You need a unique business idea to succeed as an entrepreneur or investor. A good or unique idea must have the potential to grow. Second, it must be viable or profitable. Finally, your unique business idea must be sustainable, i.e its growth and profits should remain high into the future.
To evaluate if your idea has sustainability, growth and viability potentials you may need to do a simplified analysis. In this post, we give you the five features of a unique business idea using the NERCM model. The NERCM model is a business idea analysis and appraisal criterion. It the following five features or musts.
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.
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.
- Enrol for a course on the area you have little experiences to build your capacity.
Lack of adequate and appropriate resources (capital) is the number one reason for low entreprenuership in Africa. It is number one reason the youth report for not starting a business. You need enough cash, tools and other capital to start and expand your start up business. The personnel must be qualified and experienced in their roles for efficiency. Finally, the reources must be relevant ot appropriate to use for the intended purpose. Lack of capital may cause your business failure from the onset.
Lack of enough resources will make you to operate under your full business capacity and market potential. Secondly, it will lead to an extra strain on the existing business resources like workers, or machinery. It will cause high rates of wear and tear will result into frequent breakdown in operations. Strained staff will show high rates of absenteeism and turnover from your business.The results of inadequate and /or appropriate resources are high operating losses and eventual business failure.
To have adequate resources carry out resourcing needs assessment. you will determine the types and amounts of resources; capital, human resources, energy etc that your enterprise will need. The analysis report will also point out how you can satisfy all resource needs with satisfaction through buying, leasing or other means. A business idea whose only option is to rely on outside or unreliable resources beyond your control is best left out.
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.
There are 5 features of the NERCM business idea 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.