by Merlin Hernandez

A resource-based business model uses the analysis of resource capabilities as an integrative tool that would inform the business scope. It focuses the business on what is possible and what is not to avoid the risk of overextending the reach of the venture. A small business would be better positioned for success by adopting strategies that their resources can support. Understanding what available resources would allow involves examining the strengths and weaknesses of financial, human resource, knowledge base, information and communication systems, other tangible assets like operating space, and intangible assets like patents, copyrights or special recipes.

The analysis explores how internal resource competencies impact business strengths, reduces weaknesses and might be structured to take advantage of opportunities in the external environment. Since the resource base will determine costs, market reach for a new venture will need to match resource capabilities for a product offering that closely matches resources and competencies. The way an organization integrates and deploys these resources with creative and unique strategies to circumvent external threats is what provides sustainable competitive edge.

Unique differentiating factors to satisfy the specific and emergent needs of the target market can also help to insulate the business from competitive threats. A well- differentiated business would rely on value-creating resources like strong expertise in the area of business, a product that is unique and not readily available in the market space, experienced and knowledgeable personnel, the availability of high quality supplies, good local supplier relationships, a unique capacity to quickly craft an individual-need offering to reduce the level and quality of competition and adequate financing. These would comprise organizational strengths.

In the high competitiveness of contemporary markets, meeting unique customer needs becomes an important factor of differentiation for a business. This may involve offering different versions of a product through minor adjustments, marketing new applications for use which add new benefits, or adding new marketing channels that make the product(s) more readily available. The key is to incorporate value-adding elements to the product throughout the value chain from concept to customer use.

Such differentiation will facilitate the servicing of a niche sector to which the product appeals or one that is under served in the marketplace. Niche marketing is based on customer needs that are not being met by mass-market products. This creates an opportunity for an astute entrepreneur. Structuring the business to fill these needs will minimize competition and have heightened profit potential.

There is often an initial weakness in adequate capital investment which might entail postponing the venture until the capital position improves or finding an investor or partner to enhance readiness. But a good resource-based business model, with clear differentiation characteristics, and an appropriate market niche can be almost immediately be leveraged to explore identified opportunities in the market as long as activities remain tethered to the resource base and core competencies. This could narrow the focus of the business initially but can provide evidence of viability to lenders or potential investors. Small-scale success demonstrates the business acumen and sound management that would attract the required investment capital down the road.