What is your target market size in general ? I mean are you are going after a specific niche where you expect to get about 1000 paying customers total OR you are looking at a consumer app where you want millions of users ?

I would not worry about too much competition. I would rather look at how much piece of the pie is potentially available (depending on the answer to the question about market size above). For example, you say that there are 5 national competitors for that particular idea you had but locally, there might be opportunity. So why not start local and talk to your potential customers ? Again, depending on what your target audience is and their market size, it could be very likely that there still is a big piece of the pie left for you.