Embracing The Hard In Business

By Century Favour | April 1, 2019

Dear entrepreneur,

 

It’s a new month! Can you believe how fast the year is running? How are the goals you set for the year coming along?

I’ve been thinking recently about businesses and I’d like to share my thoughts on a challenge that I think many businesses face especially at the launching phase and it’s the challenge of Barriers to entry. Ever wondered why we have so many airtime recharge voucher sellers but only 4 major telecoms companies? Or why we have so many entrepreneurs but only one Dangote? Or why it is easier to import and market cell phones than it is to set up a phone manufacturing company?

Think about it, if it was easy, everyone would have done it but the reality is that for every industry, there will always be a barrier to entry.

 

UNDERSTANDING THE BARRIERS TO MARKET  ENTRY

Barriers to entry in any market are the major obstacles that make it difficult for entrepreneurs in that space to enter and succeed in it. A barrier may be securing the necessary certification or navigating your way through complex government regulation such as tax policies or maybe raising enough startup capital for your business to launch out and thrive. It could even be that you need to build or acquire a certain type of technology or secure a patent.

For some businesses, it may be that the economies of scale apply significantly which means that you can only break even if you produce in large quantities. For others, they need a reliable supply chain network that guarantees efficient access to suppliers and distribution channels from day one to succeed, or the industry they are in is already so competitive that they require a stronger or unique selling point to be equipped to respond to the competition. Worthy of note is the prevalent challenge of talent deficit that many businesses face- being able to acquire top talent to power their business operation is challenging due to the shortage of skilled talent.

In short, there are a thousand and one barriers in any industry and it can be a tough pill for many businesses to swallow. The reality is that the larger the market opportunity, the larger the barriers and hurdles an entrepreneur will likely encounter. These hurdles are constant and they affect all players in any given market.

What this means is that you are not facing whatever difficulty you are facing in your business alone. Your competitor is facing something similar or may have faced something similar depending on the level from which they are operating in your industry.

What then is the winning formula to scale these barriers? Let me share one key strategic insight with you. This has worked for me.

 

STRATEGIC INSIGHT- IT IS ALL ABOUT PERSPECTIVE.

The principal strategic insight here is that you are not just competing in your industry for clients and customers or who can capture the largest market share, but you are actually competing on who can surmount the unique barriers to entry for your industry.

You are competing on who can raise more money before they run out of cash, who can get that government certification faster, who can grow their distribution channels faster, who can recruit the best talent etc.

In every market, there are those who succeed and those who don’t. Winners or losers in any market are decided by those who surmount the barriers unique in their industry better and faster than their competitors.

And I have come to realize that a key differentiating factor that separates winners and losers in any industry is perspective. It has a lot to do with how they see and react to these barriers to entry irrespective of their industries.

LOSERS see these barriers as challenges, as a problem they have to surmount.

WINNERS, on the other hand, see these challenges as an opportunity, they understand that their success depends on their innovative ability to surmount these challenges better than their competitors. So they embrace the hard and turn these challenges into their competitive advantage.

The question is, What category do you belong to?

If this resonated, I’d love to hear your thoughts in the comment section and the strategy you’ve employed in the past in scaling barriers to market entry.  

 

Header Image Credit: climbing.com