How to Create a Barrier of Entry for Your Freelancer or Software Business

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The day will come.

You have developed your first app and you’re looking for customers. Congratulations your app is open to the world!

But there’s a problem.

Not only your customers but your competition can see it too! And make no mistake: they will come and they will take it if you don’t do anything against it.

So you may wonder: how can you protect your business in the long run?

And if I write “protect”, I don’t mean from a legal point of view because most people cannot afford large legal departments. It’s more about how to protect your business from larger or more motivated players who offer the same product cheaper or just copy what you do.

Here’s a simple truth: you need to create a barrier of entry for new market participants — the larger, the better.

In other words, make it more difficult for individuals and businesses to steal your ideas, your customers, and your business.

How to Create a Barrier of Entry Running a Software Business

In this article, I discuss several barriers of entry that you can create to protect your business.

The Gold Standard

These can be summarized as follows:

πŸͺ™ Do something nobody else can do. ⭐

This is your gold standard.

If you can create value that nobody else can create, you have a huge barrier of entry.

You’ve created a monopoly in your niche albeit small. This makes your business very stable. To learn more about the power of monopolies, feel free to read the excellent book “From Zero to One” by Peter Thiel.

What are some examples of monopolies in practice?

Example 1: Google has created a de-facto monopoly for search because nobody else can create a search engine that finds relevant results like Google.

Example 2: Amazon has created a monopoly on worldwide product distribution. They can ship products within one day all over the world. They have invested billions and created a huge infrastructure.

No other company, not even delivery companies such as DHL, can possibly steal this business from Amazon.

Therefore, Amazon is a very stable company. No “drop shipper” or marketer on the web can really attack the 600-pound Gorilla Amazon because nobody can create such a logistics infrastructure.

It took Jeff Bezos 20 years and billions of USD to create such an efficient infrastructure. Now, Amazon is untouchable and Jeff Bezos is the richest man in the world.

How can you create such a barrier of entry as a coder?

As you may have realized by now, it’s almost impossible. If it was easily possible to create a barrier of entry, it wouldn’t be a barrier of entry in the first place.

So to create a real, powerful barrier of entry, you need to do something that only a few people can do in terms of

  • time invested (think: person-months),
  • money invested (think: dollars spent building your business), and
  • quality & expertise (think: total learning time).

But chances are that you neither have access to capital, nor time that cannot easily be matched by somebody else. So the only option you have is to create a barrier of entry in terms of quality and expertise.

In other words: LEARN! Read business books, read programming books, watch technical courses on a daily basis.

πŸ’‘ Note: Feel free to check out my business and coding book recommendations here.

Specific Tips to Create a Barrier to Entry

So here’s what you should do: do the hard things, the things other people won’t do, leverage your strengths in different areas and combine them in a way that only you can.

Niche down and reduce the size of the marketplace.

This gives you protection because, usually, large companies do not focus on small niches. Maybe in the future, they will though.

For example, Amazon focuses on delivering millions of niche products and is very successful with this strategy.

Still, you as a niche seller can offer the deepest level of service and tailor your business to perfectly serve a tiny need better than anybody else. If you can achieve this, you’ve created a great barrier of entry.

Have the Guts to Be You

You also create a small barrier of entry if you become a likable person.

If people like and trust you, and they want you as a person. You have a monopoly on yourself. Nobody else can deliver you to them, except you.

So if people miss you and want you, you’ve created a nice little barrier of entry for other market participants — and one that’s very difficult to overcome by large corporations.

These are the two best barriers of entry that I can think of: be the best in your niche and be authentic. Do this, and you can build a sustainable, long-term coding business that thrives.

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Working from the comfort of your home? Creating your own software business with Python?

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Click the link and visit my course page (on the Finxter blog) to learn more about this unique opportunity!