How to Survive and Thrive in a Changing Economy

Posted on July 05, 2022 by Joe Siecinski, One of Thousands of Business Coaches on Noomii.

How is your rollercoaster going so far? During the pandemic era, all businesses have been holding on tight, preparing for the next sharp turvy turn and bracing for impact.

As you address the impact of this strange, unpredictable season on your business, it’s important to know the difference between a bandage solution and a pivot solution.

Bandage & Pivot Solutions

ut simply, a bandage solution is temporary. This type of solution aims to get you up and running quickly and start the revenue flow needed to stabilize your business. It may also help your clients.

For example, a bakery might start selling yeast because yeast is in short supply locally. Restaurants may start selling DIY meal prep kits and even groceries. Another example is a stylist who offers “Looking good during Zoom meetings” consultations. All of these are innovative but temporary, ideas.

Can these solutions turn into long-term? Sure, but bandage solutions often come out of desperation and aren’t intended to be long-term solutions. For example, selling yeast isn’t a sustainable business practice for a bakery.

The focus of bandage solutions is “survive,” not “thrive.” That doesn’t mean bandage solutions don’t open the door to new long-term revenue sources. Looking good on Zoom meetings now could result in looking good every day of a new remote working model. The stylist’s bandage solution could lead to a thriving consulting business.

Let’s Talk Strategy

As you look at the new strategies that you put in place over the past few months to stabilize your business, ask yourself whether the strategies are temporary or long-term. Are these strategies going to help you survive or thrive? What just helps you through this crisis and what will help you beyond the present moment? What will you use now but abandon in favor of the old way of operating when the crisis passes?

Now if you identify strategies that could eventually help you thrive, then you need to take some steps to make sure that the strategies can be optimized and have a lasting impact.

Is Pivoting the Right Option For You?

Pivot might be 2020’s word of the year. The concept of pivoting – being nimble enough to change direction quickly – was what every business owner wanted to master as the pandemic’s grip tightened.

It’s safe to say that most businesses pivot not because they want to, but because they are forced to. Only the most proactive businesses analyze and take action to jump into new opportunities that are just opening up.

For the rest of us, our old ways of conducting business could no longer support us, so we jump on any temporary solution that can help us survive. By doing so, we run into a new market opportunity that has a long-term positive impact entirely “by accident”, so we choose to pivot.

For example, a videographer who used to shoot real estate videos for open houses was forced to shoot
3-D virtual tours and virtual staging videos. Now he realized that this new line of services could become a very lucrative revenue stream during the pandemic and beyond. Therefore. he pivoted into a new business model that has both virtual tours and traditional videos for realtors.

If you run into a pivot by accident, or if you are still in search of that perfect pivot. Here are the three steps you should do to evaluate the opportunities at hand to determine if they are viable pivots.

The SWOT Analysis.

First, do a SWOT Analysis. What’s a SWOT analysis?

The S stands for strength. What‘s your competency? What are your brand’s strengths? What are you good at? Although it may seem obvious, ask yourself what business you’re in. Why are you in business? What do you sell? If you’re in the travel business, you might think the answer is that you sell travel packages. But in reality, you are in the relationship business, and what you sell, though, is a service that makes your clients feel satisfied and even thrilled.

Now, consider how else you can sell your true product or service and pivot. How else can leverage that relationship and make your clients feel satisfied and thrilled?

SWOT’s W stands for weaknesses. You must understand your weaknesses. I have a friend who owns a high-end restaurant and wondered if she should offer a cheaper take – out only menu.

The questions I asked was, “What is it you cannot do? What is it that you are not good at?”

The restaurant’s strength is its elegant ambiance, great quality food, and impeccable service. Their weakness is the inability to produce large amounts of food with cheaper ingredients in a short time. So by offering a cheaper take-out menu, would that attract to their strengths or their weakness?

Of course, you can strengthen your weaknesses to move into a new market, but only if that effort can still maintain your brand consistency.

SWOT’s O stands for opportunities. No business is without opportunities. That’s why businesses like McDonald’s are always introducing new products. What new markets make sense for your business? Is the opportunity big enough to warrant the investment of time and money? If you’re the only player in a small opportunity, the return on investment could still be substantial. Likewise, a big market that is full of competitors might not be the opportunity it appears to be.

One distillery owner shared that when the Coronavirus hit, their sales tanked. He spent time considering what he is good at and he realized, “I am in the distillation business. Whether I’m distilling spirits or industrial alcohol, it’s the same core competency. There is not much I need to change to convert my production line to produce industrial alcohol.”

He converted part of his facility to make hand sanitizer and he is doing very well right now.

Investigating opportunities requires a bit of bravery and being willing to look at something from different angles. You may need to learn some new skills and develop a few more procedures, but if the market opportunity is big, it may be worth the investment to pivot.

In 2008 when I was running my own company when the financial meltdown happened and everyone was suffering. At that time we asked the same question: Where should we go as a company? We decided to call on the bigger companies who had bought our products sparingly in the past and offer a unique selling proposition – providing them with the same quality products as their current vendors with a 30% cost savings.

We showed them our delivery records on both quality & price history. We also
explained how we could save them money without compromising quality. Managing costs is always important, but it was of special concern at that time. We presented a solution that they could not resist.

What can you offer your former and existing customers right now? How can you remind customers of your strengths?

SWOT’s T stands for threats. The pandemic is an obvious threat most businesses share right now. Often, infrastructure changes can be a threat – is road construction planned that will divert traffic from your location? Are utility prices going up? Are you required to upgrade plumbing to meet new municipal codes?

When you pivot, you frequently have to consider the threats that come from the existing players who are serving that market sector. Are these competitors going to retaliate? When the incumbent tries to squeeze you out of the market, is your advantage strong enough that they cannot replace you?

Price pressure can also be a threat. For example, if you own a restaurant and decide to lower prices, assuming that will result in more customers, will you still be profitable with lower prices? Also, who are the current players in the lower-price market? They are also struggling, but know what particular market better than you. What will you do if they respond to your entry into their market by further lowering their prices?

When you are pivoting in an economic uncertainty like this, the only constant is change. The landscape of the market is changing, consumer preferences are changing, and regulations are changing as well. When we settle into the new normal, is there a threat that your new business is cannibalizing your existing one? Is there a threat of the new market is disappearing? For restaurants that are selling DIY cooking kits, as people are going back to their normal routine, buying groceries and restaurant take-outs, the demand for the restaurant-made DIY kits may dwindle. Also, as restaurants open up for dining service, would DIY kit cannibalize their dining service?

After you complete the SWOT analysis as a way to identify potential long-term opportunities, it’s time to evaluate them through an analytical lens. In essence, you need to know the cost, the profit margin, and the scalability of these opportunities.

First, think about the cost of pivoting. Ideally, the new opportunity won’t cost too much in operations because you already have some of the resources needed. However, you need to take into account other costs related to this pivot. I have a client who is in the toy and small electronics manufacturing business. Now, because there are no big birthday parties, gift-giving has shrunk and his business is very slow. He talked about getting into protective mask manufacturing, particularly in the branded mask production. I asked him what was the cost of pivoting and he said, “Oh, not much. I already have a department that is mainly focused on sewing,” I said, “Great! But how about training costs? How about marketing costs?”

These are costs that are part of pivoting. Whether it is tangible or intangible, you have to think it through.

Can It Be Scaled?

After considering the cost, you have to know the potential monetary benefit.“How much profit can you expect? I asked my manufacturing client who was considering making protective masks, “How long do you think protective masks will be in demand? Six months? A year? Five years? How much can you sell in that period? What is your ramp-up period? That period includes training employees, finding new marketing channels, and production and distribution of the products. Will there still be a market after your ramp-up period? What’s the life expectancy of that market?”

These are some of the many questions to consider along with determining the lifetime profit of a particular pivot.

When you take on any new endeavor, you need to determine whether the idea is scalable. Can your idea scale the mountain of business success? Do you have the cash flow and infrastructure to meet potential demand? Today you sold 10 widgets and through word of mouth, demand doubles every day. That means that by day 10 you could sell 5,120 widgets. Also, what will you do when demand for your original product returns? Will you be able to meet the needs of that part of your business?

In my client’s case, sewing masks is scalable, but when the toy business picks up again, the two businesses will compete for resources.

If your new pivot is going to compete for resources with the current line of products, then you need to consider sustainability-can you financially and physically sustain both lines of business? If not, which one is more profitable? Which one has a longer lifespan?

Now the last step. If you think through the previous steps and determine you are playing to your strengths, and have a solid market opportunity for a scalable and sustainable idea, it’s time to jump on it.

Don’t waste your time. If you think that this is a viable pivot, jump in it! Jump on it and get the ball rolling. So, what do you need to do first?

Marketing. This is probably against everyone’s intuition. Some people believe that their product or service is so great that it can sell itself. That is not true; no product can sell itself! We sell the product, we put it in front of people and tell them what need it meets or what problem it solves and we do so in a way that created a desire for it.

For example, MP3 players preceded iPods in the mobile music category. When iPod came out, a friend told me the Dell MP3 player was better in terms of performance and it was an overall “better” product to buy. Fast forward several years. iPods are remembered, but does anyone remember that Dell had an MP3 player or even what an MP3 player was?

Marketing is critical. Even though marketing costs are deductible business expenses, philosophically marketing is an investment. And how do you make it an investment? You test and measure to understand what strategies work, what messages resonate with people, and what message represents your company best.

This is the time that you need to demand an ROI on your marketing effort, and I believe the marketing agencies that pay attention to testing and measuring are the ones that are going to survive in the long run.

You also need to establish scalable systems. It is never too early to establish systems and they don’t have to be expensive. The trick is to know what to systemize and to what extent to systemize. The goal of establishing systems is to gain efficiency and consistency.

One of my clients believed that he needed a CRM system because other people were telling him that’s what he needed. When we drilled down on his needs, we figured out that he only needed to talk to a handful of potential clients every month to grow his business at a pace he is comfortable with. In this case, a simple Excel spreadsheet met his needs for a CRM system!

If you focus on systems that improve efficiency and consistency you can find a solution that is neither expensive nor complicated.

Keep the Momentum Going!

The final step is very important: keep the momentum going. Develop an action plan and systemize along the way so your plan can scale and be sustainable.

You will likely hit a snag or two, but don’t stop. If you’ve done your homework and know this is the right direction to go, do not stop. Consistency is the key to success. Do what you can every week and repeat that week after week. Adjust your action plan if needed and keep going. I guarantee you, that this sustained effort will be the key to your successful pivot.