Abstract for: Navigating the Trust Delay: A System Dynamics Approach to Scalability in Residential Service SMEs

Residential service SMEs face a scalability paradox where hyper-growth strategies often trigger systemic "overshoot and collapse". In high Customer Relationship Vulnerability (CRV) environments, service failures due to rapid scaling cause irreparable damage to trust. This study addresses the lack of operational models that account for the "Trust Delay", the structural lag in trust maturation, and the physical limits of supervision capacity. Using System Dynamics and an action-research approach, this study employs the primary author’s residential service SME as a longitudinal case study. We developed a 60-month simulation model in Stella Architect, integrating 'Trust Delay' parameters and human capital aging chains grounded in real-world operational data. The model formalizes the non-linear interaction between supervision load, service quality, and customer churn in high-vulnerability environments. Simulations reveal that aggressive growth saturates supervision capacity, triggering a "churn death spiral" where customer loss outpaces acquisition. Conversely, success requires restricting acquisition to training capacity and utilizing premium pricing to reduce staff turnover. Results confirm that the "Trust Delay" is a physical constraint; ignoring it destroys the Customer Life Value (LTV) regardless of marketing intensity. This work reconfigures the Service-Profit Chain, positioning salary as a structural lever for stability. As an entrepreneurial case study, it provides a validated roadmap for SMEs to transition from self-employment to corporate scalability: prioritize a 'Human Heart' (highly compensated staff) for trust-building and 'Digital Brain' back-office tools for efficiency. It proves that in high-vulnerability contexts, capacity control is the only viable strategy for long-term survival. Architect and visualize the conceptual models shown in the images