(adsbygoogle = window.adsbygoogle || []).push({});

How to Successfully Change Business Models


When businesses are launched, one of the major decisions that need to be made is which business model will the company use. Will the business pursue a model that sells directly to the consumer or will it find other outlets? Will there be franchising or licensing opportunities in the future? Questions like these help entrepreneurs know what direction to take the company. However, just because a business model is chosen, doesn’t necessarily mean that the model is the right one for the company. Sometimes, a business model change is necessary for survival or growth.

There have been many super successful companies that changed business models. In doing so, they made their good companies even better. If you have been thinking about changing your current business model, this article will help you do it the right way.


What is a Business Model Change?

A business model change is when a business makes a significant shift in one or more of the ways it makes money. These types of changes are usually made to areas to address evolving market conditions, capitalize on new opportunities, or fix existing inefficiencies.

Business model changes can be reactive or proactive. Reactive changes typically happen in response to external pressures or challenges. A business might need to react to technological advancements. They may also need to respond to competitive threats or changing customer preferences. For example, Blockbuster Video changed its business model to allow customers to rent videos online due to Netflix’s rapid popularity. Unfortunately, for them, they made the change too late and the company eventually went out of business.

Proactive changes, on the other hand, are visionary shifts driven by an organization’s strategic goals or the desire to innovate. Companies might proactively adapt their business models to tap into emerging markets, harness new technologies, or align more closely with global sustainability goals. Many companies are seeing the possibilities of AI and shifting their business models to take advantage of the current and future possibilities.

While the idea of change may seem daunting, it’s crucial to understand that not all business model changes imply a complete overhaul. Sometimes a change can be a subtle shift. Things like adding a new revenue stream or tweaking customer engagement strategies may be able to yield significant results. However, there are also instances where a complete transformation, like moving from a product-centric to a service-centric model, might be necessary.


1. Assess the Need for Change

The first step in changing business models is asking whether or not you should change models. To do this, several areas need to be assessed. Examine your company’s current financial health, operational efficiencies, and customer satisfaction metrics. Are there any glaring inefficiencies or missed opportunities? Perhaps your revenue streams are dwindling. Also, take a look to see if customer behaviors and preferences have evolved.

Market trends and competitive analysis should also be front and center in this evaluation. If there is a new competitor, technological innovations, or shifts in regulatory landscapes that may be catalysts for change. 

Conducting surveys, focus group discussions, and one-on-one interviews with both employees and customers may also be helpful. Internal teams might have a sense of operational bottlenecks. And, customers might offer perspectives on product or service enhancements. If your customers are beginning to question the need for your product or they are suddenly leaving less positive reviews, there may be a good reason for it. Asking them may reveal that it is time to consider making a significant change.


2. Define the New Business Model

If you and your team recognize that it is time to switch business models or add a new one, the next step is to decide which one. However, the choice is not one that you need to take lightly. It is important that you examine the different types of business models and which may work right for your business and customers. To do this you need to understand what makes your business different and why your customers choose to do business with you.

For example, it may be tempting to switch your business to a subscription-based business model. This would seem like a great move since 86% of Americans say that they are paying for at least one subscription service. However, some of your customers may have chosen to do business with you because they did not want to subscribe to any additional services. Defining the new business model will take some time and it may take some trial and error to find the right one.

Once you do, however, it is important to articulate the new business model clearly. Tools like the Business Model Canvas can be beneficial here. This canvas outlines several key aspects of a business, from value propositions and customer segments to revenue streams and key resources. Filling out such a template ensures a holistic understanding of the new model and its components.


3. Communicate the Change to Everyone

When the leaders of the business have decided to shift business models, it is time to communicate this with everyone. This means letting management, staff, and customers know of upcoming changes. However, keep in mind that not all of these people need to know about the changes at the same time. You don’t want to tell your customers about the changes without letting your staff know about them and preparing your team to answer customer questions.

Once the information about the change in business model has been shared, it is a good practice to continue communicating. Update your leadership staff, other employees, and customers on the progress. They need to know of any significant changes in the timeline, product structure changes, or anything else that is meaningful to them. 


4. Develop a Transition Plan

Before making any significant changes, you must develop a transition plan. This is a plan detailing the journey from your current state to the envisioned future. Given its importance, it’s crucial to approach this with meticulous attention to detail. Start by outlining the key strategic shifts required. Will you be targeting a new customer segment? Or perhaps introducing a novel product line?

From there, you will move on to focusing on the specifics. Break down each strategic shift into actionable tasks. For instance, if you’re moving towards a more digital-centric model, tasks might include website redevelopment or new digital marketing strategies.

Timelines are also very important. Assign realistic deadlines for each task. Be sure to also consider potential overlaps or dependencies between tasks. Most likely, there are several things that will pop up during the transition. You need to be prepared for the things that you have not anticipated. For example, the human aspect is unpredictable. 

Organizational change can be unsettling for employees. Building in stages for training, feedback, and adjustment can help smooth the transition and mitigate resistance. You never know how long it will take your team to adjust to the new way of doing things so be prepared if it takes some longer than others to adapt.


5. Allocate Resources Appropriately

Transitioning to a new business model will almost always demand a reshuffling of resources. Begin with a thorough audit of current assets. Do you have the requisite technology infrastructure to support the change? Are there enough human resources, and do they possess the necessary skills?

Understanding the current landscape will help you better identify gaps. Financial allocation is, of course, one of the resources you need to keep a close eye on. You might need to channel funds toward research and development, marketing, or perhaps even acquisitions. Sometimes, a new model demands capabilities that are best obtained through purchasing another entity. Some businesses and startups realize this too late and end up not making an effective change due to not having the resources to acquire the right company.

Also, be prepared for human capital adjustments. This may mean bringing on new hires, training existing employees, or even, in some unfortunate cases, layoffs. Ensure that such decisions are made with both empathy and clarity of purpose. It’s also wise to establish a contingency fund. No matter how well you plan, unexpected expenses are almost a given in any major transition.


6. Monitor and Adjust

Peter Drucker famously said, “What gets measured gets managed.” When it comes to changing business models, ongoing monitoring is your safety net. Establish new Key Performance Indicators (KPIs) relevant to the new model. These might include metrics like customer acquisition costs, sales conversion rates, or operational efficiency measures.

However, data collection is just the first step. Regular review meetings, perhaps monthly or quarterly, can provide platforms for assessment. If certain KPIs are off-target, dive deep to understand the root causes.

Be prepared for course corrections. It’s rare for a transition to go perfectly as planned. External market conditions can change, or internal challenges can arise. An adaptive mindset, one that views challenges as opportunities for optimization, can be your greatest ally here.

Once the transition is complete, you should still monitor and adjust to the things that are happening daily. Did the change achieve the desired outcomes? Are there areas of the new model that could be optimized further? Business is dynamic, and continuous improvement is often the name of the game. By regularly evaluating the new model’s performance and being open to further iterations, businesses can stay agile and responsive to evolving demands.


7. Learn and Document

Transitions, even when they go smoothly, are great learning opportunities. It’s important to capture these insights for future reference. A post-transition debrief can help with this. Engage different teams and leaders in reflective discussions. What challenges were most difficult? Which ones did the company handle with ease? Were there any unexpected wins along the way?

Documenting these insights serves two main purposes. Firstly, it allows for continuous improvement. Even after the transition, your business model will need periodic reviews and refinements. A repository of past experiences can guide these future tweaks. Secondly, it preserves institutional knowledge. As team members come and go, these documented experiences ensure that lessons aren’t lost. This means new hires will have context from the past that they can build upon.



The decision to change business models should not be taken lightly. It can positively or negatively impact your team and your customers’ lives. Before making the decision, be sure to check all the boxes. You may even need to bring on a consultant, attorney, accountant, or other professional to make sure things go smoothly. If you find making the change is right for you, take the leap towards building a better business.

Also read:

When Is It Time to Change Your Business Model?

What Business Model Should I Choose? Here are 5 Ways to Decide

7 Companies that Successfully Changed Business Models

Ralph Paul on Twitter
Ralph Paul
Ralph is the Managing Editor at StartUp Mindset. The StartUp Mindset team consists of dedicated individuals and is designed to help new, seasoned, and aspiring entrepreneurs succeed.

Like this article? Get updates by email and get our eBook for FREE

Subscribe and Get Updates!


Invalid email address
Give it a try. You can unsubscribe at any time.

Article Tags:
· · · · ·
Article Categories:
Business Models · Find Your Way · Grow Your Business · Leading Your Team · Productivity · Your Mindset

Ralph is the Managing Editor at StartUp Mindset. The StartUp Mindset team consists of dedicated individuals and is designed to help new, seasoned, and aspiring entrepreneurs succeed.

Recent Posts