Monday, October 30, 2006

Entry Barrier

Had a chat with AC few months ago and somehow our topics moved towards the internet café business in Singapore. I told him that I saw one old shophouse at the east being converted into an internet café and it claimed to be the cheapest in town at the rate of S$1 per hour. But their PCs were rather old and the ambience didn’t look that cosy.

Recently, I past by the area and found 2 other internet cafés opened just beside the first one. And all are priced at S$1 per hour. I do not know how adversely the business would be affected by the increase of competition. I do not even know who are their target customer base, since most people nowadays have internet access at home and the shops aren’t located near those low-cost hotels. But anyway, my point is in business, if your entry barrier is low, you will see competitions sooner than you expected. So, when you think that you have a great business idea, you should also start to think about how high is your entry barrier.