Advantages and Disadvantages of First Movers: Business Opportunity Entry Timing

When one sees a business opportunity, it may be hard, especially for a new entrepreneur, to risk his hard-earned money.

Answering the question, "Should I enter the market now or delay my entry?" is a common dilemma. For this reason, let us identify some advantages and disadvantages of being first movers when it comes to business opportunities.

Advantages of First Movers:

Less competition. Since majority of those who see the same business opportunity may be hesitant to take action, first movers have less competition to face. This is definitely one of the major advantages of first movers. If the market eventually grows, you are at a better place to get more customers since you, at that time, could have already improved your marketing strategies.

Ability to create stronger relationship with suppliers and distributors. Suppliers are more likely to trust entrepreneurs who have likewise trusted their products or services when they were also starting out or when the market is not yet well-established. As the demand increases, it could be more difficult for new comers to avail products or services which they can sell to others especially if there is a shortage in supply. Similarly, it is common among distributors to patronage or trust entrepreneurs who have been in the market longer.

Gaining expertise. One's length of engagement to something is usually parallel to his degree of knowledge and skills on that particular arena. If used properly, all these can help the first-mover entrepreneur to beat his competitors.

Cost efficient. First movers have to opportunity to start small and learn through trials and errors for a longer period of time. The pressure to use greater capital investments is not as great compared to those entrepreneurs entering a saturated market since they have more ample time to determine cost-efficient ways to deliver their products or services.

Disadvantages of First Movers:

Failure rate can be high. Because of market uncertainties, first movers face the greater risk of failing. Every business endeavor entails some degree of risks. If you decide to jump in at an early stage of business opportunity, you face a greater risk of failing because you certainly cannot say your target customers will patronage your business.

Competition with fast second movers. Pioneers, including first movers, must be wary of fast second movers. They are entrepreneurs who are very keen to identify highly feasible business model, immediately learn from the mistakes of the pioneers, and act fast to improve the products or services' value and reduce its cost. Fast second movers are emulators who are brilliant in innovating products and services. If pioneers or first movers become too complacent, they might find themselves being overthrown in the competition. It would certainly be a hard failure to accept seeing these emulators reach the pinnacle of success by using your business model.

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