A small to midsize (SMB) business model can gradually degenerate into a dysfunctional business model without everyone realizing there is a problem. Until something significant happens, that is. That “something” impacts customer retention in a stunning way.
First, a major client is lost. Then, “reliable” clients do not re-order. Still other long-time clients no longer have time to see your sales people. Finally, more new and existing business is being lost to competitors than in the past.
After all, you and your team of employees continue to perform the same functions you always have. What changed your customers’ minds? What are competitors (and perhaps even customers) perceiving, that causes them to view your company differently, moving forward?
SMB businesses are vulnerable to enabling a dysfunctional business model.
A business model is the operational and financial structural underpinning of an organization. This model strategically focuses on how a business produces products and services and delivers them to a receptive customer base. There is no tactical, day-to-day, feel to a business model. At least there shouldn’t be.
Why? Because the emphasis of a business model not only is on customer acquisition, but also on customer success for customer retention. Without a loyal and retained customer base, any organization becomes vulnerable to competitors.
A dysfunctional business model is characterized by:
- Lack of a true leadership team. Due to small employee mass, each employee “leads” their specific function, regardless of whether or not they are qualified to lead and have the capacity to perform their job.
- Leadership by fear-based consensus. When the business owner wants to make a decision, they poll employees. Ultimately the owner is afraid of displeasing perhaps the only employee responsible for performing a specific function.
- Employee bullying. When employees work for weak or indecisive leaders, they take advantage of the situation. As a result, “the tail starts wagging the leadership, as well as business, dog.”
- Incomplete or non–existent, reliable processes. When neither business owners nor employees can point to existing, reliable, “this is how we do it” processes, each day brings unrewarding surprises instead of innovative opportunities for growth, expansion and sustainability.
As a result, SMBs go into business triage mode, instead of jettisoning a dysfunctional business model.
Realizing the breadth and depth of “broken stuff” in poorly operating or under-capitalized business models is overwhelming. As a result, businesses are tempted to plug the leaky holes and carry on with business as usual. In addition, leadership often ignores the handwriting on the wall and hopes things will get better on their own.
Often, that dysfunctional critical mass (or mess) is what customers realized for quite a while, and competitors are capitalizing on, today.
If you suspect your SMB business model really is a dysfunctional business model, you probably are right.
Often, that realization completely overwhelms small business owners because, until today, they lacked the insight and resources to set themselves on a new course of action.
Realistically, what is called for is identifying flaws in the existing business model and making some hard calls for the future of the business. Those hard calls impact the People Model, Financial Model and Operational Model.
How long have you suspected that your SMB business model is really a dysfunctional business model?
Instead of hiding from the obvious or continuing to beat yourself up, there really is a better way. However, it takes hard work and time. There is no fairy godmother magic wand to waive.
Otherwise, third generation, family-owned businesses will continue to be taken over by private equity companies. Also, SMBs will be unable to make a graceful exit: selling assets, intellectual property and client lists to parties interested in, and excited about, acquisition.
I know I’m asking you to make a hard call here. However, isn’t it time to move forward from the model, processes and mindset that are holding you back? Then take these next steps today.
Planning your next team, corporate or association meeting? Searching for a one-on-one catalyst to get you unstuck? Engage me to present a One Millimeter Mindset ™ program! Delivered virtually or in-person. Contact me here.
I am an extroverted STEM professional and left-brain thinker specializing in professional innovation, cross-functional leadership and client retention. I catalyze professionals to translate across communication and collaboration disconnects. Become more professionally visible, cross-functionally relevant and strategically valuable to your organizations. Better serve each other first so you better serve your clients together. One millimeter at a time. My One Millimeter Mindset™ virtual and in-person speaking programs leverage Voice of the Customer design methodology and storytelling to move individuals, teams, departments and organizations one millimeter beyond yesterday’s tools and today’s professional comfort zones My playbook of cross-functional collaboration, Do YOU Mean Business? is available on Amazon.com. Contact me here.
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