How to Research Your Competitors Before Starting or Buying a Business

Before entering any local market, aspiring entrepreneurs should evaluate competitors across four dimensions — concentration and market share, business maturity and longevity, online presence and ad competitiveness, and ownership structure. Together, these factors tell you not just who you're up against, but whether the market is actually worth entering — and at what scale.

Knowing your competitors isn't just a box to check on a business plan. It's the difference between walking into a market with clear eyes and stumbling into a fight you weren't prepared for.

Most first-time entrepreneurs start with the obvious question: "Is there demand for what I want to sell?" That's worth asking — but it's only half the picture. The other half is understanding who's already serving that demand, how entrenched they are, and what it would realistically take to compete with them. Evident is built to answer exactly that question — but even if you're doing the research yourself, here's what to look for.

1. Start With Market Concentration: Who's Actually Winning?

The first thing you want to understand is how revenue is distributed across players in your target market. Is it spread relatively evenly among dozens of small businesses — or are one or two dominant players capturing most of the revenue?

A highly concentrated market isn't automatically bad. But it does change your strategy.

Suppose you're evaluating a home services market in a mid-sized city. You find 300+ businesses operating, but the top 30 firms control 43% of all revenue — and the top two alone each generate over $10 million a year. That gap between the leaders and the long tail tells you something important: a few players have figured out how to scale, while most operators are staying small. If you're targeting $1M+ in annual revenue, you're going after the same customers those dominant players are already serving aggressively. If you're happy building a lean, lifestyle business, the long tail is far less competitive.

A useful metric here is market density — how many businesses per capita exist relative to comparable cities. A market with 100%+ of the national average density of competitors suggests it may already be well-served, and differentiation will be key.

For a step-by-step framework on sizing up demand alongside competition, see our guide: How to Analyze Local Business Demand & Competition.

2. Look at Business Age and Mobility: How Entrenched Are They?

One of the most underrated indicators of market difficulty is how old the established businesses are. If the leading players in a market have been operating for 15 to 20+ years on average, that's not just tenure — it's deep community roots, repeat customer relationships, and a reputation that can't be easily replicated.

Here's a telling signal: in some markets, you'll find that zero businesses with over $1 million in revenue started in the past five years — or even the past ten. That's a meaningful data point. It doesn't mean a new entrant can't succeed, but it does mean that no one has broken through recently, which raises the question: why not?

High business age combined with low new entrant success is a strong indicator of what analysts call low business mobility — an established order that's hard to disrupt without a significant competitive advantage or substantial upfront investment.

On the flip side, if you find a market where successful businesses are relatively young (say, two to five years old), that's a signal the market is still being shaped, and there's genuine room for new players to capture share.

According to the U.S. Bureau of Labor Statistics, roughly 45% of new businesses fail within the first five years — so survivability data by state and industry is worth looking up before you commit. Some states and cities genuinely have more business-friendly environments than others, and that affects your odds meaningfully.

3. Assess Online Presence: The Digital Battlefield

In most local service markets today, the competition isn't just happening on the street — it's happening on Google. And the online landscape can be just as revealing as revenue data.

Domain authority is one practical proxy for how well-positioned competitors are online. A business with thousands of inbound links from reputable sites has built something that takes years and significant investment to replicate. If you're evaluating a market and find that half the leading players have low domain authority, that's a digital opening. If most have strong, mature web presences, you'll need a serious SEO and content strategy before you'll appear anywhere near them in search results.

Keyword difficulty is equally important. Suppose you're entering a city where the primary search terms relevant to your business are significantly more competitive than the national average — that means more time and money to rank organically. Conversely, markets where keyword difficulty runs below average offer a genuine first-mover opportunity in SEO.

Then there's advertising competitiveness. Look at how many businesses are actively bidding on paid search for your core keywords. A market where advertising costs are well above average and bidders are numerous tells you something important: the leads are valuable, companies know it, and they're fighting hard for them. You'll need either a sizable ad budget or a differentiated organic strategy — or both.

If you're evaluating a market where advertising costs are extremely high but the number of bidders is relatively low, that can mean leads are genuinely valuable and conversion rates are strong. In that environment, a smart early mover who gets the economics right could do well. But if both costs and bidder count are high, you're likely looking at a mature, competitive digital environment where incumbents have optimized over years.

Curious how a specific market stacks up? Evident pulls together digital competitiveness, keyword data, and web presence metrics so you can evaluate a market without spending weeks on manual research.

4. Understand Who Owns the Competition

Ownership structure is a dimension many entrepreneurs overlook — but it matters enormously for competitive dynamics.

There are four broad ownership types you're likely to encounter in any local market:

Individual/family-owned businesses tend to be the most common by count. They vary widely in sophistication and financial resources. Many are run lean, without dedicated marketing teams or professional management. These are often the easiest to compete with — though their local brand equity and relationships shouldn't be underestimated.

Private equity-backed firms are a different story. PE-backed operators often have professional management, dedicated marketing spend, and access to capital that independent operators can't match. In markets where PE-backed firms control a disproportionate share of revenue — say, 35–40% — they've typically figured out a winning playbook and are executing it at scale. Going head-to-head with them requires either a niche strategy or a capital commitment that matches their ambition.

Franchises bring national brand recognition, proven systems, and corporate marketing support. If a market has meaningful franchise penetration, you should ask whether a franchise opportunity might actually be better than an independent entry — or whether the franchise presence signals a mature, competitive market.

Corporate chains are the most resource-intensive competitors, with centralized operations and brand recognition. Their presence usually signals a well-developed market with strong consumer demand, but they also set a high bar for professionalism and customer experience.

If a market is predominantly individual/family-owned with little PE or franchise presence, that's typically a more level playing field for an independent entrepreneur. If the revenue is increasingly concentrated among PE-backed operators, plan accordingly.

5. Put It All Together: What the Competitive Picture Is Really Telling You

Competitor research isn't about finding a market with no competition — those markets usually have no demand either. It's about finding a market where the competition is beatable, or where you can build a sustainable position at the scale you're targeting.

A market might look intimidating at first glance — 300+ businesses, a few dominant players, high advertising costs — and still be a viable opportunity if you're targeting a specific niche or a down-market segment that's underserved. Conversely, a smaller-looking market with deeply entrenched players, zero new entrants in a decade, and high digital barriers is a much harder nut to crack than the raw business count suggests.

The key questions to hold onto as you do your research:

Who controls the majority of revenue, and how did they get there?
Are successful businesses old or young? Has anyone broken through recently?
What does the digital landscape look like — is there an opening, or is it locked up?
Who owns the competition, and do they have resources I can't match?

Getting clear answers to these questions — backed by real data, not just intuition — is what separates entrepreneurs who enter markets strategically from those who learn the hard way.

If you're serious about evaluating a market, Evident does the heavy lifting: market sizing, competitor analysis, digital presence, and barriers to entry, surfaced in a single report so you can make a confident decision before you invest a dollar.

Want to go deeper on the demand side of the equation? Read our guide on how to analyze local business demand and competition before you pull the trigger on any market.