Navigating the Circular Economy: A Practical Step-by-Step Approach for Business Model Transformation

The transition to a Circular Economy (CE) is paramount in fostering sustainable business practices. Recent research highlights a surge in circular innovations, showcasing strong technological solutions, e.g. regarding recyclability or durability, and innovative disruptive ideas for novel business models, such as sharing or repairing concepts. These concepts are often utilized by newly founded enterprises. However, existing Small and Medium Enterprises (SMEs) encounter challenges in adjusting to these new developments and are in need for support to evolve their established business model towards circularity. This paper addresses this gap by proposing a hands-on process for SMEs aiming to embrace more circular practices. The process comprises several steps, starting with an assessment and analysis of the existing business model in alignment with circular economy principles, followed by an exploration of circular economy potentials within the business context. Furthermore, the steps outline specific circular business model patterns and tailored measures resulting in individual action items for the circular transformation of the enterprise’ business model. Through practical implementation, this approach equips enterprises with a structured process for evaluating, refining, and implementing circular business practices.