the competitive landscape, you set yourself up for informed decision-making and a greater chance of success.

Takeaway

Don’t underestimate the value of competitive analysis in franchise ownership. The time spent on in-depth research can provide clarity and confidence in your investment decision, ensuring you’re well-prepared for the journey ahead.