When considering what type of business you will create, make sure you consider not only the demand forces, but also whether that demand is being served and to what degree.
I would challenge you to talk to all of your friends and find out what kind of business they would be interested in starting right now. Changes are, you will get a number of people saying that they want to start up a bar or a restaurant, a photography business, or something that has to do with makeup or hair. Each of these have relatively low barriers of entry and, thus, have a tendency to become saturated markets.
To simplify this, let’s just think of a towel that is completely soaked (or…saturated!). What comes to mind when you think of this? Perhaps you think of a towel that has absorbed as much water as it could possibly hold. Would you give this towel to your kid to dry off after they get out of a swimming pool? Assuming that you aren’t joking with your kid, I’d assume that this wouldn’t happen. This is because the towel has as much water as it can hold.
Now, think of a business market. Specifically, lets think of the market in the Anaheim/Santa Ana California region for Mexican restaurants. There is no shortage of options because there is no shortage of demand. If you examine the results that show up in Yelp, you will see that many of them are new. This is because of the high turnover rate for Mexican restaurants in the local area. In other words, there are so many new options because so many fail.
According to Modern Restaurant Management, “60 percent of restaurants don’t make it past their first year and 80 percent go out of business within five years.” Because there are so many options for Mexican restaurants, it is very difficult for any single one to gain enough market share through customer loyalty to remain in business.
What needs to be done during your planning phase is to ask whether there is a need for your specific type of business in the area. If there are too many options in a single category, it is indicative that there is high demand and also a lot of competition. If there are too few options, it may be a sign that there is very little competition, but also very little demand.
The bottom line is that you need to investigate your market segment during your initial business planning phase. Simply being in an area with high demand does not mean that your venture will be successful. There also has to be few other viable options for potential customers.
Christopher Padilla 
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