Different times call for different measures, and while you see many large businesses adapting to current circumstances, they are not the only ones that can reevaluate their business models. Small businesses, too, can adjust to today’s reality by offering different products and services to meet changing customer needs. Often, small businesses actually have an easier time adapting as they are more nimble and able to capitalize on events without bureaucracy.
Trying to reposition your company? Here are three ways business owners can evaluate new opportunities and enter new market segments in efforts to come out on top.
1. Prioritize digital solutions
One of the most affordable ways to pivot your business — if it's viable for your industry and you have not already done so — is to take things online. Investing your time into moving your operation online can create new sales channels and opportunities to attract new customers.
Here are some simple ways to pivot your business model more strongly toward online objectives:
- Decide which online services or goods you can offer: Here’s where you’ll need to get creative. While you might work in an industry that isn’t traditionally digital, you might be surprised at the level of innovation you discover once you start brainstorming in this area. For example, many personal trainers have been able to shift their in-person coaching to video sessions. Even real estate agents, who typically rely on showing homes in person, have been able to transition many business activities online. Looking at ways these industries have modified their services could help you brainstorm within your own circumstances.
- Develop a low-cost, digital-first communications strategy: If you’ve always relied on people coming into your store or meeting you in person, a large part of pivoting your business to become more digital will be finding the right method to communicate with your customers. Don’t just assume that because email is a classic digital communication strategy it’s the best option. Recent research shows that up to 80% of customers surveyed feel brands are getting in touch with them through the wrong channels. These customers would prefer opt-in marketing that respects their time, such as text message marketing or sparse email communications with obvious opt-out instructions.
- Create or upgrade online assets: If you’ve never put much time into creating your online presence, now’s the time to get started. You can take a DIY approach to upgrading your website or setting up a Shopify store — there are many online tutorials to walk you through the process. E-commerce sales worldwide have grown at a rate of 10% to 20% annually, and throughout the coronavirus pandemic, sales in some regions have doubled from the same time last year. Learning how to pivot at least some of your business online will become more essential with each passing year.
2. Focus on one key selling point
Moments of crisis can cause businesses to strip away what they aren’t doing well and focus on their core business — those business activities at which they know they can succeed. This is an especially important exercise if your small business is trying to weather an economics slowdown while still in the startup stage.
For example, the average construction company requires $67,349 in start up capital — money that could be hard to earn back if your firm is focused on building custom homes that are currently stalled. However, if you pivot your business to focus on one key selling point — perhaps installing at-home offices or workspaces — you might find more work that can help you survive, and thrive, in changing conditions. This isn’t to say that your business wouldn’t come back to its loftier goals eventually, but taking a simple approach can help you gain traction in the short term while you reassess how to reach your long term goals.
Simplifying your approach might not cost you extra capital at first, and could help your business regain its footing, especially if you’re beginning to falter.
3. Address an immediate market need
Because small business owners have the advantage of being able to act quickly, they can also pivot their products or services to address immediate needs in the marketplace. An example of this is the number of small distilleries that began producing hand sanitizer at the beginning of the COVID-19 pandemic.
One challenge with this strategy is that it could require extra funds to execute. You might need to hire new staff, buy new raw materials or invest in different marketing strategies. If you’re thinking of pivoting in this direction and need extra cash, you do have a few options:
- Business loans: There are several ways to obtain a business loan, especially in light of new government initiatives to support businesses during the pandemic. For example, the Small Business Administration (SBA) has increased Express loans to $1 million. Before you go down this path, you should consider whether your business will have enough cash to service the debt. Creating a new product or service for your business pivot is somewhat high risk and might not be worth taking on more debt to pursue.
- Paycheck Protection Program (PPP): The PPP is another SBA initiative designed to help businesses find the cash necessary to keep their employees on payroll during the pandemic. You are eligible for this eight-week loan if you have fewer than 500 employees. These loans can be forgiven if you use at least 75% to cover payroll costs. However, if you decide to use PPP funds, make sure no more than 25% of them go toward your mortgage or utilities, as this could disqualify you from forgiveness.
- Contribute personal funds: Some business owners prefer to use their own funds when creating or building a business. While this is certainly the cheapest way to grow a business — you won’t spend any money paying off debt interest — it could also put you in a risky financial position. Before committing your own funds to your business, you should make sure you have enough personal emergency savings to cover your expenses for at least six months.