What does it mean to "pivot"?
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Unless you spent the whole of 2020-2022 stuck in media-free suspended animation, you’ll probably have heard the term “pivot” in reference to UK businesses and their various responses to COVID.
The post-pandemic world took a bit of getting used to, right? But businesses of all sizes have successfully adjusted what they do and how they do it, to continue serving their customers through the pandemic, the energy crisis, and the rising cost of living.
That’s basically what pivoting means - responding to unplanned events with a change of direction and/or a change of approach.
In the startup world, pivoting means shifting to a new strategy. But it doesn’t necessarily mean a drastic change to your whole business plan. If you’ve identified one important problem or one incredible opportunity, you may only need to change one area of your strategy.
Why pivot?
A small business doesn’t need to be in survival mode in order to justify pivoting. Whilst you may have seen lots of businesses changing their strategy in recent years, thanks to lockdowns and growing concern about climate change, there are positive reasons to pivot as well.
If changing one of your core products or services would help you do a better job of meeting customer demand - awesome!
And if shifting your target audience to a different group would allow you to increase sales - go for it!
Did you know…?
Facebook started as a way to compare the attractiveness of college students
Pinterest started as an app to notify label-lovers when their favourite designer goods went on sale
Groupon started as a website for raising funds for charity
Instagram started as Burbn - an app to let you “check in” at your favorite places
The original company behind Twitter created it as a podcasting platform, but this was shelved after iTunes came out
Netflix has been dominating home entertainment since the nineties. But they began by posting DVDs to people’s homes.
Even Netflix was once a Startup.
So what lessons can small businesses learn from the story of a BIG brand?
Team Transmit use Slack to communicate with each other when we’re working remotely and collaborating across multiple projects. We love Slack’s backstory, because it’s a great example of pivoting to meet a need in the market.
Slack started as a gaming company called Tiny Spec, who developed a team communication app for their own internal use.
Once they realise how useful their app could be for other businesses, they pivoted away from gaming and became one of the most popular team collaboration tools in the world.
Looking for a brilliant business idea?
Finding it might take less effort than you think.
Questions and examples to help you work out whether now is the right time to pivot your business
Do you have a product where a popular feature could become a product itself? Would this help you create a simpler, more streamlined offer to your customers?
Example: If you work in social media and find that creating TikTok content is your most popular service, would it make sense to move the focus of your business to video production?
Could you invest in different technologies to make your product or service stand out?
Example: If your work involves machinery that is noisy and gives off fumes, could you invest in battery-powered tools instead, offering clients a low-noise and zero-fume (and therefore eco-friendly) option?
Do you currently have one product that you could enhance by providing it as part of a larger package?
Example: If you are a personal trainer creating personalised exercise plans, would your clients pay you for a nutrition plan as well, as part of a wellbeing package?
Is there a different set of customers that you’re not reaching yet?
Example: If you run a gardening business cutting hedges for residential properties, could you also target retail parks, schools, care homes, and other larger commercial properties that also have hedges?
Switching up your income streams
Lucy is a dressmaker specialising in occasion wear, and in particular, bridesmaid dresses and alterations.
When Covid struck and weddings were cancelled, she (understandably) panicked that her income had disappeared overnight. Then she realised there was something else people needed more than pretty frocks, which she was already equipped to produce with her trusty sewing machine: face coverings.
Lucy was able to use up fabric she’d already invested in for making clothes, to produce a variety of face masks instead.
Once she’d worked out the cost to produce each mask, Lucy calculated how many masks she’d need to sell in order to make up the income she would have had from dresses and wedding suit alterations.
Selling masks allowed her to balance her finances during the lockdowns, and when the law changed so that face coverings were no longer mandatory, Lucy saw this as a signal to pivot back to her original business model.
Sure enough, as hospitality businesses began to reopen, wedding venues were re-booked and her customers came back for their special outfits.
Lucy’s story is an example of how being a small business (or sole trader) makes it easier to pivot quickly, as you don’t have to go through multiple rounds of meetings and approvals before making a major change to your sales strategy.
It also demonstrates that changes to your business model don't have to be permanent. It’s perfectly reasonable to give something a go, as long as you’ve done a cashflow forecast prior to any experimentation.
Sometimes, less is more
Ted makes luxury candles in different shapes, sizes and colours, with scented candles being his most popular product range.
Supply chain issues caused by the conflict between Ukraine and Russia have meant that he hasn’t been able to get hold of all the various fragranced oils he normally uses to produce his “floral” range.
Unsure how to avoid losing his customers when he was unable to fulfill their orders, Ted conducted a quick survey on social media to find out which product was the most popular.
The results were clear: his regular buyers loved lavender. Rather than stressing over how he could import oils from seven different countries in order to make his full range of candles, Ted put all his efforts into sourcing high quality lavender oil and discovered a UK farm in Kent who were able to supply him at a great price, without the usual shipping costs and with a much lower carbon footprint.
The next step for Ted was to redesign the jar for the lavender candles, giving them a fresh new “made in the UK” look, with new labels and recyclable packaging as well.
Ted launched his new and improved “eco-friendly lavender candles” with a special 10% discount and they flew off the shelves in every shop that stocks them. Phew!
Digital transformation
Another phrase that has been widely used in conversations about pivoting, is “digital transformation”.
It sounds technical, but even a sole trader operating a side hustle from their home can take their business through a simple digital transformation, by:
adding their products or services to a website or social media page
making it easier for customers to contact you online, by using Facebook messenger or WhatsApp For Business
holding meetings with clients and partners over Zoom, instead of face to face
hooking up with an online payment processing partner like Stripe or Klarna
moving from pen-and-paper bookkeeping to using business accounting software, like this free tool from Crunch which makes it faster and easier to send invoices, track expenses and file your tax return.
Combining digital with sustainability
Transmit Startups’ customer Rachel Jones is a brilliant example of a small business owner turning a setback into an opportunity by taking her eco-friendly business online.
"I set up a click-and-collect service... It means there’s very little queuing because customers literally grab a bag of their pre-ordered goodies and go."
Think you can’t afford to pivot?
In life, and in business, change is often necessary. Given the disruption the UK economy has experienced in recent years, it may now be time for you to shift your business goals towards a different set of outcomes. And if you’re still pursuing the same outcomes, you might be looking for new and better ways to achieve them, or take your offer to more customers by going digital.
Explore Smarta’s Digital Marketing course
Changes of direction sometimes need extra funding, and for that, we’re pleased to be able to offer Start Up Loans to more businesses.
You can borrow between £500 and £25,000, which can be “tranched” (taken in chunks) so that you only borrow what you need at the time you need it.
First loans are available to applicants with a new or early-stage business trading for no more than 36 months
Second loans are available to existing Start Up Loans borrowers with a business trading for no more than 60 months
Why size is on your side
Small businesses find it easier to pivot because they have:
Fewer staff, so fewer roles and responsibilities to shift around
A close-knit team who are likely to be in near-constant communications
Access to finance in the form of Start Up Loans and second loans
Make hay while the sunshine
This old-fashioned saying means that when you see a business opportunity, it makes sense to make as much profit as you can, while you can. Because, like the Great British weather, all small businesses face their fair share of darker days.
Work hard to maximise your revenue in the “good” months, and you’ll find it much easier to survive the tougher ones.
If you’re not sure how much revenue your business should be bringing in, that could be a great conversation to have with a mentor. All Start Up Loans applicants are assigned a business mentor as part of the ongoing support provided by Transmit Startups.
"We’re delighted to be the 2000th loan recipients!"