The Hidden Drift: Does Your Business Model Match Your Reality?

Oct 2, 2024

For many businesses, the business and revenue models they started with are no longer what they’re running. Over time, the day-to-day realities of operations, client demands, and market changes drift away from the original vision – and if you’re not tuned into these changes, your business will suffer. “Many people don’t review their business model regularly,” explains Haleh Fardi, Chief Visionary Officer at ProCFO Partners. This lack of review can lead to inefficiencies, misaligned teams, and profit leakage. The growing gap between vision and execution becomes a silent threat, impacting long-term success.

Operational Blind Spots: What You May Be Missing

As businesses scale, they naturally evolve. But often, this evolution happens reactively, where changes are made in response to immediate issues rather than a long-term plan. For example, you might hire more staff as demand increases but fail to revisit your workflow processes, leading to inefficiencies. Or you take on new customer segments without updating your pricing model, resulting in lost revenue. These reactive adjustments can create a disconnect between your operations and your original goals, making it harder to identify where problems stem from and how to fix them. Symptoms of this drift are easy to overlook but hard to ignore:

• Mismatched Expectations: The product your team delivers may no longer align with what your clients expect or believe they’re purchasing.
• Siloed Departments: Marketing, sales, and operations point fingers when goals don’t align.
• Operational Inefficiencies: Legacy processes remain in place long after they’ve lost relevance, wasting time and resources.

Without taking stock of your business’s current state, you may continue operating on autopilot, doing what you’ve always done without questioning whether it still works.

The Cost of Ignoring the Gap

The impact of not reassessing your business model extends far beyond inefficiencies. Businesses that don’t review their models regularly end up serving the wrong customers, focus on low-margin activities, and miss out on profitable opportunities.

Employee burnout, declining customer satisfaction, and stagnating profits are all symptoms of a business that hasn’t adjusted its model to fit its current operations. Making things worse, misunderstood symptoms of business misalignment often get misdiagnosed as surface-level issues. “The Sales team needs to work harder,” when the real issue is a shift in market demand or competition. “Marketing isn’t driving enough leads,” when in fact the product itself no longer meets customer expectations. Assuming your original model still fits can leave you blindsided by financial strain, customer churn, and a lack of alignment across teams.

Realigning with the Revenue Flywheel

Regular, deliberate review is key to closing the gap between your operations and business model. This is where tools like the Revenue Flywheel™ from ProCFO Partners become essential.

The Revenue Flywheel™ offers a clear framework for assessing your business from all angles—helping identify where alignment has shifted and where adjustments are needed. The flywheel breaks down your business into key areas for review:

• Problem-Solution Fit: Are you solving the same problem you set out to address, or has the market shifted?
• Unique Value Proposition: What makes your offering different? Are you still positioned uniquely in the market, or have competitors caught up?
• Customer Segments: Are you still targeting the right customers, or are low-margin clients dragging down profitability?
• Revenue Streams: Are you maximizing opportunities, or are your highest-potential clients being overlooked?

The Revenue Flywheel empowers you to regularly check in on your model and adapt it to fit the realities of your current operations. At ProCFO Partners we start strategic engagements with this tool, getting all the key stakeholders in a room to align on these areas. If your team can’t answer these questions clearly, you’re likely running with assumptions that no longer serve you.

Symptoms of Misalignment

Here’s a compelling example of the hidden drift: A translation service provider struggling to maintain profitability came to ProCFO Partners for help. They had been focused on their government contracts, which operated on thin margins, and hadn’t realized that hospitals—one of their smaller client segments—were far more profitable. They turned around their financial situation by realigning their focus and actively pursuing the more profitable hospital clients.

This kind of operational misalignment is common. Businesses often retain outdated customer segments or continue operating on legacy systems without realizing the opportunity costs.

The Power of Regular Review

You can’t afford to run your business model on autopilot. The world changes, customer needs evolve, and internal operations must adapt. The business you’re running today isn’t the one you started—and it’s likely not the one you’ll be running tomorrow.

Regularly reviewing your business model isn’t just good practice—it’s essential for long-term success. Let’s say that another way – this kind of review isn’t optional. It must be something you regularly review. Tools like the Revenue Flywheel™can help your team assess where they are, identify opportunities, and ensure every department is aligned with the same goals.

If you haven’t reviewed your model in the past year (or more!), you may already be behind. It’s time to realign your operations with your current goals, ensuring the business you’re running today is designed for the growth you want tomorrow.