5 Reasons You Should not Have a Monopoly Business
Monopoly business is one where there’s no competition. You tend to work on your own, and the customers or clients have no option apart from you to get their work done. A monopoly business was a good idea until a few years back when you could leverage on that. However, it might not be a great idea in the current scenario.
Some of the reasons why a monopoly business is bad is:
1. The Market is Untested
While you can make all the plans and do the research, for the most part, the market is untested. Therefore, it is one of the riskiest propositions. While other businesses know their market, an untested market means that you need to spend much of the resources in studying the market, and even the end result may not come out as desired. Launching a product is always a risk.
2. Competition Will Eventually Come
Once you’ve researched on the market and got your product rolling, and assuming it is working well, the next step comes from the competition. The competition will come up eventually if they see the business succeeding. What’s more, they don’t need to do market research on the same level. They can build a better product than you do by working on the weaknesses, and the customer feedback received on your product, which is very easy to find.
3. There are not Many Scopes of Growth
In this day and age, if any new idea of a business is unique – it can point to the thing that this idea may not even have the same scope of growth as others do. If the idea has been lying for years without anyone seeing profit in it, it may hurt you in the wrong way. So, unless you’re extremely confident about the idea, and are sure it will all work out well, you can simply work your way through the channels.
4. The Customer Isn’t Sure
Another important factor is that the customer isn’t sure of what the product is supposed to bring to the table. This adds to the variable costs of engaging a customer in trying the product. It might also involve giving freebies and stuff. So, the break-even point comes out much higher than it ought to be, and still if the customer doesn’t see immediate results, you are likelier to not have a repeat sale from the same customer.
5. Monopoly Businesses Haven’t Been Seen in Great Light
In general, monopoly businesses haven’t been seen in great light – mostly because the big businesses and governments are the only monopoly business people tend to remember. They tend to carry a wrong reputation – because, without competition, these businesses have had no alternatives and people have grown to loathe them. This is one of the bigger challenges concerning monopoly businesses – challenging the mentality that people have grown up with and make sure they see the other side. It’s not impossible- several players have done it in the past and will continue to do it.
Monopoly businesses are hard to start and sustain in the beginning. They require higher market research, more of the efforts on marketing, and gaining customer trust. When that is achieved, the business will set on its path, but it is harder than it seems and is definitely an uphill task in the beginning. The break-even point tends to be higher and it ultimately boils down to the product – what it is achieving for the customers and if it can sustain in the longer run. If confident of the product, this is a good idea, otherwise, not so much.
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