Is Your Business Model Like A Leaky Drip Tray? Use This System To Plug The Gaps

This is going to sound weird, but last week I worked with a client on a racetrack. It wasn’t just like any old circular road… (I’m showing how much I know about motor sport here) it was actually a proper, serious racetrack.

As I was working with their executive team the problems they talked about having reminded me of when you change the oil on a car.

What can happen with an oil tray is that you can pour oil into it, but if it has holes in the bottom, things just drip out the bottom.

Sometimes what we can have is a business model or a way of running our business that’s essentially like that oil tray.

Do you feel like sometimes your business is like that? Which is that you aim to grow it but the challenges just keep falling out the bottom? They stop you moving forward? If you do I’m going to talk about how you can fix that so that you can move forward in a much more sustainable way.

I’m talking about the leaky drip tray business model, and let me first explain the analogy and how it works.

So, think of this like a typical drip tray you’d use when you’re changing the oil in a car. It’s designed to capture the oil and in this case our business model is designed to capture our customers or our clients, whatever you might call them. The problem is that when clients start to interact with you out the other end, there’s leakage.

So the client I was working with at the racetrack… That they had a problem with operating income, their gross margin was really low, these are all the measures they use, and they had a problem with inventory. Now, each of those problems were impacted probably by three things that they were doing in the business that meant that when they added new customers and clients they weren’t meeting expectations.

And what was leaking out the other end was essentially money.

A lot of the time what happens is what customers do in their business model is they focus on clients and customers and what they try and do is keep turning the tap on with more clients. And what happens is that the problems that they’ve got actually become bigger.

Because of the leakages… if you add more oil in here, the leakages just get bigger at the other end.

So what do you do about that?

Well what yo do about it is that you need to give yourself a goal (I usually talk about 12 months) of fixing the drip tray first, where these projects become your priority. So that your business model stands up to more customers, more vendors, more whoever your people are that you serve, being poured into it.

If you don’t, over time you your problems that you’ve got at the moment are exacerbated, they’re amplified.

If you spend 12 months both fixing these leaks and also serving customers as well what happens is that yes, you might go backwards for a period of time, but over time you start to really lift off.

The leaking drip tray is not a business model for the long term.

And if you really want momentum, you’ve got to stop what you’re doing, fix the things that you need to so that you can grow in the long term.

So, here’s the leaking drip tray business model which is the idea that when you pour extra customers into the drip tray there’s money leaking out the bottom. The way to fix it is to not ignore the problem.

Not just trying to add more clients in to a business model that’s not serving them and spend time fixing the problems as well as serving customers for the 12 months.

What it does is builds the foundations so that the next 12 months you can really take off.

If this is something that you could use in your business at the moment and a good framework for building a strategy for your business, or you can think of someone else that could benefit from it, please share it along.

I’ll see you next time on The Reason & The Road.