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A Question of Need

Written by : John McGavin
2007-04-15
You know, it's kind of funny. I very often have people ask me for a business that no one else has. Something unique, or different from everything else out there. And I understand the thought behind it, too. Because people will flock to you if you can give them something different, or that isn't available just anywhere, won't they? And if you have something like this, then you'll own the market, won't you? Imagine, no competition! Imagine how good your life could be, if you got ­all of the business! But if that was really the case, if you could really find something that no one else has, you'd have to ask yourself why no one else has it. Could it be that there's no need? If there's no need, then it might not be a good business to go into. And if there is a need, and there's no competition today, then you can be sure that there will be competition tomorrow. That's just the way things are.

I'm a consultant in the franchise industry, and I work with people to help identify their skills, interests, and financial comfort level for investing to find the right franchise for them. I then provide a format to coach them through the necessary research steps so they can make the right yes or no decisions on various business opportunities that might be a fit. We wade through the multitude of types and offerings to provide businesses that can offer safety for our clients, and we offer only those that fit! But the concern about competition is one that comes up over and over.

What it really boils down to is a Question of Need. Franchises are kind of funny that way. They work best when they are in an industry that meets the everyday, ongoing needs of the community that they're in. It can be a residential community dealing with households and consumers or a business community working with other businesses. It doesn't matter which, as long as there is a demonstrated need for the product or service that they deal in. And that means that there's going to be competition. Someone is already providing the product or service, and it's going to be up to you and the franchise that you choose to be able to do it better than your competitors. And that's one of the things that's good about a franchised business. You are buying a system that can outperform all of the mom and pop independent businesses that don't have a system.

But there is a need. The more need there is, the more competitors you'll have. And that's where it gets funny, because people invariably ask me about franchise opportunities in the food industry, without realizing other franchise industries that may also be available to them. The reason? I've been told it's because "Everyone has to eat." Very rarely does anyone ever tell me that there's too much competition in the food industry: they are asking for something in food. So, there it is. It's identifying and filling a need. Except these people never really seem to look at what other businesses are also in the food industry, and that there will also be lots of competition for them. Hamburgers, hot dogs, pizzas, submarine sandwiches, ice cream, coffee, donuts, and on and on. They are all out there, competing for your dollar. But it's not a concern to most people, because "Everybody has to eat." It's one of our basic needs for survival, and it needs to be filled daily.

Where this gets funny is in some of the other businesses outside of the food industry, where I'm often told "There's too much competition." What? Wouldn't the same principles apply? If there's a strong need, there's going to be competition. Lots of competition means a strong need. An acquaintance of mine was considering the purchase of a sign business, so he looked up the competitors in his market. And there were lots, and they were also very busy. So much so that they could hardly keep up with their orders. He realized that there was a strong need, and that even though there were lots of competitors, the need wasn't being met satisfactorily. In other words, there was still room for more sign companies in his market.

The result was that he was able to focus his research on which Sign business to buy and which part of the market to focus on. Because just like the food industry consists of pizza, french fries, hot dogs, submarine sandwiches, etc., the sign industry also consists of neon, vinyl, molded, ink, paint, digital, illuminated, etc. This means that competition in any industry will also be diluted by specialists in each area of the industry as well, so that something that appears to be saturated at first glance may not be at all. Without proper research into the actual businesses available, a prospective franchisee could very well miss the opportunity of a lifetime due to some misconceptions about competition. My acquaintance in the sign industry today is a highly successful sign business owner. He moved ahead and never looked back, and is now actually working through a succession plan whereby he will become the owner of the entire sign company that he bought into.

Certainly, a market can become saturated, but it requires investigation to determine, and "impressions" by themselves of a market won't give you the necessary information to make a decision on the actual market competition itself. Solid facts are required, and it's up to you to do the research to get the facts and make the right decision.

Because the question isn't really competition, is it? It's a question of need!

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