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Market Research and Business Opportunities

Written by: Patrick Findaro
Last Updated by Rocio Somoza: August 17, 2022
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This article is based on a video originally recorded on Business & Franchise Opportunities By Vetted BizYouTube channel.

Patrick: Patrick Findaro here with Vetted Biz. I’m really excited to have on John LaRosa, who has well over 30 years of market research. We’ve been doing deep dives on a lot of the different industries and business opportunities for, basically, looking at business for sale, as well as franchise for sale. And it’s really important, before you dive into buying that restaurant down the street, or that pawn shop down the street, that you look at it from an industry level. And that’s what John specializes in, looking at the industry, but then also doing further deep dives upon engagement from his clients.

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Contents

Business For Sale

Patrick: So, John, thanks so much for joining us. You’ve written a lot of reports, and we publish at least five articles on the Vetted Biz blog on these kind of industry deep dives. Could you just tell me a little bit how you entered in the market research world and kind of what your focus is?

John: Yeah, I guess I started in market research in about 1979 after a brief stint in teaching. I was going to teach foreign languages and then decided I wanted to switch into business instead because it was more lucrative, and just more in line with my personal interest. So I’ve had a passion to do market research since the late 1970s, working for four different companies, before going out on my own and pursuing our company, Marketdata, full time in…

Patrick: When did you establish Marketdata?

John: 1979.

Patrick: Wow, that’s incredible.

John: So I have worked for a small market research company on Long Island in New York. And I just love the work. It’s like being an investigative journalist, where you put all the pieces of a puzzle together in terms of what makes an industry tick, and the nuances, and characteristics of it. And it never got boring because I was looking at a different industry every two months. So it’s not like I was a market research analyst just for the automotive industry, or the construction industry all year long. I was looking at six or seven different industries every year. And each one has its own story. So it just became very interesting to me. And I decided I wanted to do that full time.

market research

Market Research Analyst

Patrick: And when did you make the move down to Florida?

John: I moved to Florida in 1996. So I’ve been in Tampa for about 25 years now.

Patrick: Okay. And Tampa has probably changed a lot since you came down in 1996.

John: Oh, yeah, it’s grown a lot. And we just moved here for lifestyle reasons. Just, you know, real estate was getting really expensive in New York. And it was…we were just starting our family back then. So it was a lot cheaper to buy a house and live the kind of lifestyle that I wanted. I like to play golf and, you know, be outdoors in the sunshine, even during the winter months. So, Tampa fit the bill for us.

Patrick: Yeah, I grew up right outside Washington, DC. I went to college in New England. And my parents are actually both from Manhasset on Long Island. You know, I lived a couple of years in New York, but for me, it was just too fast-paced. And I do prefer the lifestyle in Florida. Yeah, I mean, there’s just a lot to offer. And it’s really exciting, and, you know, cities like Miami and Tampa are changing a lot. And I think in a positive way after the pandemic with this whole work-from-home, or work-nearby-home.

John: Yeah. Growing up in New York, we never heard about any news from Tampa. But now we have all these championship teams, you know, between the Bucks, and the Raids, and the Bolts in hockey. We’ve got all these champion sports teams now. So, I guess we’re getting on the map the last 10 years.

CTA-2

What is Market Research

Patrick: And yeah, going back to Vetted Biz, you know, we’re mostly focused on individual investors, although there have been private equity firms that leveraged the insights that we have, especially on the franchising and business for sale industry. Do you have a similar type of clients that buy your industry reports, and engage your services for market research? Can you tell me a little bit about the type of clients you work with?

John: Yeah, the reports that we do are generally off…what’s known as off-the-shelf studies, which are produced for a mass audience. And so the buyers of our reports could be entrepreneurs, investors, banks, ad agencies, consulting firms, trade associations, you know, a pretty broad audience.

Patrick: Diverse.

John: Yeah. And frequently, when somebody buys one of our reports, they’re doing due diligence about a specific company or an industry that they may want to get into or acquire a company. So we get a lot of merger and acquisition candidates, and private equity firms that are looking to invest in a specific company, maybe buy them out, you know, invest in them. So, you know, they buy our off-the-shelf studies.
But frequently, they want a deeper dive into a specific part of the country, either a regional analysis, or a competitor analysis, or a market potential analysis for a new product or a service coming out. And we’ll do custom studies and consulting for them as well. So, it really varies. Our bread and butter business is the off-the-shelf studies, but we frequently do consulting and custom projects.

market research

Business Opportunities

Patrick: And, I mean, do you have any advice for, whether it’s a private equity investor or someone that’s, you know, quitting their corporate job in New York City, or the Northeast and moving down to Florida and they want to buy a business or open up a franchise? Where would you start if you were in their position?

John: Well, I think the mistake a lot of people make when they’re about to invest in a business or, you know, spend several hundred thousand dollars to buy a franchise, for example, is they don’t do market research. A lot of times, people don’t even know or understand what market research is. But it’s like, if you want to buy a new car, you do research online, you look at consumer reports, you look at reports about how reliable the car is…

Patrick: Safety, especially if you have kids.

John: Yeah. I mean, you know, gas mileage. You do all kinds of research online before actually going to the dealership. But a lot of people skip that first step to do market research, to do their due diligence, to find out, is this a good industry right now? Is it growing, crowded, oversaturated? Is there room for more growth? Is the industry being regulated by some government agency? Is it undergoing some transformation technology-wise? Is it popular with consumers? What are the trends affecting the business? And how is that going to impact how successful you are?

CTA-2

How to do Market Research

John:

A lot of people don't do that. And it's a big mistake because they can be investing their life savings into an industry that's on the way down

And, you know, you want to try and avoid the pitfalls, and pick industries that are growing, and don’t have any special circumstances. So that, you know, you can maximize your chance for success.

Patrick: And why is it like…Is it…you think, like buying a small business, or investing in a franchise for an individual investor can be, like, a very emotional decision, and they’re swindled by a smooth sales guy? Why do then…why do people…why are people not necessarily always doing their research on the industry level first?

John: I think they don’t know that a lot of information exists, and is out there free, or for a very low cost. Like, for example, the Census Bureau, the U.S. Census Bureau has a bunch of different surveys that they do, like the Economic Census, is the census of wholesale trade, retail trade, manufacturing, and service industries, and all of this information, and statistics, and, you know, great content is available free if you know where to look. And you can find it easily online. Market research is not magic, and it’s…

Patrick: It takes time.

John: It takes time. It’s kind of painstaking and boring to a lot of people. But it’s work that you really have to do if you want to prepare yourself and get into the right business, and it’s well worth the effort.

Patrick: Yeah, to get in the right business and avoid the ones that aren’t looking so hot.

Franchise Opportunities

John: Mm-hmm. Market research is not…it’s not rocket science. Anybody can do it if you have the tenacity and the patience to find the statistics and information, and identify the trends to figure out what’s going on in the industry. So, you know, like I tell people, you don’t need any special degree to do market research. It’s just grunt work. Getting on the phone and talking to people and interviewing them, It’s looking at different websites. Finding articles about a business or an industry that has been put out by reporters or other research organizations.
So, you know, a lot of people don’t like to do research. But that’s why we do it to take that load off of people’s minds. And, you know, we’re good at it. We’re efficient at it. And we know where to go to find the relevant information.

Patrick: And I think it was in one year’s study, you were conducting one of your studies, and that’s how you entered into contact with us at Vetted Biz, right?

John: Yes, yes. Mm-hmm.

Patrick: And I know…yeah, you’ve produced a lot of different reports. And part of the reports, as kind of like a teaser, are highlighted on the Vetted Biz blog.

John: Mm-hmm.

Patrick: Could you tell us just like what industries that you would put your money in? Or that you think are worthwhile for individual, or institutional investors to look at, based on different factors like growth rate over the next 5, 10 years? Because I know you’ve done…you’ve looked at so many industries. And I’d be curious just to hear from you, you know, what industry picks your interest the most?

market research

Business Revenue

John: Yeah. I think, you know, obviously, COVID and the pandemic has affected a lot of industries, and markets, some more than others. And a lot of personal service and healthcare sectors were hurt by the pandemic, but they’re bouncing back. And one example of that, where you have a very personal service where, you know, it has to be delivered in person, it can’t be delivered online or digitally, is nail salons. The nail salon industry is a very interesting one. It was started by Vietnamese women that came over here after…in the 1970s after the Vietnam…

Patrick: Yeah. I think, largely, refugees started the whole industry.

John: After the war, they came over, and a group of them in California were kind of recruited by one of the actresses, Tippi Hedren, and she kind of took them under her wing and got them to be admitted to beauty schools in California. And they taught them how to do nails, you know, being manicurists, and then do all these nail services. And from there, it just kind of grew into an industry that’s still dominated by Vietnamese women. But has really spread across the country.
And I would say, right now, the industry is worth about 6.5 billion. I’m just looking at a couple of notes here in my report. There’s about 28,000 nail salons in the country. And the typical nail salon revenues are about $287,000 per year in 2019.

Patrick: And did you deduce that from the census data? How do you get the figure on the per-unit revenue?

John: Yeah, the census data has information of the number of nail salons and their receipts or revenues. So, you know, just divide the receipts by the number of nail salons and you get the average revenue per salon.

Patrick: So the average is doing, what was it? $280,000 in top-line revenue sales?

John: $287,000, right.

Patrick: Do you know like an estimated profit margin? Like how much the owner can take out of a business like that, a nail salon?

John: Yeah, that’s 17%.

Patrick: Not bad.

John: But the point is, that’s just the average, and there’s a lot of nail salons that do much higher than that…

franchise specialist

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