How can you come up with the best business idea? In this post, we give you the five features of a unique business idea using the NERCM model.
To succeed as an entrepreneur or investor today, you need a unique business idea. One that cannot be copied easily by others. While choosing it, consider your passion, interests, skills, and the market demand for the products or services you plan to offer. Additionally, consider the capital requirements, potential profitability, and scalability of the business idea.
The NERCM approach is a business idea analysis and appraisal criterion. It has five features or musts as outlined in the table below. It will answer if your idea has sustainability, growth, and viability potential.
| Theme | Meaning |
|---|---|
| Need | The good or service can be supplied at an attractive or affordable price and make you a good profit |
| Experiences | Your good or service delivers a solution, fills a market gap, or solves some people’s problems |
| Resources | Relevant education background, skills, or working experience. |
| Customers | Scalability or the potential of your good or service to be sold to many clients or to an ever-increasing market. |
| Model | Enough cash, tools, and other capital to start and expand your start-up business. |
Genuine NEED
A business should exist to solve a social need or want in exchange for profits. An example of a business need includes hunger, health, hygiene or education etc. You will then produce or provide an affordable good or service targeting people or other businesses in need of it.
To make your business idea more unique, offer a product whose features satisfy genuine consumers need. An example of solving hunger needs is selling the volume of food each consumer can afford. You can use milk and oil dispensers instead of selling packet milk that consumers may fail to afford.
Credible EXPERIENCES
To reduce chances of business failure, invest in a business idea in which you have relevant experiences. It will help you to understand its basic operations for efficiency, profits and business success. Credible experience includes relevant education background, skills and working experience. An example of using experience to start a business is an accountant leaving his job to start a finance and accounting consulting firm.
As an entrepreneur, you may have limited qualifications in some areas of business operation like accounting. You can improve your mastery by following strategies
- Hiring a qualified and experienced employee or consultant.
- Outsource some business management functions
- Forming strategic partnerships with people or businesses with rich experience in those areas.
- Enroll for a course in the area where you have little experience to build your capacity.
Adequate RESOURCES
For many aspiring entrepreneurs in Africa, the dream of starting a business often collides with a common roadblock: lack of capital. Without enough money, it becomes a struggle to acquire essential tools, hire qualified personnel, and set the business in motion. It’s like having a car but not enough fuel to drive it – a crucial hindrance to the entrepreneurial journey.
Insufficient capital doesn’t just mean operating below your business’s full potential; it puts a strain on existing resources like machinery and staff. Overuse leads to increased wear and tear, causing frequent breakdowns and disruptions. Overworked staff members may start showing signs of absenteeism and turnover, creating a downward spiral that can spell disaster for your business.
To avoid this scenario, take a proactive approach. Begin by assessing your business’s resource needs – whether it’s capital, human resources, or energy. Plan how to meet these needs satisfactorily, considering options like buying or leasing. A reliable plan ensures your business isn’t overly reliant on external, unpredictable resources
Paying CUSTOMERS
The sustainability of any business depends on access to a large pool of paying customers. To identify them, trailblazers recommends that you carry out robust market research before any investment. It will help in understanding the consumer’s demographic characteristics like gender and education, their financial status and shopping preferences
You will use the research results to make an ingenious value proposition. It may include superior features in your goods or service like free after-sales services. You will price your products within a range most people can afford. Shopping preferences will help you to make custom goods or services.
Superior products that are affordable and offered in a personalised way means more consumers. Since your buyers are satisfied, they are likely to market you to friends and relatives. It means you will have high returns that are higher than your running costs. Paying customer means your business profits and growth is sustainable.
Sound Business MODEL
How will your business idea make money for its owner(s)? A business model outlines how your business activities will contribute to business returns against costs or expenses. The components of a sound business model using the BMI labs magic triangle are:
- Who: The individual and other business customers of your intended business.
- What: The value proposition of your business. includes the products and services you will offer your consumers.
- How: Its the value chain or the operations you will undertake to produce or provide your goods and services for sale
- Why: Your revenue model, its how you will price, market, sell and collect payments or value from your customer
Complete this step of the analysis by completing a canvas. The section goes into various parts of a business plan As a rule of thumb, your business model revenue must exceed its costs according to a simple cost and benefits analysis.
conclusion
There are 5 features of A good business idea using the NERCM analysis and appraisal model. Invest in a business idea that has many features of the model. These will give you higher chances for profits, success and sustainability. The absence of the above factors will give you a weak business with higher chances for failure.