Imagine there are 20 Fuel Stations in your Local Government Area and you have insight that they are all doing very well. People must buy fuel, they say.
Bad business practice is if you think starting the 21st fuel station is the best idea in the world.
What you are doing is simply reducing the average market potential of the fuel market in your local government. By starting a new station, you have not created a bigger market for fuel (i.e if your LGA consumes 250K litres of fuel daily, your new station doesn’t increase the consumption). You are simply swimming in a shark infested ocean with everyone baying for blood and the rigid market that exists. And unless the existing stations have bad customer service, no value added services, you cant make much dent as the per litre price of fuel is rigid. It is a disease with everyone wanting to do same thing once a business model is validated.
Now imagine if you decide to create a niche within the fuel distribution business. You can decide not to have just a fuel distribution business. Imagine if fuel is just your anchor product but you have a quick mechanical service unit, a coffee shop, fast grocery store, tyre fitment center, pick up point for eCommerce companies, barbing services, agency banking facilities, lottery playing service, etc. You would have differentiated yourself and you’d even most likely make money from those ancillary services than just selling fuel.
What you have done is create new market spaces for yourself and the competition will have to try and do same thing. You can also incorporate a reward system for your fuel station. Lock your customers in.
Don’t just do a business because everyone is doing it. Understand the real issues in the industry, be ready to have unique propositions. Me too businesses don’t last. They are pretenders about to be usurped and crushed. Be deliberate about business excellence.
Note that this applies to almost any business. The fuel business was just an example.