Video: What Are Two Common Barriers That Prevent Firms From Entering the Market?
Hello, this is Vince Rogers with Vince Rogers & Associates. I want to talk to you about the two greatest barriers of entry for a company into a new market, or a new business. There are a lot of barriers of entry for a business into a new market. There can be zoning issues. There can be issues of bureaucratic red tap, and you can, frankly, be entering into a market where the competitor just has a great reputation that you're not going to be able to enter that market, because you're dealing with a big competitor. But, there are two very, very basic barriers of entry for most companies into a new market, and the first is going to be lack of access to adequate start-up capital, and the second is going to be having a solid business plan. Now, there are many sources for start-up capital. You want to, hopefully, be in a position where you can use your own savings, but most entrepreneurs have to either seek money from family, friends, banks, venture capital firms, or angle investors. The second barrier of entry for most businesses is that they don't have a solid business plan. A lot of people, they have a idea that they think is ready to be a full-fledged business, but sometimes they're just not ready. Sometimes they don't have a good plan for the business they want to enter into the market with. So, the second greatest barrier to entry is not having a good plan for your business. If you don't have a solid business plan, you're not going to be able to get adequate start-up capital, which is the other barrier of entry for most businesses. This is Vince Rogers with Vince Rogers & Associates, and we've talked about the two greatest barriers of entry into a market: lack of access to adequate start-up capital, and lack of a solid business plan.