Entry barriers

To make money in a business consistently, it should not be easy for competitors to enter the field. The entry barriers for the business should be very high.
This is usually achieved by:
1. Having a monopoly in the business – usually for essential services
2. A large capital investment is needed to get the business started
3. You discover or invent a new product, service or technology after spending a lot of time researching and experimenting and keep it a secret.

Before starting any kind of business, it is important to carefully evaluate the entry barriers for starting the business. If you are just starting the business, you may not have a lot of funds to invest since banks and other financial institutions are usually hesitant to lend money to your business. The only investment you will be able to make will probably be your own savings.

If you have a good business idea and it is very profitable, other companies in related fields will also be interested in it. If they are already established companies, in addition to having more capital to spend on development and marketing, they will already have a ready customer base, to whom they can sell the new product or service.

So if the business idea is based on a technology which is easily available or widely known, the entry barriers will be low. Initially, you may make a lot of profit, but over a period of time as the competition increases, the margins will reduce and some of the larger companies may be willing to suffer a loss initially to gain a foothold in the market.

Entry barriers to starting a business