We’ve Hit Critical Saturation for Local Business Listing Startups

I work with a lot of small businesses and it’s time to address a popular pitch I’ve gotten over and over again as my company continues to grow.

I think it’s some kind of rule that if you have ever considered, at any point in your life, starting a company or pursuing entrepreneurship, you will have to have at least considered starting some form of a local business listing startup.

Don’t act like you don’t know the pitch, because I get it almost weekly at this point as a developer: Google search is too inconvenient! People need ways to discover local businesses and events! Nobody knows what’s going on in town! Exciting things are happening at bars, restaurants and businesses and you need the best way to stay in the know! Find a concert, a happy hour, a sale, WE’VE GOT IT ALL!

Hell, odds are if you’re a local business, your E-mail inbox is saturated to a breaking point with these types of service offerings. I see it every single day on behalf of a lot of the inboxes I manage.

Let’s back up a little and provide some context. First off: Why are these things so popular?

From the perspective of a cash-strapped startup or aspiring founder it’s easy to see the appeal. In terms of upfront cost there are mountains of these local business listing companies because it’s pretty cheap and the overall complexity of building basic software that replicates business listings is fairly minimal. You don’t need a physical storefront, office or distribution center and you don’t require any raw materials, nor are you involved with logistics involving shipping or physical products.

On the technical side open source software exists that will literally generate a version 1.0 of everything you need. There are WordPress plugins that require less than five minutes of out-of-the-box configuration to set up. The usual promotional tools – newsletter are popular – have minimal costs if you’re starting from square one.

Running a local business listing startup or event aggregator also gives you a built-in target audience that requires very little in-depth research. Even if you live in an extremely small town, odds are that you’ll have a long list of prospects to approach that you may even already be familiar with – the local restaurants, grocery stores, flower shops, fitness studios, or what have you.

Much like running any new digital company, starting one of these services sounds appealing because there’s basically no barriers to entry if you know your way around a database. Except the problems associated with any digital company are multiplied tenfold with online business listing services.

The Community Paradox

Let me introduce a concept that goes by many names but I tend to call it the community paradox. In short, you need to actually get enough people regularly visiting your local business listing startup website (or responding to your E-mails) to make it viable long term. This is incredibly difficult to do because of the sheer proliferation of these companies, services and startups online. If any startup doesn’t attract people, at best it lingers in startup purgatory or at worst it just dies. That happens all the time.

Where the community paradox comes into play is the fact that you need an ongoing community to keep coming back, rather than people just buying a product once. It’s the lifeblood that sustains things like E-commerce stores, social networks, and multiplayer video games. Not only do you need to go through the Herculean effort of attracting people to your site but you also have to keep them there. Otherwise you’ll basically jump into the air and feel like you’re making progress only to crash back to the ground.

You may have noticed the problem already. Even at the local level there are going to be far more attractive places on the Internet for people to spend time and a new platform is likely going to be at the bottom of the list. Whether it’s localized versions of larger social networks like Facebook or Nextdoor, private group DMs,

When the community starts dwindling it starts a death spiral that’s almost always permanent and impossible to overcome barring very extraordinary instances. So people will share less, then they’ll consume less. Your listing site will be less useful and people will spend less time there. And because people spend less time there, any advertisers will spend less money there, resulting in less money. So goes the death spiral that not even Facebook is immune to.

Rather Than Unify Business Listings, You’re Just Fracturing an Already Fractured Market

Part of why Internet reputation management has turned into a complete nightmare for any small business is the staggering number of local business listing sources that already exist; many of these are from bigger, more established and better funded companies than yours. HubSpot conveniently lists fifty of these listing companies from a lot of the usual suspects: Google Places, Facebook, Instagram, LinkedIn, Yelp, MapQuest, Angi, Nextdoor, Manta, and MerchantCircle among countless others. Many of these have their ups and downs and I’ve criticized a few of them for creating a problem and then selling a solution, which is what landed Yelp in my crosshairs originally.

The one company that can have a legitimate claim to effectively unifying local business listings is Google both because of its simplicity and because Google ties its listings into its search engine rankings for better or worse. There’s a lot of criticism you can aim at Google – and I’d agree with most of it, probably! – but they’ve streamlined online discovery in a way that few business listing platforms can. Yours in all likelihood is not going to be the exception.

Part of why the typical small business owner groans and their eyes glaze over when they receive these sorts of offers is that they’re thinking “Not another one.” It’s another listing they have to worry about, sold to them by someone trying to convince them that they’re getting a benefit out of something with very nebulously defined value. Which is what brings us to the harshest point.

You’re Not Providing Anything of Real Value

I’ve spent a lot of time discussing how wildly saturated the online local business listing market is and the difficulty of even getting a platform of the ground when there are so many competitors constantly competing for your time, but here’s the cold truth: What you’re attempting has in all likelihood been done. It’s been done better, more efficiently, and the market winners emerged a long time ago.

Think of it this way. If you want to run one of these services, can you say right now what you do differently and better than Google Listings? Is your platform going to impact search engine visibility in the same way that Google Listings is? I highly doubt it unless you’re a top level Google engineer (and if you are, you’re probably about to get sued for leaking proprietary information). The question a lot of these listing services fails to answer is simple: What differentiates you from the hundreds of not thousands of other services that mechanically fulfill this exact same function? Why should small business owners go through the effort of spending their precious time claiming or spending time on your platform when there are countless others offering the same thing?

If you can’t immediately answer those in about five seconds that’s a very bad sign.

I’m not saying that none of these services provide value. Chambers of Commerce maintain local directory listings but often work in conjunction with their members to provide membership benefits like events and alerts targeted to the local community. Even local newspapers often maintain events which they of course write about it. Those are two natural fits that help facilitate the needs and benefits of business directory listings which you probably won’t have.

People use Google Listings. They use Facebook and Yelp. The market leaders have been established and there’s no point in trying to clone them on a much smaller and more limited level. If you want to start a company that lasts, start from immediately solving a problem rather than inventing a problem you think might need to be solved and has already been solved a dozen times over. Your customers – because you’ll actually get customers – will thank you.