Every small business is built on a business model, which is a company’s plan for how they will earn a profit. Traditionally, there are four factors that help small businesses to define their business model.
- Differentiation and pricing. Many companies, including your competitors, can tell customers that they have the best prices and services. What differentiates your business is an exceptional customer experience.
- Marketing and sales. You have an amazing business idea — now you need to communicate it to the masses. Various marketing channels, including social media, TV commercials, and print advertising, allow you to build intrigue around your offering and pique that interest into sales.
- Production and delivery methods. How will you produce products and deliver them to customers? Will you handle production in-house or outsource production?
- Customer experience and satisfaction. This is the journey that the customer takes with your business. It’s key that you go on this journey with them and continue to find ways to keep reaching, and anticipating, their needs.
Amid COVID-19, many businesses are hard at work pivoting their business models.
Fashion houses are sewing masks and hospital gowns. Automotive companies are manufacturing ventilators. Perfume production facilities and breweries are creating hand sanitizer. In the ongoing “war effort” against the coronavirus, major and small businesses alike have quickly shifted their business models to fight for their own survival.
If your small business is ready to pivot its business model during this unprecedented time, here’s what you need to note before getting started.
1. Small businesses must remain in compliance with quality standards.
On April 8, 2020, Josh Silverman, CEO of eCommerce marketplace Etsy, told CNBC that 20,000 shops are now selling face masks. Silverman has clearly stated Etsy does not claim masks purchased through the platform will prevent individuals from contracting COVID-19. Rather, it’s an “additive measure” for public safety.
Creators are complying with CDC recommendations. Many sellers are including COVID-19 disclaimers on their product pages. Diana Mabie, shop owner at The Darling Doves, clearly states on the product pages for her cotton face masks that these face masks are not medical devices and are not compatible for inserting PM2.5 filters.
Sumant Vasan is the Director of Customer Acquisition at Confirm BioSciences in San Diego, California. Before any business decides to pivot its offerings, Vasan says it is paramount to comply with all quality standards and any governing agencies.
“We have been witness to a slew of companies looking to make a quick buck versus those that follow protocol,” Vasan says. “Following protocol not only ensures quality products, but also meets standards set forth by their local authorities.
Choosing to make fabric face masks? Make sure your business includes a disclaimer that these masks are not medical-grade masks.
“This is important for compliance, and getting the quality products into the hands of those who need it most.” Vasan says.
2. Pivot based on your core competencies.
This is great advice from Chris Chan, Founder and CEO of 3CStrategies LLC, a DC-based consulting and event-planning firm. Chan has worked on large events including Democratic National Conventions and formerly worked for the U.S. Small Business Administration (SBA) under the Obama Administration.
In order to successfully pivot a business, Chan advises leaning on your strengths and core competencies. Remember that this is still an uncertain time for all businesses. The successes and failures your small business could experience when pivoting depend on the company’s ability to produce satisfactory results.
“If you stretch too far outside your skillset without the proper training or education, it could lead to a mistake that unravels all that you have built,” Chan says. “Take into account the ecosystem you’re entering as you pivot. Focus on finding your unique value-add.”
Julie Austin, CEO of Creative Innovation Group and investor of wrist water bottles Swiggies, agrees with this approach. Austin is a motivational speaker who is mindful that live events are not happening right now. In the interim, many speakers are focusing on live streaming efforts.
However, Austin is taking another road forward. She has pivoted her business model temporarily to phone coaching and consulting services. Phone consulting allows Austin to switch up her marketing and its format. It’s an approach where she is able to embrace her core competencies — being an exceptional speaker over the phone — and set her business, and its customer experience, apart from the crowd.
“Small business owners should know what they’re really good at before trying to pivot to something they aren’t familiar with,” Austin says. “It pays off in the long run to diversify. You never know what will change your business or what you have that will be of value in the future.”
3. Focus on how your business can continue to grow its target audience while still fulfilling the needs of customers that built your business.
Pivoting a small business is a fantastic opportunity to build a bigger customer base and secure consumer trust. However, if not done carefully a pivot may also position businesses to lose loyal customers.
Erik Rivera is the CEO of ThriveTalk, an online mental tele-heath platform. There has been a greater demand for his company’s services during COVID-19, leading ThriveTalk to pivot to a larger target audience than before.
ThriveTalk might have expanded to a wider audience, but Rivera is still mindful of the community that helped build the platform. When pivoting a business, Rivera recommends considering the wellbeing of its clientele — not just the business’s bottom line.
“It’s easy to lose valuable brand loyalty for missteps in the wake of a crisis and that can really sting in the long run,” Rivera says.
In pivoting to a larger audience, ThriveTalk is able to provide customers with discounts on services. There are also free sessions available to essential workers as a means of giving back to the community.
By keeping its focus on being able to branch out and considering the needs of the community, Rivera hopes to help more people in the short term and retain more clients in the long term with stronger brand loyalty.
Ultimately, the impact companies have on making successful pivots is incredibly profound. The nimble nature of a pivot allows businesses to keep their doors open, retain employees, and provide customers with necessary services and offerings.
“As an added bonus, if you already have a notable reputation in your field, this continues to add trust and value,” Vasan notes.