Are there substantial barriers to entry or sustainable competitive advantages?
Try to evaluate whether a company will be able to maintain its lead in the marketplace. Does it have patents, an infrastructure, or long-term relationships with key customers that make it harder for rivals to penetrate the market? Are substitute products available (or likely to be developed) that will affect these advantages? Those companies that have advantages that can’t be duplicated or substituted should be better positioned for success than competitors. 4. How profitable will the business be? After considering the first three questions, try to evaluate the level of profitability that can be achieved by the company. I purposely ask this question after evaluating barriers to entry and sustainable competitive advantages. If an industry doesn’t have these attributes, the entry of new competitors will turn what could be a great business into one that is only marginally profitable, if that. 5. Does the business have the resources to make it to profitability? If a business is currently o
