Pivoting a Business in the Pandemic
This is arguably one of the toughest times to run a small business. The FSB this month published figures that suggest that nearly 5% of UK small companies expect to be forced to close within 12 months, the largest proportion in the history of the Small Business Index. If accurate it would mean that 295,000 companies will shut down this year. How can you be sure that you’re not part of this statistic?
Some businesses have thrived through the pandemic, others have struggled, and some have found it impossible to carry on at all. Of those that are most affected I have seen two attitudes; those that throw their hands up in horror and complain, and those that have successfully pivoted their business to meet the changes they’ve found head on. No prizes for guessing which businesses will avoid being part of the FSB statistic.
The changes of the last year have been seismic and unprecedented, but adapting to a changing business landscape is something that all businesses should be doing all the time. Even major businesses, who appeared solid, have found this out too late and to their cost. Woolworths and Blockbuster didn’t go out of business because of a pandemic, but because they didn’t adapt quickly enough to the changes that had been happening in retail since the turn of the century. The retail businesses that are thriving now are those that invested in their online offering long before March 2019. But it was clear from news reports that some retailers still didn’t address this even after the lockdowns. Instead they wrung their hands in news bulletins, complaining about not being able to sell their Christmas stock.
Of course, not all of the challenges facing small business are this obvious or this easy to address. One of the videos, that we recorded early on in the pandemic, featured an artisan chocolate maker (Alexander Chocolate) who had established a successful business model supplying to prestigious events. That customer obviously disappeared overnight. The business owner tried to improve his online offering, but he couldn’t build fast enough to provide him with an income. Sadly, there are many who, like Alexander Chocolate, can’t effectively pivot quickly enough to save their business. Sometimes these business owners have taken another job until the crisis blows over (which is admirable), sometimes they establish a business in a completely different field. In the case of the chocolate maker, he’s currently a tree surgeon.
However, outside these two extremes (of businesses who can and should have adapted and those that simply can’t), are the majority of businesses that may be able to pivot. If you’re one of those how do you go about doing it?
From a legal view point you would have registered you company’s main purpose with Companies House. If you deviate too far from this then you would need to establish a separate company. However usually pivoting means adapting the business model and finding your customers in this new world.
The key questions to ask yourself:
- What is it about the pandemic that has reduced or stopped your income? Is it something temporary, that will resolve after lockdown, or it likely to have a long term impact on the marketplace? Try not to make assumptions based on how things used to be, this is a new world. People are not likely to go back to offices full time, for example, there will therefore be a decrease in footfall in business centres. If you serve the theatre industry those will return in time, but it could take years as the industry relies on overseas visitors, similarly with events, they will probably return but it may take a long time. So do your research on your sector, to get a clear idea on the impact on your business in the short and longer term.
- Can you change the way you operate to reach more customers? I’ve seen some great examples of this: local pubs providing essential groceries and take away food, and personal trainers and event companies going online. Talking to these business owners it’s clear that they’re excited at how the challenge has created a new business line that will increase their profits long after the pandemic.
- Could your skills or assets be used in a different way? If your product is not in demand right now (or can’t be delivered) is there something similar that you can do? One company I know has moved from selling park homes to offices for the garden. The product is essentially the same but whereas the park home market disappeared, the demand for ready to use offices that you can put in the garden has leapt. I also know a manufacturer who switched to making PPE and hand sanitiser and a business consultant who switched to training people on how to come across well on Zoom calls.
- What are your competitors doing? Could you replicate it, or even go into business together to help you both survive this tough period? There is an increase in community spirit, we recognise how much we rely on each other far more than we did. I’ve seen a number of businesses survive by helping each other, sharing assets and resources to reduce costs or working together to improve the offering they could make separately to customers. One of our podcasts, for example, used a local taxi company to deliver their fish and chips, to the benefit of both businesses.
During times of crises, we typically see innovation accelerate and it is happening during this pandemic. Many businesses, forced to pivot, will find they have new profitable business models. It is tough; I’m full of admiration for the resilience of small business and I don’t underestimate the emotional and mental toll these times are taking. However, changing your business model to survive can be exciting and rewarding, it is certainly better than the alternative.
To hear businesses talk about how they’ve pivoted during lockdown go to the Amaiz podcast.