4 Signs of a Broken Business Model

Sustainability is the name of the game in modern business. Though plenty of entrepreneurs have sacrificed long-term viability for short-term gains over the years, this strategy simply won’t provide consistent results or stability. The unfortunate truth, though, is that it can be difficult to spot a broken business model from afar. Indeed, if a company is posting profits, what evidence is there to indicate deeper internal problems? To answer that very question, today we’ll be providing four signs of a broken business model. Check them out here and be wary of associating yourself with companies that behave in this manner.

High Employee Turnover

Of course, some industries have higher turnover rates than others. Still, companies that have a significantly higher turnover rate than their nearest competitors are unlikely to grow much in the future. The long and short of it is that the best businesses simply don’t let good employees get away; they offer them extensions and build around them, and they certainly don’t let them leave for rival corporations. If a company is constantly churning through employees, trouble is almost certain to follow. 

Shifting Target Markets

There’s a big difference between a company responsibly expanding into new territory, and a company desperately trying to find a lucrative niche. Ideally, businesses should be able to create buyer personas and use them to find interested consumers. However, when businesses are unable to reach sales quotas with their regular consumer base, they may expand into other areas out of desperation. Even if this practice leads to a temporary bump in revenue, its effects won’t last and aren’t iterative. 

Inconsistency in Branding

The biggest and best businesses in their industries not only have super-compelling brand images and taglines, but they take great pains to protect that intellectual property. On the other hand, companies that are unable or unwilling to fend off counterfeiters and brand-related fraudsters lack the proper protocols to ensure brand integrity. Companies that suffer from lots of falsified accounts have little chance of developing long-term trust with consumers.  

Over-Reliance on Advertising

There are numerous benefits of advertising online. For many companies, advertising is an integral part of their digital strategy. However, it is possible to become too reliant on an advertising platform for sales generation. It’s preferable for companies to have multiple methods to draw in leads. Otherwise, a few poor choices or a few badly-phrased advertisements could cause inordinate damage to a company’s reputation and sales figures. Plus, advertising is often a costly venture. Companies that are able to supplement their advertising efforts with sustainable, SEO efforts, are much more likely to have a prosperous future than those solely dependent on leads derived from ads.