Business Sucess Video Series #2

What Are Two Common Barriers That Prevent Firms From Entering the Market?


A number of different barriers exist that often prevent firms from successfully entering the marketplace. Learn about two common barriers that prevent firms from entering the market with help from the principal change agent at Vince Rogers & Associates in this free video clip.


What Are Two Common Barriers That Prevent Firms From Entering the Market? —powered by eHow.com

Video Transcript

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.

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Business Success 2

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Business Success 2 — Presentation Transcript

• 1. Business Success Prepared by Vince Rogers & Associates for Demand Studios
• 2. What AreTwo Common Barriers That Prevent Firms From Entering a Market?
• 3. Many people dream of starting a new business Many of us will succeed in getting that new business off the ground Unfortunately, many of these businesses will failFor those businesses that never get off the ground, there are a number of “Barriers to Entry” that prevent these enterprises from launching
• 4. There are many barriers to entry into a market that new companies can face such as: Lack of Access to Proprietary Technology Government Regulations or Bureaucratic “Red Tape” Zoning Issues Existing Customer Loyalty for Competing Products
• 5. However there are Two Common Barriers That Prevent Most Firms From Entering a MarketThis is true whether you’re trying toopen a typical fast food franchise or an innovative high tech start-up
• 6. It is often said that the number one reason for business failure is lack ofaccess to sufficient operating capital Lack of Access to Sufficient Startup Capitalis also the number one reason that most businesses never get off the ground
• 7. If you don’t have personal savings to fund yourBusiness, then you will have to acquire it fromother sourcesThe most common sources of business financingare: Family Friends Banks Venture Capital Firms “Angel Investors”
• 8. Financing from either of these sources will come in the form of loans that will have to be repaid or investors in your business acquiring some percentage of ownership interest and control Sometimes, when aspiring entrepreneurs can’t obtain the necessary funding to start theirbusiness, the one thing that many fail to accept is that their concept or idea may not be ready to be a real business
• 9. If you can’t acquire the funding to launch your new business you might want to consider the obvious – your concept may not be strong enough to be an actual business The second most prominent barrier to market entry is Lack of a Solid Business PlanHaving a great concept without a solid business plan can be a significant barrier to business success
• 10. A well written business planhelps to guide you through each step of the process in formulating your business If you are seeking to get funding from sources such asBanks, the SBA, Venture Capital firms oreven your relatives, you’re going to need a high quality written business plan
• 11. If you don’t have enough money tofund your business from the concept stage through initial operations it is highly unlikely that your business will be able to get of the ground If you don’t have a solid business plan you won’t have the roadmap you need for business success and it is unlikely that you will be able to acquire the additional capital you may need to succeed

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