How Businesses Can Adapt, Grow During COVID-19
In order to survive – and even thrive – during these unprecedented times, small businesses have had to find new ways to make money. The UPS Store’s Small Biz Buzz survey found that 41 percent of small businesses in the United States took steps to modify their businesses in hopes of survival. Fifteen percent provided customers with curbside delivery options, 28 percent moved to online sales as their primary source of sales, and 65 percent made a concerted effort to grow their e-commerce capabilities.
More than 50 percent of those polled by a U.S. Census Bureau Small Business Pulse Survey said it would be at least half a year before pre-COVID levels of business come back. Looking at overall economic recovery, and we could be waiting five years or more for things to return to where they were before. When it comes to small businesses, it might take even more time; however, businesses that adapt will be more likely to succeed.
In order to increase the chances of the pivot being successful, Harvard Business Review recommends doing so based on the newly created conditions of the crisis. In the case of the pandemic, it’s created more telecommuting, disrupted supply chains, and required everyone to socially distance for work, leisure, and daily tasks. In light of these circumstances, there are three factors for a pivot to be successful.
Social Distancing Opportunities
With the pandemic demanding less contact, chiefly through social distancing, businesses must find ways to work around the new circumstances. One example is how dating websites have added video dating for users. Other examples include grocery stores limiting in-store customers, requiring workers and customers to wear masks, and adding more and wider delivery areas for groceries and other products.
Building on Original Business Concept
The second recommendation by HBR is that businesses examine how additional and different services or products complement the original business concept.
Let’s consider Airbnb; when travel and resulting bookings collapsed, the platform’s hosts received financial assistance that helped facilitate guest relations virtually. In a shift from its non-hotel lodging option via homeowners and apartment dwellers offering their abode for rent, Airbnb moved to provide hosts with the ability to hold online events, such as cooking classes, art therapy, virtual tours, or other activities.
Looking to the future and building on the opportunity for growth, tourists could learn about new places to travel and things to do and learn while visiting the new destination.
Adapting to Change by Adding Value
The final ingredient of a successful pivot, according to HBR, is that the move demonstrates how well a company can adapt, work through problems and adjust to market forces while proving profitable and resonating as a value in the consumer’s view.
Before the lockdown orders, Spotify placed a sizeable portion of its business model on having primarily free customers stream music on personal devices. Spotify would benefit in two ways – they wouldn’t have to send out Spotify-specific devices, along with relying on receiving advertisers’ income that free users would listen to in exchange for a free Spotify membership. However, when the pandemic hit, Spotify’s advertisers cut their marketing budgets, making this business model difficult for Spotify to sustain.
Spotify’s pivot offered podcasts for users from music artists, talk show hosts, celebrities, etc. By offering premium subscriptions for its podcasts, along with curated, niche programming, Spotify gave customers more control and a better value over previous media offerings.
While the pandemic doesn’t necessarily mean a “going out of business sign” for companies, it could spell the end of the road for those that don’t adapt to the new economy.
Sources
https://www.uschamber.com/co/start/strategy/metlife-us-chamber-small-business-index-covid-19
https://hbr.org/2020/07/how-businesses-have-successfully-pivoted-during-the-pandemic
https://www.uschamber.com/co/start/strategy/pivoting-your-business-to-survive-pandemic