EVALUATING POTENTIAL VENTURES: THE RAMP MODEL   

The goal of every entrepreneur is to venture into business opportunities that will be successful. However, attaining this goal is requires more than just instincts, and perceptions on the side of the entrepreneur. Proper evaluation and analyses is needed to assess the potentials of a business opportunity.

This evaluation employs examining certain criteria known as the “RAMP MODEL”

THE RAMP MODEL

RETURN. ADVANTAGES. MARKET. POTENTIALS

R- RETURN

Return simply means the Return on Investment (ROI). Entrepreneurs address questions and issues like

+ The existing strategy for material acquisition

+ The profitability of the business. Will the business give higher revenue than expenses?

+ Break even periodicity. How long will it take to break even and have positive cash flow?

+ Required investment. How much capital is needed to start up this venture?

A- ADVANTAGES

During evaluation of a venture, the entrepreneur examines

+ The cost structure. Is it better to manufacture or to source?

+ Barriers to entry such as regulations, large capital requirement, large and already established competitors, etc.

+ Intellectual Property. Do I have proprietary advantages such as patents or exclusive licenses on products?

+ Distribution channels. How will I sell my products? Will I sell directly to my consumers, wholesalers, businesses or retailers? Will I sell via internet or have a physical store?

M- MARKET

The market examination is very critical as it forms the base for operational and financial planning and activities of a business venture. The market examination comprises of three factors

+ The need. Is there high demand for my products or service?

+Target market. Who are my audiences, who am I selling to? A middle class audience is definitely not a choice fit for luxury items

+ Pricing. What pricing strategy will be employed? What will be the prices?

P- POTENTIALS

Potentials check considers the following

+ The Risk-Reward Ratio. How risky is the business opportunity, and is it possible reward worth the risk? Are there higher chances of success?

+ The team. Is the management and operational skill composed with the required skillsets and knowledge? Are they right for the business?

+ Timing. Is the market ready for your product or service? Are they too advanced or too outdated?

You may have a great innovative idea for sustainable convertible houses in Africa, but if the African consumers are not ready for it, it most likely will be unsuccessful.

+ Goal fit.  Does the business concept fit the goals to create a lifestyle business?

By using the RAMP model, a thorough evaluation and analysis can be done on business ideas and opportunities presented. It serves as a guide, ensuring that the right decisions and choices are made with regards to starting and pursuing potential ventures.

REFERENCES

Introduction to Entrepreneurship. Authors: C.E Ezedum, F.U. Agbo, G.O Odigbo

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