Building Business Models That Can Take a Hit

The wake-up call for Indian businesses

The pandemic did not only test health systems; it tested business models. Many companies that looked successful on the surface were exposed as fragile—over-reliant on one channel, one geography, or one founder’s hustle. Others, often smaller and less “glamorous”, survived because they had built cushions, options, and flexibility into how they ran the business.

For Indian startups and SMEs, resilience is no longer a “nice-to-have” topic reserved for board decks. It is a design principle. A resilient business model is one that can absorb shocks, adapt its shape, and still protect three things: cash, core customers, and core talent.

What makes a business model resilient?

A resilient model is not bulletproof. It still feels stress. The difference is that it has room to manoeuvre: it can cut or add capacity, redirect demand, re-price, pause non-essential bets, and still protect its long-term position.

Four design elements show up repeatedly in resilient startups and SMEs: diversified revenue, flexible cost structures, strong digital and data capabilities, and a disciplined yet pragmatic balance sheet.

1. Revenue diversification with intent

Diversification is not about doing “a bit of everything”. It is about deliberately shaping a revenue mix where no single customer, channel, or product line can sink the company on its own.

• Multiple product / service lines: Anchor offerings plus 1–2 adjacent lines that share capabilities, not random side hustles.
• Customer concentration guardrails: Internal rule that no single client should contribute more than 20–25% of revenue for more than 12–18 months.
• Channel mix: Combination of direct sales, partner-led business, and digital/self-serve where relevant.
• Business model mix: Recurring (retainers, subscriptions), transactional (one-off), and project-based revenue in a conscious proportion.

2. Operating leverage that can tighten and relax

Many Indian businesses carry fixed costs that made sense in a growth story—large offices, full-time teams, owned assets—but become a burden when demand slows. Resilient models bias variable or semi-variable where possible.

• Variable-cost bias: Structuring key cost lines (logistics, marketing, some production) to flex with demand instead of staying fixed.
• Flexible workforce: A thoughtful mix of core full-time roles, contract specialists, and partner capacity rather than all in-house or all outsourced.
• Asset-light choices: Leasing non-core assets and avoiding heavy capex where strategic advantage does not depend on ownership.
• Modular infrastructure: Systems, warehouses, or production lines that can be scaled up or down in discrete steps instead of all-or-nothing commitments.

3. Digital and data as shock absorbers

Digital is not just about having an app or a website. In resilient businesses, technology allows work to continue when offices shut, customers to transact when field teams are grounded, and leaders to see reality in near-real time.

• Cloud-based core systems: Finance, CRM, and operations that can be accessed securely from anywhere.
• Digital customer channels: E-commerce, self-service portals, or at least structured digital ordering and support, not just ad-hoc messaging.
• Operational dashboards: Simple, reliable metrics for daily sales, collections, utilisation, and service levels instead of waiting for month-end.
• Process automation: Automating repetitive, error-prone tasks so teams can focus on judgment and customer work during crises.

4. Financial buffers and discipline

Resilience lives in the balance sheet and cash flow, not just in narratives. Companies that survive shocks usually enter them with dry powder, clean books, and clarity on unit economics.

• Cash runway: A target buffer (for example, 6–9 months of core operating costs for SMEs, longer for more volatile sectors) built gradually during better periods.
• Low non-essential fixed obligations: Avoiding long leases, unnecessary debt, or guaranteed commitments that do not directly drive revenue quality.
• Clear unit economics: Knowing contribution margin by segment or product, not just blended, and actively pruning unprofitable business.
• Diverse funding relationships: Multiple banking partners, working capital lines, and investor relationships where relevant.

Stress-testing your business model

Resilience cannot be judged only in hindsight. It needs rehearsal. A structured stress-test once or twice a year forces leadership teams to look beyond base-case plans and examine how the business behaves under strain.

A simple scenario-planning exercise

Pick three scenarios that are uncomfortable but plausible for your context, and quantify the impact.

1. Demand shock: Revenue drops 30–40% for two consecutive quarters in your primary segment.
2. Input or supply disruption: Key raw materials, platforms, or suppliers become unavailable or 25–30% more expensive.
3. Regulatory / macro shift: New rules, taxation, or funding constraints change how you can operate or price.

For each scenario, work through four questions with your leadership team:

• How long can we operate without drastic measures (layoffs, shutdowns)?
• Which costs and activities would we cut first, second, and third?
• Which products, customers, or markets would we protect at all costs?
• What early-warning indicators would tell us this scenario is starting to happen?

Designing optionality into your model

Optionality is the ability to switch paths without starting from zero. Resilient startups and SMEs quietly invest in capabilities that may not maximise this quarter’s margins but give them real choices in a crisis or a new opportunity.

Strategic options

• Platform-like capabilities: Building reusable components (for example, logistics, analytics, or content) that can support multiple offerings.
• Partnership networks: Active relationships with distributors, tech partners, and ecosystem players to pivot channels or offerings faster.
• Brand and trust equity: A reputation with customers and talent that makes it easier to launch adjacent products or shift formats.
• Data and IP assets: Proprietary data, processes, or know-how that allow differentiated responses, not generic reactions.

Operational options

• Flexible contracts: Vendor and facility agreements with clear break clauses, volume bands, or step-up/step-down structures.
• Multi-skilled teams: Cross-training people so critical processes do not depend on one individual or one location.
• Modular processes: Designing operations so parts can be paused, outsourced, or reshored without collapsing the whole system.
• Redundant suppliers and channels: At least two credible options for key inputs and sales routes, even if one is primary in steady state.

What resilience looks like in practice

The principles of resilience are similar across sectors, but the levers differ. For many Indian founders, it is helpful to see how the same logic shows up in very different businesses.

Example: Restaurants to cloud/ghost kitchens

When footfall collapsed, restaurants that survived were often those that could quickly shift capacity into delivery and new formats.

• Reconfiguring kitchens to serve multiple brands or cuisines from the same infrastructure.
• Aligning with delivery platforms and building direct ordering channels to protect margins.
• Experimenting with meal kits, subscription meals, and corporate contracts for distributed teams.

Example: Retail to omnichannel

Brick-and-mortar retailers with resilient models had more than just stores—they had digital pipes already in place.

• Online catalogues, payment options, and inventory visibility before the crisis.
• Store networks repurposed for local fulfilment, curbside pickup, and same-day delivery.
• Customer databases and CRM that allowed targeted communication, not just generic offers.

Example: Professional services to remote delivery

Consulting, legal, and other service firms that adapted quickly treated “remote-first” as a design challenge, not a temporary hack.

• Standardising digital deliverables, structured updates, and asynchronous collaboration.
• Investing in secure tools and clear norms for virtual workshops, reviews, and decision-making.
• Redefining how relationships are built and maintained without constant travel.

A practical resilience investment roadmap

Many founders agree that resilience matters but struggle with sequencing: what to do this quarter, what to do over the next year, and what to treat as ongoing hygiene. A simple three-bucket view can help.

High-priority moves (0–6 months)

1. Get a clear numbers view: Build or refine a basic profitability bridge by segment, product, and channel.
2. Strengthen digital basics: Ensure core finance, sales, and service tools are accessible remotely and capturing reliable data.
3. Protect cash: Create a rolling 6–9 month cash flow view, tighten working capital, and renegotiate non-essential fixed commitments.
4. Reduce single-point failures: Identify and address one or two obvious concentration risks (for example, a single customer, supplier, or individual).

Medium-term moves (6–18 months)

1. Shape a healthier revenue mix: Add at least one adjacent offering or segment that leverages existing strengths but diversifies risk.
2. Build ecosystem partnerships: Formalise relationships that can open new channels, geographies, or supply options.
3. Invest in talent and leadership depth: Develop second-line leaders and cross-functional capabilities so decisions and execution do not collapse if one person is unavailable.
4. Institutionalise scenario planning: Run an annual or half-yearly resilience review with explicit scenarios and response plans.

Ongoing practices (always-on)

1. Financial discipline: Monitor a small set of leading indicators—gross margin, collections, customer health, and team capacity—rather than relying only on P&L.
2. Customer proximity: Keep direct lines open with key customers to sense changes early, not only through reports.
3. Market and policy awareness: Assign clear responsibility for tracking regulatory, technology, and competitive shifts.
4. Structured experimentation: Run small, low-risk experiments to explore new channels, formats, or pricing before they become urgent.

Balancing efficiency with resilience

Pure efficiency aims to squeeze every rupee today. Resilience deliberately leaves some slack—extra capacity, higher-quality suppliers, deeper capabilities—that may reduce short-term margins but significantly lowers the probability of catastrophic loss.

Choosing your trade-offs consciously

• Risk mapping: Quantify your top 3–5 vulnerabilities and estimate their impact, even roughly, instead of treating them as abstract fears.
• Cost-of-insurance view: Compare the annual cost of resilience measures (for example, backup suppliers, extra inventory, or stronger systems) with the cost of a major disruption.
• Downside protection first: Prioritise moves that protect against existential risks before optimising for small efficiency gains.
• Resilience as an enabler: Position resilience not as a drag on growth, but as the foundation that allows bolder, better-calculated bets.

Closing thought

Building a resilient business model is not about predicting exactly what will go wrong. It is about designing a company that can handle multiple types of shocks without losing its core. For Indian startups and SMEs operating in a volatile environment, that design work is no longer optional.

The businesses that will matter a decade from now are not just the fastest-growing ones today, but the ones that can take a hit, adapt with clarity, and keep compounding through uncertainty.