Even before the pandemic hit, it wasn’t uncommon to hear about businesses “pivoting.” While the term suggests that changes are in store, what does it actually mean, how do you know if your business should pivot and what should be included in your pivot strategy? Could a pivot actually grow your business?
Here, you’ll learn how to recognize if your business should pivot and how to start creating a pivot strategy. Learn more about the kinds of changes you can make to better serve your customers and boost your business’s bottom line.
What does it mean for a business to pivot?
When a business pivots, it means that it’s changing some aspect of its core products or services. Businesses might pivot to better meet customer demand, to shift their target audience to boost sales or some combination of both.
Making a pivot is a strategic move that you can take to ensure that your business remains viable and profitable. Typically, it’s also done as a long-term strategy, as opposed to changes made for a relatively short time, like adjustments made during COVID-19-related shutdowns.
That said, it’s not always necessary for a business to pivot. For others, it’s essential.
An example of a pivot strategy in action is when a sit-down restaurant changes its offerings to takeout only. While this change may have started as a way to generate income when onsite business was limited, for some restaurants, it will become a permanent change.
What are the financial impacts of a pivot strategy?
The ultimate goal of pivoting your business is sustain or return to profitability as soon as possible. You may need to make short-term changes to survive unexpected business interruptions, but these are not necessarily pivots.
Pivoting typically requires an additional investment of time and money as you make a strategic shift from the way your business has previously operated. Along with that, your business may need to change its inventory, rebrand and change its marketing materials, find new ways to deliver goods or services and more.
Given this, your pivot strategy needs to account for additional financial fluctuations while building a more profitable foundation for long-term success.
How do you know if pivoting is right for your business?
Are you considering pivoting your business based on impacts from the pandemic or another unexpected event?
First, ask yourself which changes you would truly want to continue for another six to 12 months. If your current business is your dream, then it may make more sense to continue with short-term changes that can get you through your current challenges. If you think that your business model is not viable in the long-term, then you’ll have to pivot.
Review your business plan and strategy and consider the following for your pivot strategy:
- Which products and services your business offers and whether they’re still desirable and relevant for your customers
- If there’s a way to modify your business short-term so that it generates sufficient income now and has future profitability — or if more significant, strategic changes are needed
- If your business would be better positioned if you gave up a brick-and-mortar presence and only offered online sales and services
- What kinds of changes to staffing you would need to make to achieve profitability
- If you have the cash on-hand needed to make the necessary changes, and if not, whether you could obtain it
Talk to your accountant and any business advisors you have, such as your business attorney and a mentor, and get their input. After reviewing your business against these considerations, if you can’t see a clear path to profitability through “business as usual,” then you’ll likely need to pivot to survive.
Common pivot strategies for small businesses
Keep in mind that while the changes you make are intended to be long-term, it’s not necessary to change everything. You more than likely just need to find a few ways to adjust your products or services, operations and marketing to make it work.
Here are some examples:
- Change how you offer products: If there’s still demand for your product, consider your method of delivery. Restaurants can move to takeout-only; gyms can offer outdoor fitness options or focus on online or personal training; retail stores can move online; and products can be offered as subscriptions.
- Refocus your target audience: Who is most likely to need and use your offerings now? How has your customer base changed? For example, if your restaurant’s business was built for a lunch crowd that’s now working from homey, change your focus to another demographic or online orders and delivery.
- Be patient and flexible: Striking the right balance between the business you had before and the business you’ll have going forward may take some time. Be flexible and ask for feedback from customers and staff. This will help you get to the core of how to overcome any challenges.
- Use a variety of marketing, especially inexpensive and effective digital channels: Make sure your website reflects any business pivots, as well as your social media pages. Use your digital channels to announce any exciting new products or services you’re offering through your pivot strategy. And be aware that you may need to update or change your marketing messages and information to adapt to new audiences, products or services.
- Talk to other small businesses for ideas and support: For some businesses, this may mean co-offering products and services to create more attractive packages for your pivoted business. For example, instead of stocking desserts for your restaurant’s takeout business, partner with a nearby bakery and offer specials together. You could offer dinner and dessert, so that you piggyback on each other’s clientele and add a benefit to your customers.
- Find the right funder or funding opportunities to keep your business moving forward: If your business is feeling the impact of the COVID-19 pandemic, find out what federal, state or local grants and low-interest business loans are available and apply. Talk to your commercial banker and see what options are available to your business. Even if you don’t use any of the funding, having it available if you need it can make all the difference in a successful pivot.
Talk to Pursuit: We can help
Whether you need funding to pivot your business or simply to ease cash flow until we move past the pandemic, contact us today.
With access to more than 15 loan programs and a range of additional services, we’re committed to helping your small business get stronger today and thrive tomorrow.