From the November 2005 issue of Entrepreneur

Q:How do I know if the business I want to start is in an industry that's too saturated?

A:Too many competitors in a marketplace will drive down prices and force some businesses to close their doors or change direction, so your question is important to answer before starting a new business.

Your first task is to learn about your competitors. Whether starting something local, national or international in scope, the web is the best place to begin scouting out the competition.

For a current listing of businesses, use AnyWho or Switchboard. On these sites, you can get an idea of how many competing businesses there are, as well as their names and locations. Visit these businesses' websites to learn more. Check the Yellow Pages, too, to see if your competitors use Yellow Pages advertising to attract new customers.

For more about local competitors, check out Google Local, SuperPages.com and Yahoo! Local. For more about national competitors, use major search engines, such as Google and Yahoo!. To learn about companies manufacturing products, ThomasNet is a comprehensive resource. Also useful are trade and professional organizations that have directories listing members by locale.

Lastly, try meeting with someone already in the field. How willing they are to talk and share with you is often an excellent indication of how saturated the market is, and making these contacts can lead to referral work for you, particularly if you specialize in a different area.

Authors and career coaches Paul and Sarah Edwards' new book isThe Best Home Businesses for People 50+. Send them your questions at www.workingfromhome.com or in care of Entrepreneur.