A co-dependent business model is a situation where two or more businesses or organizations depend on each other for mutual success. In a co-dependent relationship, the success of one business is directly linked to the success of the other business. Here are a few examples:
- Supplier-Dependent Business Models: In this business model, a company relies heavily on one or more suppliers to supply goods or services. For example, a restaurant that depends on a single supplier for all of its food products is a supplier-dependent business.
- Platform-Dependent Business Models: In this model, a business depends on a platform or technology to deliver its products or services. For example, a mobile app that relies on Apple’s iOS or Google’s Android operating system is a platform-dependent business.
- Partner-Dependent Business Models: In this model, a business depends on a strategic partner for its success. For example, a marketing agency that relies on a single partner for all of its leads is a partner-dependent business.
- Customer-Dependent Business Models: In this model, a business depends on a particular customer or group of customers for its success. For example, a company that sells specialized equipment to a specific industry may be customer-dependent.
In all of these examples, a co-dependent relationship exists where the success of one business is tied to the success of another business or organization. This can create risks and opportunities, as any disruption or change in the co-dependent relationship can impact the success of both parties.
Mitigating business risks in co-dependent business models requires careful management of the relationship and its risks. Here are some strategies that businesses can use to minimize risks:
- Diversify partnerships: It is important to have multiple partners instead of relying on a single partner to mitigate the risk of failure. The business can still operate with other partners if one partner fails or experiences a setback.
- Build redundancy: Having backup suppliers or alternative platforms can help reduce the risk of dependency on a single supplier or platform. By building redundancy, businesses can quickly switch to alternative suppliers or platforms if there is a problem with their primary partners.
- Develop contingency plans: It is essential to have a contingency plan in place to address any disruption to the co-dependent relationship. This plan should outline the business’s steps in the event of any disruption or change in the relationship.
- Monitor the relationship closely: It is important to monitor the co-dependent relationship closely and monitor partners’ performance regularly. This can help identify potential issues or challenges before they become major problems.
- Negotiate favorable contracts: Businesses should negotiate favorable contracts that include clear terms and conditions for the co-dependent relationship. This can help mitigate the risks associated with the partnership and provide a clear roadmap for managing the relationship.
Overall, mitigating risks in co-dependent business models requires a proactive and strategic approach to relationship management.
A business will thrive and grow with a business strategy that gives it a competitive advantage. Please look at your value chain and the relationships between its activities. Compare these with those of your competitors. If you observe that a competitor can easily replicate your enterprise activities, the business will get disrupted irrespective of your chosen business model.
Sustainability depends on its business model, but if it does not have a business strategy that will give it a sustained edge over competitors, you can keep changing its business model, and the enterprise will flounder. I see so many businesses fussing over the business models, placing a lot of emphasis on a consultant building a killer business plan for them. On Upwork, you have many contracts offered by SAAS, edtech, crypto, not-for-profits, and other companies seeking freelancers who will build a business plan or a pitch deck that they will pose to an investor. They mistakenly believe that a pretty business plan and pitch deck will make an investor open his purse, and their venture will fly.
It is an illusion that these businesses are running after. To build a successful business, look at the concept brought to the market, what your strategy will enable you to create a sustained competitive advantage, and then look at business models and plans.