And to prevent the threat of new entrants, you need to set up barriers. And these barriers are what we call "barriers to entry".
Simply put, barriers to entry is what makes it difficult for competitors to emulate you, i.e. to enter your market. Or you already have some existing competitors, it's what makes it difficult for them to expand.
Some of the barriers to entry:
This is when more people use your product or service, the more useful it becomes and the more people will use your product or service. Once you have reached a tipping point, competitors will not be able to unseat you because they don't have the numbers.
Having sole access to patented technology or technical experience that lowers cost or provides a major benefit, gives you an advantage over others.
Having sole access to supply at lower cost gives you a cost advantage.
When the cost or inconvenience of switching to a competitor is high, the customers will tend to stay with you. And competitors will find it difficult to take them away from you.
this is when your volume is large enough that your fixed cost per unit becomes significantly lower than others. This then translates to either a lower price to the customer or a higher gross margin for you. Your competitors, whose volume is smaller, would have to sell at a higher price with a lower margin.
When building your business or startup, consider how you could have barriers to entry as part of your growth strategy.
© Osman Mia