Pivoting: A post-COVID-19 small-business strategy
In business, just because you want something to happen, it doesn’t necessarily occur. Hope is not a strategy. There are so many environmental factors that affect our strategies. These environmental factors were fully in play during the COVID-19 pandemic. So, what is pivoting? Pivoting is shifting a business to a new strategy. It is a change in the business model, small or large, an act of moving a company from where it is now to where it wants or needs to be. Most times, pivoting references an event (e.g., the COVID-19 pandemic) that causes major disruption to your daily operations. Transformational changes have come from this pandemic.
Now that there is light at the end of the tunnel, we can more fully assess the impact of changes that were forced by the pandemic. We experienced nearly complete cessation of business life as we knew it. Loss of revenue, market shifts and demand modulation made the original concepts that formed the foundation of our enterprise no longer options to success. We had to consider: Altering the process to deliver our product or service, changing how revenue is generated, developing a new product or product line and targeting different market segments.
Pivoting means rethinking your value proposition — what are you offering? What needs, wants or desires are you fulfilling? View your target market through a new lens. Whose need, want or desire are you fulfilling? How are you going to reach them? What key activities will your enterprise be engaged in going forward. Will your resource needs change? Do your strategic partners need to be modified to meet new customer needs, wants and desires.
To do this, you need to reach out to your current customers and test how their needs will be met in the “next normal.” Will they be eating out as often as they did pre-COVID19? Will they be willing to shop in a casual manner or will their shopping be very need-specific? Will they buy lawn mowers again rather than have a landscaper visit their property? Will they return to networking groups that have a Thursday morning breakfast every week? Will they attend concerts, seminars and workshops with many other people? We have seen pivoting taking place. Gyms are offering access to exercise apps through their membership. Small craft fairs are going virtual. Furniture manufacturers are reverting to smaller wood products — baby gates, shelving, small coffee tables. The answers to all of these questions will give the owners of small businesses the rationale for pivoting.
What alternatives can a small business owner consider? Two elements need to be considered: Which of these pivots can increase the revenues generated by your business and which option carries the most reasonable risk. You do this by running a variety of cash-flow analyses based on assumptions for each pivot change. Focus on your offerings – your pivot might be based on “less is more.” Instead of adding more products or service offerings, reduce what you are offering. Narrowing your offerings to the most profitable and obtaining higher conversion rate by targeting your customers more effectively.
Modify the expense model of your business. How can you re-create the expense side you’re your business, namely, can you manage your business with less travel or less people? Did using distance communications allow personnel still working do more with less? Can you reduce the expense side of your model? This means reevaluating your resources. What does it really take to operate the business? Maybe the pivoting answer is in restructuring your business.
Evaluate customer need and find one that you are not currently meeting. Your customer base may be the same, but their needs have changed over the past two years of the pandemic. What else can you offer them to meet their needs differently? It might mean adding products or services, or making your business a one-stop, when before the pandemic, customers were willing to make multiple stops. Consider creating a sub-brand. Can you subdivide your business to offer a sub-brand targeting on a different market segment? The pivot doesn’t have to monumental. It can be a small change that allows you to operate more profitably in a changed business climate.
Evaluate your current resources. What are the skills and expertise of your staff? You may have to reduce your staff and hire those with different skills or even add staff to fulfill a pivoting strategy of new products, services or sub-branding. You also might be able to reach out to your suppliers, strategic partners and even customers to leverage their resources to support your pivot. Once you have figured out the NEW direction, then align the rest of your business plan to support that change in direction. Research is the key. Talk to your customers, hold panels of customers using Zoom to address how you will be serving their needs in the future. You need to update your business model plan since every single element in your business will be affected by your pivot. Create a new business name or brand; get new businesses licenses or EIN; acquire new space in which to operate; lay off or hire staff; train your staff to deliver your product or service differently; sell off your old products, supplies or inventory; sell your old equipment or reuse it in your new model; develop new partnerships with suppliers and manufacturers; and engage outside services such as accounting, marketing or website management.
The last suggestion in pivoting is to communicate what you are doing. Being transparent with your customers and marketing, in general, will enable you retain current customer loyalty and attract new buyers.