What to do when your business must pivot.
- Hosted July 20, 2020
- By Dustin Clendenen
Agility is one of the most important traits that an entrepreneur can have. The market is always changing and evolving, and this is more true now than ever before. Success, if not actual survival, depends not only on foresight and sensitivity to these shifts, but the ability to quickly act on them.
“Pivot” might sound like one of those startup culture buzzwords, but it’s actually as old as business itself. All it really describes is the way a company changes strategy, usually modifying the way revenue is generated, how operations are handled, what customers it serves, or what products it offers.
You’d be surprised by how much of an impact business pivots have had on our world. Starbucks, one of the most ubiquitous brands on Earth, didn’t start out as a coffee shop. Back in 1971, it was only selling espresso makers and coffee beans.
Pivots don’t always happen as a result of choice, however. Economic conditions and the marketplace are two of the biggest factors that force companies to change their strategies, or to fail.
Twitter famously started as Odeo, a podcast marketplace that was transformed into a microblogging platform when the founders grew worried about the growing market dominance of iTunes. Mailchimp started out only offering services to major corporations for yearly retainers. However, after losing clients during the 2008 recession, the company switched to a “freemium” model, allowing them to massively expand their userbase and becoming the defacto email marketing platform for small businesses and solopreneuers alike.
The economic landscape is more tumultuous than ever. Here are some tips on how to weather the storm if you’re forced to change course.
What forces entrepreneurs to pivot?
Your business model is invalidated. Sometimes, changes happen in the world that make the products or services your company offers no longer necessary.
Rentals from brick n’ mortar stores like Blockbuster used to be the only way to get movies and TV shows that didn’t own, but the rise of streaming made these companies obsolete. (Fun fact: Blockbuster could have bought Netflix for $50 million, but they didn’t take the company seriously.)
Thanks to the stay-at-home orders issued to combat the coronavirus pandemic, the primary offering of restaurants (a public place to dine) was completely nullified. It’s temporary of course, but for many, take out orders alone won’t be enough for them to survive, let alone keep their employees on payroll. Many eateries have started to offer necessities like toilet paper and small groceries in order to stay afloat and keep locals safe from overcrowded grocery stores.
The market has shifted.
In some instances, the means or interests of your customers will change, and you have to adapt if you want to keep them.
In order to combat Uber and Lyft, some cab companies have offered their own ride-hailing apps to make booking taxis easier for digital-native customers.
Scott Hove, a gallery artist known for his decadent, anthropomorphic cake sculptures, pivoted into a brick n’ mortar business owner this year with the creation of Cakeland LA, an a immersive art popup in Chinatown. “Art sales have steadily been drying up because the art buying community is so heavily burdened by debt,” observes Hove. “Way too many people are living hand to mouth. And that increasingly means that people aren't able to buy art. So pivoting over to a business where people can spend $20 on a ticket to have a fantastic experience rather than spending several thousand dollars on an individual piece of art just made a lot more sense to me at this point in my career.”
Suppression from competition.
It’s amazing when a startup or small business proves to be successful, but the danger is that it will get the attention of a larger competitor with more money, resources, and a larger audience. Because of their massive market share, if they offer a product or service similar to yours, whether its better or not, it can be incredibly challenging to compete with. The best solution might be not to compete at all, and to pivot in another direction.
How to pivot successfully.
Several years ago Paul Shirley opened Writers Blok as a co-working space where writers of all types could find structure and community while doing their work. As a brick n’ mortar space built on gathering in public, the primary business model was virtually invalidated when California issued the stay-at-home quarantine order. He had to launch into high gear in order to get Writers Blok Online off the ground, not only to keep the existing community engaged during the quarantine, but to launch a separate company that will remain even after the pandemic has ended.
“We were forced to close our doors, and that was like a jolt to the system,” says Paul. “Suddenly I had to get real serious about [Writers Blok Online], whereas before it just would have taken me a lot longer. It would have been a casual side hustle, but now it has become the main gig. My landlord is still going to be asking for rent every month, so there’s a sense of urgency.”
Be resourceful and solution-oriented.
If you are forced to pivot suddenly and the survival of your company requires immediate action, don’t be afraid to pivot in a completely new direction if you have the right resources in place to support it.
Merrilee Kick, president of Buzzballz, a Texas-based liquor company, never thought she would be working with the medical community to battle the coronavirus epidemic. However, when the WHO and the CDC revealed the formulation for hand-sanitizer and waived the necessity of having a manufacturing permit to make it, Kick realized that her distillery already had a lot of the necessary raw materials and equipment to start making it—and fast. They donated the first batch to hospitals in the area that were in critical need, followed by shipments to pathology labs responsible for testing. Word spread, and before long, hundreds of gallons were being manufactured at her distillery and being sent to the city of Carrolton, TX, police, firefighters, airlines, the Air Force and the Army. Buzzballz has pivoted to protect people on the front-lines of the coronavirus epidemic, and because the government does not take donations, Kick has generated a new revenue streams she never could have imagined.
Pivots don’t have to involve re-inventing the wheel. Oftentimes it can literally be a minor turn in direction, slightly askew of what you were doing previously. Be practical and identify the aspects of your company that can be maintained and re-used once you’ve settled on the new direction to work in.
Every company has some sort of anchor that it can pivot from. Find out what that anchor is and use that as the center for which you change direction. For Writers Blok, that anchor is structure and community. The pivot toward online gatherings then, isn’t even really a change in direction, but an expansion of what the company already is.
“It was a few of my writer friends, actually, who pointed out, ‘this thing you're doing is so much more scalable if you take it online,” Paul says. “At first I was kind of reluctant because I really do like the in-person aspect of what Writers Blok is, but what we're going through with the quarantine really makes clear the need for online gatherings.”
Hove’s Cakeland art pop up was scheduled to open the exact same weekend that LA’s stay-at-home order was issued, preventing him from ever opening the installation’s doors. All of his effort would have been for naught—but he realized there was still something to offer: merchandise.
“It was actually kind of a surprise, because merchandise was really an afterthought with this project,” Hove explains. “I didn’t just want it to be T-shirts and enamel pins, but something unusual, with its own sort of mystique and life that’s separate from the pop up. And, and so, you know, I went about doing it. I created these bottles of potions that tie into the narrative of the show. Here I am with an art pop up I’m not allowed to open to the public, but I have all this inventory, and inadvertently it’s become a source of income for me while I ride out this quarantine.”
Authentically love the pivot.
Most entrepreneurs got into their line of work because they have a passion for it. If you can’t find something about your pivot to be in love with, it’s not going to feel good to implement, and that will eventually catch up with you.
Hove was used to working solo in his studio as a gallery artist, being self-directed and self-managed, having very little overhead and no budget aside from the cost of his materials. When he started plotting the design and operation of Cakeland LA, he immediately realized it was not something he would be able to do alone. Fortunately, he was able to find a whole new depth to himself as an artist.
“I felt parts of me utilized in so many ways that I had never been utilized before,” he says. “It was really satisfying to hire experts who have real specialties. You know, like hiring a proper PR firm, hiring a proper marketing expert, hiring a lawyer to handle all the details and the minutia of contracts, and finding out how to manage all these people at once. I just feel like I'm finally maximizing my potential.”
Take advantage of new technology.
As technology evolves, so does convenience and consumer preferences. We’ve seen the taxi cab industry get eviscerated by the rise of ride-hailing apps, but this sort of displacement has been happening for many, many decades in every industry imaginable.
“September 11, 2001, was the moment when everything changed,” says Mitch Goldstone, CEO of ScanMyPhotos.com. “Since 1990, selling and developing film had been like printing money. Then with a screeching halt, everything stopped at our retail photo labs in southern California. People stopped traveling, and the photo developing business came to a slow end. Shortly afterward, as digital cameras and smartphones began to change how pictures were taken and saved, the bottom dropped out. The advent of photo-sharing apps, from Facebook, to Instagram, and Google Photos created the demand to share not just pictures from your phone, but your entire trove of family snapshots. The question was how to create a business around that need?”
Goldstone got focused and decided to stick to his original mission of helping people make photographic memories of their lives. His pivot was simply around the type of mediums he would use. “We re-engineered how pictures were previously digitized,” he explains. “What once took minutes and five dollars to scan a single photo, is now pennies. Bulk high-speed scanning was the answer as we redesigned and pioneered a new way for our professional scanners to digitize 1,000 pictures in five minutes.”
Unite the team.
When it comes down to it, an entrepreneurial pivot can only be as successful as the people implementing it. In the same way the entrepreneur must actually be passionate about the change in direction, it goes better when everyone else working for the company shares the same vision.
Before Writers Blok became a community anchored by a permanent brick n’ mortar headquarters, it was a more casual gathering that met at coffee shops.
“When we got a physical space, it was because I had hired three awesome people who thought, ‘oh, there’s something here and you should probably get serious about doing this more permanently,’” says Paul. “I think I would've come to that, but it would have taken me longer. Similarly, my friend suggesting we take Writers Blok online was very helpful. But having [the staff] get really excited about it helped get the ball rolling.”
Forced change is never welcome or necessarily enjoyable, but, like a brush fire clearing out a forest, a pivot can open up a whole new phase of expansion for your business. Make the best of whatever changes you have to make, and enjoy the journey!
Back to Blog