Questions to ask before you move in:
- What type of neighborhood surrounds the potential location?
- Who lives there?
- What is the area's average household income?
- Is the population growing or declining?
- Are the families young with children or are they older families whose children have moved out?
- How many of your desired target customers live in the area?
- How many target customers live within five miles?
What Are They Up To?
Your industry analysis should reveal which companies would be your direct and indirect competitors in a particular business. Look for them as you conduct your market analysis. List all of the competitors located in your prospective market radius. Then shop them. Visit each one several times, and answer the following questions:
- What does each one do well? What does each do less well? In what areas do you think your franchise can do better?
- Who are the customers? When do they purchase? How many visit on weekdays? Weekends? Holidays? Do they visit during the day, evening or night?
- What is the business's peak hour? When is its slowest period?
Extrapolate the competitor's sales by learning its prices and then multiplying by the number of people who leave with packages during a particular period. Enlist family and friends to help log customers during different parts of the day, and do the math once you have a good sample.
Cheryl Babcock is the director of the Institute for Franchise Management and chief officer of the Society of Franchising at the University of St. Thomas in St. Paul, Minnesota.