Are New Entrants in the Market Only Potential Threats For a Business? A Survey

Businesses today have a never-ending web of threats that they need to fight from time to time to pursue long-term success in the industry. Natural calamities, wars, weather extremes, inflation, and many other avoidable and unavoidable factors have made businesses challenging and painstaking for entrepreneurs today. The threats that a business faces are dependent on the life cycle of a business; new entrants are likely to face more difficulties and challenges as compared to a business operating at the maturity stage of its life cycle. Similarly, a business in the decline stage has the major threat of keeping up with emerging markets and innovations that newer businesses are dropping towards.

While some businesses are conventional and need the same raw materials, techniques, strategies, and workforce for their operations over the long run, unfortunately, such businesses are not expected to thrive in today’s era of global fluctuations and ever-evolving business era. Today only those businesses are promised survival and flourishing which make efforts and strategies to incorporate technologies and new tools in their product and service life cycles.

Talking about new entrants, as this is the time of experimenting and exploration for a customer; every buyer is ready to consider some new products and different services in the market. Today buyers are not reluctant to try and test innovative products and this is why new entrants are welcomed in the industry. The newbies in industries are exposed to low or sometimes no regulations from the government especially in developing economies, where taxation and other laws are quite relaxed for businesses. Prevailing companies however have a lot to consider when it comes to laws, clauses, and pre requisites of government. Similarly, new entrants can easily exploit businesses with low brand loyalty; customers would easily switch to a new and relatively cheap brand if the prevalent one is not up to their expectations. If suppliers are easy to access and contact, the industry would be providing easy channels to new businesses for quicker operations, which is again a threat to the prevalent business.

The new entrants carry a handful of threats and challenges for businesses today, but are these all? The answer is no. In economies where new entrants are meager and access to industries is difficult, businesses still have a large number of pressures to face and conquer, before actually ruling the industry. If after a thorough analysis you believe that these threats are not something you could overcome, finding a good business broker may be the next step you want to take. These challenges and threats in 2023 are:

1.  Inflation:

Inflation today is perhaps the most talked-of threat that every business has to face. In 2023, the purchasing power of consumers globally has decreased two to threefold according to statistics. Not only third-world countries, but developed economies and their citizens have curtailed options to buy, thanks to the post-pandemic era and war which created energy crises throughout the world. Earthquakes, natural disasters, and wars have hiked problems for almost all economies, and the common man has suffered the most. With an inadequate purchasing power of the buyer, businesses have to face losses and so many products and services have seen extinction because they have escaped the bubble of affordability by customers.

2.  Supply Chain Disruptions and Increase In Demand:

As the population is increasing immensely, so is the demand for goods and services. To cater to this plethora of demand, newer and more efficient strategies of supply chain operations need to be implemented, which is indeed a difficult task and not possible in the short term. Businesses need to work on their relationship with suppliers, apt information about raw materials and manufacturing processes, and address any supply chain disturbances that may come their way. A large population means products requiring more customization, more novelty, and more interesting features, all of which can be outfitted only through resourceful supply chain networks globally.

3.  Training and Development:

Today, as the older workforce retires and newer freshmen are hired for the same jobs, the gap in skill sets needs to be filled quickly, which is seldom possible. Training, grooming, and mentoring of the new employees not only requires time, but patience from the mentors and supervisors, as well as the company’s resources and investment. Many businesses are reluctant to invest in training and want to retain old employees, which creates a pool of unemployed qualified youth within economies, making them search for better opportunities and leave their native countries. This results in brain drain and economies suffer nevertheless. Hence training and development needs to be worked on by individual businesses so that equal opportunities can be provided to fresh minds and run the business operations successfully.

4.        Inventory Management:

Inventory management has always been a challenge for businesses, especially those where operations involve both domestic and imported raw materials. These raw materials might sometimes be a company’s assets and may require extra preservation. Packaging and manufacturing all are different operations and require different steps, each requiring inventory count and proper checkup. Not all businesses can apply efficient checking policies and procedures, and so many ventures suffer loss of supplies and over or under usage materials leading to massive costs and wastage of efforts. To avoid such hitches in inventory management, hardware tracking software is used or outsourced by various businesses today. This way, IT and other assets are safeguarded and looked after, without any disturbances and extra costs. Assets that need license renewals, repair, or complete replacement are considered, and required actions are taken at the right time.

Considering the above challenges, it is wise to say that new entrants are not the only threats to a business in the industry. The threats discussed above are difficult to overcome and manage, and if done within time, businesses can still progress and nurture despite new entrants in the industry.