New businesses are constantly emerging as entrepreneurs launch new ventures in various industries. However, legendary investor Warren Buffett emphasizes the importance of investing in businesses with high barriers to entry—factors that deter competitors from flooding the market.
At the 2012 Berkshire Hathaway Annual Meeting, Buffett explained that industries without significant barriers to entry face intense competition. “In those industries, you better be running very fast,” he said, noting that competitors will quickly analyze and exploit weaknesses or strive to outperform existing players.
For long-term success, Buffett seeks businesses that are protected by factors like brand loyalty, patents, or operational advantages, shielding them from being overwhelmed by new entrants. His advice highlights the value of competitive resilience in sustaining business growth.
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© 2025 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.