Purpose - In this new era, due to the market competition, there are a lot of pressures in the SME manufacturers. Most of the manufacturers are facing challenges, such as increasing product variety, small lot size and short delivery time, but there is lack of a suitable and practical methodology to solve such problems. This study is mainly based on drilling down into an SME manufacturer, exploring the limitation in its current business model and determining the boundaries of its operation process. Design/methodology/approach - This research paper develops a new business model, two-phase operation process and standardization modular design to solve the above problems and then trial run the new business model in the SME manufacturing company. Findings - The results prove that the new business model and the new operation process not only solve the problems in product variety, small lot size and short delivery time, but also create a synergic effect for transformation of the surplus to business opportunities, and improve the efficiency and effectiveness in the operation. Research limitations/implications - This study only focuses on an SME manufacturer, so that the results and conclusions are limited. In the future, it would be interesting to collect data from other manufacturers and conduct a cross-country comparison study. Originality/value - The study provides a clear roadmap for exploratory and cost-effective solutions for other SME manufacturers to achieve continuous improvement of their business model.