Explain two barriers to entry for a new business.

Answer 1

1. Capital requirements: Starting a new business often requires a significant amount of upfront investment for expenses such as purchasing equipment, leasing or buying property, inventory, marketing efforts, and hiring employees. This initial capital requirement can act as a barrier to entry for new businesses, especially for small entrepreneurs who may not have access to sufficient funding sources.

2. Regulatory and legal barriers: Depending on the industry and location, new businesses may face various regulatory and legal barriers that can make it difficult to enter the market. This may include obtaining permits and licenses, complying with zoning laws, meeting industry-specific regulations and standards, or adhering to environmental and safety guidelines. The process of meeting these requirements can be time-consuming and costly, discouraging some entrepreneurs from entering the market.