When do I Pivot my Business and How do I know that is it the Right Time to Change?
Businesses are faced many hard decisions since the fallout of the COVID-19 pandemic and its resulting worldwide lockdown. However, this should not mean that you should shut shop and close, now would be an ideal time to “pivot” into a new business model. Entrepreneurs and business owners will need to assess how their businesses are doing from a revenue and customer point of view. Revenues may have dropped but customer engagement may well be high which could indicate that they may well be best served through alternative products and services. Before such a move is taken you will need to understand what the core strengths are for your business.
- Do you have staff motivated and committed to your change of direction?
- What are their skill sets and how can they benefit from the new model?
- Do you have the time and financial resources to make the change for 6 months?
- Are your investors confident in your proposed change of direction?
- Does your change of business model capitalize on your existing customer base?
- How easy is it for your business to go digital?
To help you decide what to do, there are a few things that need to be taken into account. If you can say yes to all of these questions, then a pivot could be the answer to propel your business forward. However, if you are unable to say yes to any of these, then it may be time to temporarily stop operations to preserve your cash and wait for business conditions to improve.
For any business to survive, it needs to grow and evolve and therefore it should not be seen as a failure if you find yourself having to consider pivoting your business. So what is a pivot? In terms of your business, a pivot would be taking on sales information and branching towards an element that the business is flourishing in, which was never intended to be the main crux of your business. It could be the difference between your business succeeding or failing. Some examples of pivoting could be a restaurant providing daily meal plans rather than an eat-in option. Another example could be that fitness and yoga studios provide online classes rather than in-person sessions.
It should be expected to have some degree of pivoting in a new business or be aware that regular pivoting may be necessary to adapt and be successful in the early stages of running a business. To facilitate this, you need to have a mindset that is willing to accept facts, be honest with yourself and your business, trust your instincts and if sought, take on advice from more experienced people.
Types of Pivots
There are many effective ways to pivot a business.
- Focus on the main feature of your business and simplify the running of the business directly on this aspect. You can always bring back the other aspects of the business later when things are much stronger in the business. Make this one feature stand out to draw in new and existing customers.
- Take into account different technology platforms and see how they can work for you.
- Review your target client/customer base to move towards expansion of the business.
- Reconsider your pricing.
- Consider the impact of changing your business model to one that positively contributes to social and environmental change – this could open you up to a whole new customer market of like-minded people.
- Find an innovative aspect to draw attention and bring in new customers - something that will give you the edge over your competitors.
- Adapt your business model to one that works better. For example, if your trade is direct with customers, explore if working with distributors may yield greater returns.
Part of supporting your pivot is to ensure the most important people in your organization can adapt to the changing environment – your employees. Where possible you may need to implement a work from a home policy with your employees. Given that not many people are used to this concept, you will need to support your staff to help them settle to ensure minimal productivity loss. Touch base with employees to ensure that the most basic things such as internet connection, conferencing software, workstations, etc are set up correctly so they feel as comfortable as possible when working. Also, ensure regular communication and a working routine to assist with the new working conditions.
Now is the time to explore new ways to communicate with your customers if you have not already done so. Given that in a lockdown scenario face to face meetings are not possible, why not set up video conferences with customers or webinars with clients? Also, other channels such as SMS, WhatsApp, and Social media should be explored for improved customer engagement.
Shifting to online services
If you are a brick-and-mortar business and have not experimented with an online offering, now is the time. If you are selling physical products then it would be a good time to set up a Shopify store or sell via an e-commerce platform. Similarly, if you are providing services such as tutoring, fitness classes, or counseling, now would be a good time to offer services using video conferences. If you were not previously using online payment gateways, now is the time to set them up to ensure you can collect payments faster and easier.
Taking up online tools
To help manage your business more efficiently now would be the ideal time to set up and implement online tools. Cloud-based accounting software such as Xero can save you time and provide the level of information you need to help you make more informed decisions. A Project Management and Job Management software such as WorkflowMax can ensure that you are delivering on projects in an organized way while at the same time effectively collaborating with employees.
This article is written in general terms and therefore cannot be relied on to cover specific situations; application of the principles set out will depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any of its contents.