The Need for New Business Models: To Survive the Worst Economic Conditions in Decades The Need for New Business Models: To Survive the Worst Economic Conditions in Decades

Doing business as usual is the attitude many companies have adopted to survive one of the worst economic downturns in almost a century. In other words, some companies feel the best way to stay alive is to do everything the same and not do anything to change or adapt.


On the other side of the dilemma, some experts believe that the traditional business models of the past are not strong enough to spur the needed growth for the future. This may be the best time to review the models used by companies of any size and any type and implement much needed change.

Traditional Business Models

A business model can be defined as a framework for a new company in terms of how to create economic, social, and/or other forms of value. Most business models define core components of a business such as:

  • The value proposition in a company’s products and services
  • The definition of the targeted customer base
  • Strategies for finance, marketing, and ways to generate income
  • Sustainable competitive strategy through differentiation, niches, or keeping costs low and prices low
  • Infrastructure of the organization
  • Positioning statement in the value chain structure
  • Operational practices, processes, and policies.

One of the oldest business models has been used for centuries by shopkeepers or retail and grocery stores. An entrepreneur selects a product line, finds a location where the potential for sales is good, they open a store, and start selling.

Different business models are used by different types of companies. Take for example the business model used by Amazon and compare it to the model used by fast food restaurants. There is a big difference in the way Amazon markets and generates sales than the way McDonald’s does. The marketing is different. There is a major difference in the infrastructure of the brick and mortar of fast food restaurants and brick and click of Amazon.

A few similarities in both models include shopping convenience, low prices, fast ordering and fast delivery, reliability, trustworthiness, and product selection.

New Components of Business Models

Times have been changing for decades. Today’s business models also need to define how and where technology plays a role. Powerful tools such as the Internet and social networking like Twitter or other online social networks have a firm foothold in developing new business and marketing strategies. The green initiative is here to stay and as such new business models need to have a component that details how a company will participate and contribute to environmental sustainability.

Recession Breaking Business Model Components

The Entrepreneur magazine offered several suggestions to “evolve” a business model such as:

  • Adjusting to and getting comfortable with the constant economic chaos.
  • Keeping up with customer values
  • Remember people will still buy good products.
  • Use the slower time to reassess the current business model and making updates where needed.
  • Explore new markets.

A Good Business Model Will Survive

The old saying that change is the only thing constant is more viable today than ever before. To survive today’s – and for the foreseeable future- economic roller coaster ride, visiting the business model may be the surest way to determine if and what changes are needed.

Related Post