Stay in business a long time by keeping your business model fresh and relevant
A Chinese proverb states, “Anybody can start a business, the hard part is staying in business!”
Blockbuster was formed in 1985. By the early 1990’s Blockbuster was the undisputed leader in the Home Video Rental Industry with over 3,500 video rental stores in the USA. Clearly the business model they established in 1985 was a winner. The company made $244 million in 1993. (source: Co. SEC filings)
Young upstarts like Netflix and Redbox with different business models appeared on the scene in the early 2000’s. In 2005, Blockbuster lost $588 million and in 2010, $268 million. In 2011 the company filed for Chapter 7 bankruptcy and liquidation. One to the main reasons for the company’s financial troubles was an outdated business model and their slowness in responding to Netflix’s revolutionary business model. (A monthly fee for unlimited mail order DVDs plus unlimited on- line streaming with low prices because they had no costly rental stores to maintain.)
Whether you’re a big company like Blockbuster, a medium size company or a privately owned micro enterprise in order to maintain a viable business for a long period of time it is imperative that you revisit the components of your business model at least every 6 months.
The business world is changing at a rapid pace along with many elements; technology, the economy, politically, new competition, changing consumer spending habits etc.
As such the business model that worked for you in 2018 may not be as compelling in 2019. You need to get ahead of curve, not fall behind it as Blockbuster did.
To tweak your business models, here are the components I suggest you evaluate:
#1- Market: Is the market I am servicing still viable? Are sales trends up, down or flat? Do the metrics of my market suggest that I diversify into a new market?
#2- Unique Value: Are my current products/services still providing my customers unique value versus my competitors? Am I becoming commoditized? Can I provide a new value proposition, based on either low cost or unique product or service features/benefits?
#3- Resources & Capabilities: Does my company still have the necessary resources and capabilities to consistently deliver my unique value to my customers? If not what do I need? Resources could include additional financing, human capital, more physical assets etc.
#4- Fending off Copycats or Imitators: What barriers can I erect to prevent competitors from imitating my unique value or competitive advantage?
Good luck, it’s never easy is it?