Development of an assessment tool to evaluate and improve SME business models

The approach presented in this paper addresses entrepreneurs and managers of SMEs in the construction sector that are willing to refine their current business model. It is a well-known phenomenon that, on the one hand, everybody is aware about the need to adapt business practices continuously according to external drivers and circumstances. But, on the other hand, small firms have restricted personnel resources or restricted access to knowledge on business model transformation. This situation impedes plans to change or adapt the business model. However, to remain competitive in many cases there is no other opportunity – companies have to come across external constraints and adapt their business models accordingly. Some of most important constraints the European construction industry struggles with are factors such as the identification of their respective unique selling point, the correct strategic orientation to face competition in general and, most of all, price pressure on the European market or the development of service portfolios that satisfy today’s customers. The readiness of a business model concerning the mentioned indicators but also others will be tested with the new assessment tool. In the future, it is envisaged that the assessment, implemented as a self-assessment tool, will be part of a holistic approach that guides SMEs through the challenging journey of business model reconfiguration and adaption. The work presented in this paper will focus on the initial stage of such a change process regarding the concept, the content with underlying success and performance indicators and procedure of the self-assessment. Beside the technical support of managers that strive to influence their company future, the assessment will be the initial ignition for managers to start change projects in their companies. The idea is to help entrepreneurs in their strategic decision-making process and to enable them to control their complex and continuously progressing company environment. The main scope of the technical work for defining the assessment was the transformation of generic industry performance indicators into an assessment framework that encompasses the needs of SMEs in the construction industry. A literature review on business strategy frameworks and business model literature of the past years but also papers and journals that focus on business models in the construction sector revealed typical indicators. The assessment comprises for example the market-based view or resource-based-view but also typical key success factors that are relevant in the construction sector. These are for instance aspects like project management capabilities, implementation of risk-management mechanisms or mastering of the value network in the construction sector. They were analysed according to their relevance, demarcated to each other and taken as a basis for the assessment. The set of indicators is thematically aligned to the Osterwalder Business Model Canvas which means that nine aspects of a business model are distinguished and elaborated in the assessment: Value proposition, Customer segments, Customer relationships, Channels, Key activities, Key partners, Key resources, Cost structure and Revenue stream. For each of the indicators questions and respective multiple-choice answers were formulated to identify the degree of performance achieved by companies conducting the assessment. Some explanatory text per question will additionally help clients passing the assessment. The result analysis that shows per business model building block the achieved number of credits compared to the maximum credits gives first orientation concerning the robustness and viability of the current business model. The identified main lever are constituting the most relevant starting points for a detailed analysis and refinement of a company’s business model and gives SMEs in the construction sector valuable input to adapt their business models according to future needs in a dynamic market environment