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Evaluating the Market

Written by: Suzanne Donald

Article Overview: Though franchising is considerable less risky than starting a business from scratch, as with any new business, an element of risk still exists. With this in mind you need to ensure that you thoroughly research the franchise you are interested in; there is no room for getting it wrong! You cannot get carried away with the idea of running your own franchise without finding out whether that business is viable. Researching, and knowing your potential market inside out, is essential.

Evaluating the Market

Though franchising is considerable less risky than starting a business from scratch, as with any new business, an element of risk still exists. With this in mind you need to ensure that you thoroughly research the franchise you are interested in; there is no room for getting it wrong! You cannot get carried away with the idea of running your own franchise without finding out whether that business is viable. Researching, and knowing your potential market inside out, is essential.

As it is the franchisor that makes any decision regarding changes or developments to the product or service provided, you as the franchisee must be 100% certain that the franchise you are buying has potential, and the future of the market is not threatened.

All successful businesses need to have a strong understanding of their potential and existing customers, and the marketplace they will work in. This will help you to target potential opportunities, market your product/services effectively, and identify and understand your competitors.

You should undertake your own research of the market, covering all the following points:

Qu. – Who is your target market? i.e. who you would be aiming to sell your product/service to. Is it a specific age group or sex, income, etc?

Qu. - Is the market for this product / service expanding rapidly, growing slowly, static or declining? You need to take into consideration the local market as well as general market. Does the local market have the same characteristics as the market in general? Is the product particularly suitable for your area? How dependent is success of the business on particular lifestyles or levels of income? How profitable are other franchisees in your local market or in a similar demographic area?

Qu. - Does the product / service have special USPs which will help it to sell? Does it warrant a premium price?

Qu. - Who would your competitors be and how competitive would your product or service be in relation to them? Do competitors have any technical or price advantages? Could you improve on the service offered? What is their level of advertising? If there are no competitors ask yourself why there are none.

Undertaking a SWOT analysis should help with your research – strengths, weaknesses, opportunities and threats. Strengths and weaknesses are internal factors and relate to your actual business/product/service. Opportunities and threats relate to those external factors and trends in the market place that could affect your business.

A SWOT analysis will allow you to look at the potential franchise business from the point of view of your target market and your competitors. It allows you to uncover opportunities that you could take advantage off and weaknesses of the business you would need to manage.

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Article Tags: age group, demographic area, element, existing customers, franchise, franchisee, franchisees, franchisor, lifestyles, local market, marketplace, new business, potential market, premium price, risk, scratch, target market, usps



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