Maintain success with a pivot plan
When changes occur in consumer trends and needs, it can be a good time for small business owners to alter or pivot their operations to better serve customers and the core values of their business. You’re probably not surprised to hear that new research shows COVID-19 has impacted consumer behavior. According to McKinsey, consumer behavior will continue to evolve with the long-lasting impact from the pandemic.1 This means that small businesses that can adapt in response to the changing needs of consumers have the best chance for survival.
What is a pivot in business?
When a small business owner makes dramatic changes to their original business focus, it's referred to as pivoting a business.2 This usually includes a change in business model, altering what the business does to earn a profit. For example, a restaurant may begin offering pickup or delivery options, or a gym may add online classes to their existing in-person membership offering.
Small businesses that can adapt in response to changing market needs have the best chance for survival. The Harvard Business Review called adaptability the new competitive advantage in 2011.3 A recent study released by Advantage | ForbesBooks found that the adaptability quotient (AQ) of a business plays a critical role in its ability to survive.4
When to pivot in business
To determine whether you should pivot your business, you’ll need to identify your business’s core competencies, conduct market research and complete a competitive analysis. Follow these steps to determine whether and how you should pivot.
Step #1: Identify your business’s core competencies.
Consider what gives your business a competitive advantage. Core competencies are typically difficult to duplicate, allowing you to serve your customers in unique ways. The Balance Small Business notes that successful businesses tend to have more than one core competency. Some examples include quality, customer service, value, innovation and marketing.
Step #2: Anticipate and forecast market needs and emerging trends.
This is an important step in determining the long-term viability of your business. CB Insights found that 42% of startups fail because their business does not serve a market need.5 A market need refers to a functional or emotional need or desire of your target audience.
Step #3: Know your customers.
Successful small businesses can identify what people want or need and then create products or services that meet those wants and needs. As consumer preferences change, businesses must adapt their offerings to stay relevant and continue to earn revenue.
- Market research — This involves gathering and analyzing information related to consumer needs and preferences. Conducting market research can help you determine existing and emerging needs and the viability of your business in its current state. It can also help you start thinking through ideas for pivoting. To get started, the Small Business Administration (SBA) suggests asking the following questions:
- Is there a desire for your product or service?
- How many people would be interested in what you're offering?
- Where do your customers live? Can your business reach those customers?
- How many similar options are already available to consumers?
- What do consumers pay for similar options?
For more information, visit the SBA’s list of market research resources. You can also find guidance on research methods through their resource partner network. - Emerging trends — These can include market responses to technological advances as well as major national or global events, such as an economic downturn or pandemic. There are many resources you can use to discover trends, including:
- Google Trends: Find topics people are searching for online. Discover upward or downward trends that could relate to customer needs.
- McKinsey & Company: Access insights related to issues in business and management.
- Forbes: Find stories on marketing trends, along with advice for entrepreneurs.
- Mintel Trends: Discover research on trends impacting all industries and within select industries, such as beauty or food and drink
- Small Business Trends provides a larger list of resources.
Step #4: Know your competition.
Competitive analysis allows you to learn from businesses competing for your potential customers. By identifying your competitors’ strengths, you can pinpoint your business’s unique strengths. Identifying your business’s unique competitive advantage will help you determine the need to pivot your business. Small Business Trends provides a great resource detailing various methods and tools to complete a competitive analysis.
Conducting market research and a competitive analysis can help you formulate ideas for pivoting your business. Pivoting your business does not mean you need to give up on your company’s core values — the guiding principles and beliefs that help you and your employees work toward a common goal.
Develop a “pivot plan” for future success.
Finally, develop a plan to pivot. Changing market trends may suggest a need for a short-term or long-term pivot.
- Many small businesses have made short-term pivots during the COVID-19 pandemic. Distilleries are using their resources to create hand sanitizer. Restaurants are offering takeout and delivery options.
- Economic and market trends can create long-term impacts on consumer needs and wants. A long-term pivot serves the lasting needs and wants of your target market. For example, a retailer with physical stores may pivot to selling exclusively online.
- A strategic plan will help you implement a pivot. A strategic plan documents your future vision for your business. It details your business’s current state, desired future state and a plan for how you’ll evolve your business over time to land at your desired future state. For more information, visit SCORE’s guide on how to craft a strategic plan.
Adaptation is necessary for business survival, and the ideas for pivoting your business should be supported by your core competencies. You can stay true to the business you’ve built with the values you’ve built it on while also pivoting your business to ensure long-term success. Get in touch with a Nationwide agent or get a business insurance quote today.