Five Force Model
Five Forces ModelAllyssa RodgersENT395- E1WWPerry MaughmerJanuary 24, 2016 Threat of Substitutes:Some substitutions for my Financial Planning/Education business could be self-help books. There are many books available on personal finances, savings and even investing. Suze Orman and Dave Ramsay are two of the most popular authors. There is also internet education, large financial firms and even CPA’s. Some other risks can be on-line trading, online banking accounts and other on-line tools. People are so busy these days and taking care of errands, banking etc… need to be convenient. Besides being mobile and going to them, being available for my clients, my program would be individual. Each client is different and the education would be based on their specific needs, budget would be based on their household and financial goals. There is no substitution for personal customer service.Threat of New EntrantsThere will be barriers to entry. This will be especially difficult if I decide to open my own independent firm. The major barrier will be client base. Financial Planning is a commission based business. Without clients or a client list there will be no profit or even income. One way to get over this hurtle is to work as an independent consultant for an already established firm. Build my name and brand in the industry. Along with this another barrier would be not being able to take that client list from the established company if I break out on my own. Most firms will have you sign a non-solicitation agreement that states you cannot contact any of their clients for so many years or months after their employ.
Another barrier is branding. My idea of the education is unique, particularly in the Columbus area. Having the means to research and patent or trademark my idea, program names etc… will prove expensive and time consuming. These would be a must to start up my own firm. Being able to work my current position and the new business part time for a while would allow the money and research needed for the patents.Competitive RivalryAccording to Credio.com there are 2,374 independent and firm based financial advisors in Columbus. According to the 2014 census there are around 836,000 people in Columbus, OH. About 578,000 of these people are eighteen or over which is a little of 69% of the population. Many of these people already have a financial advisor or will need one in the next few years. This field is expected to grow 30%. Using these numbers there would be 243 clients per financial advisor in Columbus. Although there is rivalry there is room for new business. This is a good sign for me especially since I do not already have a built client base.