8♦️ Define strategy: Protect your business

What's giving your competitors the edge? How are they outperforming you? Is it getting harder to compete? Are they offering something better—a cheaper, simpler, or just different product? It's frustrating when that happens. But here's a straightforward question to ponder: How can you make your business more sustainable and profitable in the long run?

In today's competitive landscape, it's essential to create barriers to entry that protect your business from competitors. By understanding and leveraging these barriers, you can establish a sustainable competitive advantage.

Solution

What are the hurdles preventing new businesses from entering your market? These barriers could be anything from intellectual property to a strong brand. Consider Apple—they've built a powerful brand that's hard to compete with. Or maybe you have access to unique resources or relationships that your competitors lack.

While no barrier is completely insurmountable, they can make it tough for competitors to break into your market. So think about your business from the perspective of barriers to entry. What sets you apart? How can you protect your advantage? Remember, a strong company culture and talented team are often the most difficult assets to replicate.

Building barriers is a strategic move that can help you sustain your business's long-term value.

To build and protect barriers to entry, consider the following strategies:

1. Intellectual property: Protect your innovations and proprietary technology through patents, trademarks, and copyrights.

2. Brand equity: Invest in building a strong brand that is recognised and respected by customers.

3. Customer relationships: Cultivate long-term relationships with customers to create loyalty and switching costs.

4. Economies of scale: Leverage your size and scale to achieve cost advantages and economies of scale.

5. Distribution channels: Establish strong distribution channels that are difficult for competitors to replicate.

6. Regulatory barriers: Understand and leverage any regulatory barriers that may exist in your industry.

Benefits

By building barriers to entry, you can:

• Protect market share: Reduce the threat of competition and maintain your market position.

• Increase profitability: Command higher prices and negotiate better terms with suppliers.

• Enhance brand value: Strengthen your brand's reputation and customer loyalty.

• Reduce risk: Mitigate the risks associated with market entry and disruption.

Why it works

Barriers to entry make it more difficult and costly for competitors to enter your market. This allows you to maintain a competitive advantage and enjoy higher profitability.

Measurement

The effectiveness of your barriers to entry can be measured by:

• Market share: Track changes in your market share over time.

• Customer loyalty: Monitor customer retention rates and repeat purchases.

• Profitability: Evaluate your profit margins and return on investment.

• Competitive analysis: Assess the competitive landscape and identify any new entrants or threats.