Wondering how to pivot your business during a crisis?
These are the 7 steps to make a successful pivot in these challenging times.
Step 1: How BIG is the crisis?
When wondering how to pivot your business during a crisis, the first step to make a successful pivot (and even deciding if you need one) is to assess how significant this crisis really is.
Is this just another of the dozen crises you face every day as a startup founder? Or is this one of those once in 100-year complete game-changers?
How long will the impact last? Is it just something temporary and short term you just need to ride out as a company? Or is it a major shift that requires a change in product or business model?
Not all crises are bad. They can produce a lot of human tragedy, which shouldn’t be dismissed too lightly. Some can instantly relegate even big businesses from being irrelevant overnight.
Others provide that leap and set up for the huge success startups have been waiting for. Just remember, you cannot control what happens out there. You can only control what you do about it now.
Step 2: What did change in the last 8 months?
Before you try to understand how to pivot your business during a crisis, you need to get clear on what has really changed, and what hasn’t.
Both are equally important and foundations for building a great business that has long term potential and can also thrive in the short term. It’s also worth noting how it has changed for the whole industry and your competitors. This isn’t just happening to you.
Some great examples of this are that traditional grocery shopping and meals may have definitely tipped more towards digital ordering and delivery. Yet, people will always need to eat and buy food.
A few businesses may not be able to make the pivot without going through bankruptcy. Others just need to sprint to adjusting to the new trend.
Just like we still need human intelligence for many roles. Brick and mortar offices may be redundant, and a lot of their supporting industries. Yet, people still need to be hired and communicate with team members.
A Harvard Business Review report on the 2008 Great Recession showed that three years later, only 9% of public companies were back on top of performance and were significantly outperforming the peers that remained in business.
What was deducted about those few survivors and leaders was that they seemed to have struck the right balance between business cost-cutting measures to survive in the crisis, but also continuing to make investments so that they could keep growing and thrive as the market picked up again.
Step 3: Create new financial models
When things change it is important to begin with creating new financial models and financial forecasts and that should be in place before deciding how to pivot your business during a crisis.
A happened, if we do B, we’ll now get C. Play with the inputs and outputs. See the effect on cash flow, sales units, customers, and profits.
Step 4: Identify your needs
The next step is to identify what you need to make these changes happen. How much money do you need? How many and which people? What tools are needed and which not (anymore)? What decisions need to be made?
Step 5: Collect feedback
Crises are emotional times and that could get in the way of addressing how to pivot your business during a crisis. They can cause rash knee jerk reactions. This can be dangerous and counterproductive. It’s important to get perspective and the advice of someone who has been through it before and can see the big picture.
A great analogy for this is if you know any parents with kids. Try all they might, it can be impossible for their small children to get that “waiting for that toy” isn’t really a life or death moment.
Losing a single school sports game doesn’t justify quitting the team and a promising career. Not seeing their first girlfriend or boyfriend this week or even breaking up with them is survivable. Those are things they just can’t understand because they don’t have the perspective of time.
So, consult your teams internally. Your experienced executives and those directly on the front lines. Consult outside, unbiased experts on your situation and plans and gain their insight. Make sure you are directly talking to customers and are hearing their problems and needs too. Only then can you make intelligent and informed decisions.
Step 6: Keep everyone on board
Once you have compiled the data and know what you need to do, you need to get everyone to buy-in. This is a critical part of how to pivot your business during a crisis. If they are staying, they need to be on board with whatever it takes. That includes your team members, vendors, customers, the board of directors, and your investors.
Step 7: Make quick decisions
The only thing worse then being punched by a crisis is to lag on making decisions and to throw away a salvageable business because you were too slow to act. Whether it is layoffs, rebranding or product, business model and systems changes, make the choice and commit.
Make the announcements to everyone else and go all-in on your pivot.
I’m curious how you are reacting on this crisis. Please leave a comment below so we can learn from each other.
Your biggest fans,
Jeroen & Merijn