Small businesses, particularly startups, frequently discover their initial business plan is not taking them where they want to go. That usually leads to several rounds of “tweaking,” but when that fails, they are faced with more existential decisions: persevere, quit or try something new. When there is a significant change in strategy, a business has performed a pivot.
Even the best-planned pivots can be scary experiences fraught with uncertainty. However, COVID-19 has brought the pivot to new levels of anxiety. In pre-COVID times, a business typically had time to see a problem coming. Then, plans could be made to deal with shifting markets, technical advancements, new competitors, and other issues. Further, those challenges typically came one at a time.
COVID landed on the world economy like a bucket of hot glue. The disease, regulations fighting the disease, and wave after wave of confusing predictions, information, and social media rumors created an environment that affected every business aspect. And it did it all at once.
The Post-Covid Pivot
When customers (your source of revenue) disappear overnight as they did in the hospitality industry, or when large swaths of employees become desperately ill or die as they did in meatpacking plants, or when your supply chain is disrupted because of a lack of truck drivers, you need to act quickly to stay afloat.
But do you need to pivot, adjust current operations, or pack it in?
Here are a few indicators that it is time to consider a new direction:
- Financial Performance. Perhaps the most in-your-face indicator of all is your profits up, down, or unchanged. If you are losing money or your margins have been significantly reduced, it may be a sign that your current model isn’t working anymore.
- Customer Erosion. If your customer base is shrinking, particularly if your return business is down, something dramatic has occurred. Either the market tastes have changed, or you are not meeting consumers’ expectations. It is time to reexamine how you are doing business.
- Low Morale and Difficulty Recruiting. When productivity declines and you can’t lure new talent, it is an indicator that your team does not believe the current game plan is sustainable.
- Owner Indifference. More common than you might think. If your passion for the business flags, if your interest in the business declines, you are heading towards a quit unless you can re-energize yourself and lead your team in a new direction.
Pivots can work. COVID has led to hundreds of small business pivot success stories in manufacturing and services industries as companies retooled to meet new COVID-specific market needs. For example, shortages of PPE demand collaboration software to accommodate remote workers, home entertainment systems and services, and online education programs sprouted up from apparel, software, and educational institutions.
Of course, the most notable pivots in American business history are IBM, which went from typewriters, computers, business services, and Apple, who went from desktops to incredibly successful smartphones.
Knowing where your business is and the correct next step is difficult to do objectively. If you are in the Los Angeles or San Diego areas, give the professionals at ASCEND Business Advisory for help.
Schedule a free consultation or call our office at 888-297-3321.