What are the best strategies to pivot a business successfully? Our guide outlines the key factors and steps you must consider to repurpose a business.
The COVID-19 crisis is an exceptionally arduous time for every business. The situation at present is chaotic, and nobody is absolutely sure of what lies ahead.
In a July 2020 research article published on PNAS (Proceeding of the National Academy of Sciences of the United States of America) titled “The impact of COVID-19 on small business outcomes and expectations”, the researchers stated that close to 43% of the businesses surveyed had temporarily closed, and nearly all of these closures were due to COVID-19.
Steps to pivot a business successfully
Many businesses are repurposing their assets to protect the brand, create new value, and survive in these uncertain times. Here are a few steps that can help business owners pivot their models quickly to kickstart growth by assessing the new normal.
1) Conduct Thorough Internal and External Financial Assessments
Begin by understanding where you currently stand with your resources, in order to pivot a business successfully. To be able to manage your finances and pivot quickly, you need to rapidly assess your internal and external environments moving forward.
An internal assessment is an exploration of your business’ cost position, competency, and competitive viability in the marketplace. Performing an internal analysis can help incorporate measures that furnish vital information about your strengths, weaknesses, opportunities and threats – a SWOT analysis. The data generated by such an analysis is important because you can use it to come up with strategic planning objectives while making the pivot.
Some of the key factors you may want to consider while conducting an internal assessment include: liquidity and likely cash-zero date under your worst-case scenario, accounts- both payable and receivable, marketing programs spending, payroll and other variable costs, and sources of additional capital.
As far as external assessments are concerned, they can help you see where you stand in the global marketplace. Some of the factors you might want to consider within an external assessment include: state of the economy, unemployment percentage, health of your current target market, forecasted recovery date and emergence of new market(s) within your niche.
2) Gather Customer Feedback
The next step to pivot a business successfully is to contemplate what your customers want or need from your business that you might not have anticipated in the products/services you currently offer. The first touchpoint that will aid you in identifying these needs is customer feedback.
You can gather customer feedback in a number of ways: send out a survey via email; engage your customers in conversation; put a questionnaire or survey up on your website or blog or ask questions on your social media accounts.
Sift through the feedback you collect for patterns that pique customer interest, especially any that aren’t on your priority list at present. It’s possible you’re already receiving the feedback you need for a successful pivot; think back to client interactions to recollect if any common requests have been coming your way.
3) Involve Your Team Early on in the Process
Don’t try to produce pivot options in seclusion. Collect ideas from outside and inside of your team. Work with your employees – they can be valuable idea generators to help pivot a business successfully.
You can begin by conducting brainstorming sessions at frequent intervals (via video conferencing, ofcourse). Once you’ve conducted a SWOT analysis of your current business model as mentioned earlier; try taking feedback from each of your team members to get the juices flowing in the right direction.
In addition to this, you can also share what other enterprises in your niche have done to pivot – seeing what your market counterparts have done can spark creative thinking. Then explore these places to look for pivots – networks, value, customers – and identify possibilities together.
Try to get as creative as you can in the process, and break loose from any traditional thinking about your business. These discussions are the time to be truly revolutionary to grow and sustain your business and not conventional.
All of the ideas that are generated during discussions should be labeled potentially useful, so long as they can shift key elements of the business model in such a way to save the current business, or allow you to jump into a new model that uses your partners, people or assets. Once you’ve streamlined the most pragmatic options, you may fabricate a brief set of selection criteria to help you narrow down further. Use your gut and these criteria to select the best option at hand.
4) Leverage Technology to the Best of your Potential
If you’ve not had the time or interest in utilizing technology to expand your service, customer base and revenue streams, there will be no better time to do it. Covid-19 is consolidating its role in our daily lives—bringing us both closer and further from one another at the same time. Going digital is a great way to test if the pivot is worth the effort.
To begin with, you can look to integrating something as simple as automation within your operations. Business Process Automation (BPA) is a technology that can greatly help you furnish results within a short time span and with limited resources.
Predictive analytics is another important technological solution that can help you determine customer responses or purchases, as well as promote cross-sell opportunities. Predictive models help businesses attract, retain and grow their most profitable customers. Many companies use predictive models to forecast inventory and manage resources. Therefore, this can be a vital option to put to use when trying to pivot.
Data management is another one of the most important business operations. Artificial intelligence based technologies such as speech recognition, Natural Language Processing (NLP) and audio to text transcription can greatly help your business when it comes to managing data effectively.
There are many other technologies available today that can help you pivot quickly. You just need to be observant and explore the options that fit your business and the demands of your pivot.
5) Test your Pivot
Once you’ve expanded into the interest, prototype the selected pivot quickly with a rapid succession of fast tests. Test a lean version of the pivot or elements of the idea. Try learning and improving with each iteration. Then give it a try. Don’t let inertia set over you. Bumpy, ugly and swift is always better than beautiful, smooth, and slow.
Your motto, at all times, should be: “Make decisions, honor the decisions you made yesterday, then figure out how to do it better today.” That’s pivoting in a nutshell – a dynamic shift toward a new business model.
6) Analyze and Change if Need Be
Once you’ve tested your pivot and are about to make changes, simultaneously monitor customer interest by continuously gathering and analyzing feedback and, of course, watching your financial figures.
If the rate at which you’re gaining customers keeps growing as you invest in changes, you’re on the right track. If you notice the figure leveling off or dipping, it might be time to hold back on additional changes until you see people’s interest growing again.
While it feels like we’re stuck in a time warp, Coronavirus has rather revealed your business needs to change quickly to diversify for sustainability and remain relevant. You’ll find your gut instinct is pretty darn on point as you change and analyze what’s working for you.
Don’t decide anything right after you pivot. Wait for a few weeks, if not months before deciding if you want to move ahead with the pivot or start preparing for another one.
When you approach pivoting by making small changes, you can tap into new areas of customer interest without making high-risk investments. A pivot should always augment what you’re already offering and grow your bottom line. That’s a winning approach for any business, enabling you to keep your overhead manageable while increasing your profitability.
Once you start seeing positive changes, know that you’ve followed the process perfectly well and are right where you need to be!
Rahul Varshneya has founded 5 tech companies across different verticals as a non-tech founder since the age of 21. He is currently the cofounder of the award-winning, software consulting firm Arkenea that helps fast growing startups accelerate product time to market with on-demand engineering teams.