How to Find Success as a Small Business During the Pandemic
The Covid-19 pandemic came out of nowhere. It was not something we could easily prepare for as it hit us suddenly, unexpectedly and with massive, global implications the likes of which we had never previously seen. However, it is here and here to stay, in terms of its impact on the economy and small businesses. The pandemic has stunted the growth of numerous businesses across the United States and many small businesses have struggled to survive and recover. Though the pandemic has caused catastrophic change across the globe, it has also given us the chance to understand how businesses can adjust, and in this case, pivot, in a way that sets them up for success in tomorrow’s market - one where customers value safety, experience, and comfort more than ever.
A number of fairly obvious industries and products have seen success during the pandemic. Two industries specifically saw their markets dominated by familiar names - one that’s been a household name for a while, and the other a booming industry name that just about everyone is familiar with in 2020. Amazon, already an eCommerce giant, doubled its net profit year over year to $5.2 billion after initially projecting a loss in their second quarter due to spending on COVID-19 related expenses, according to The Verge. As avid shoppers couldn’t go to their favorite stores down the street, they relied on online shopping, and with Amazon’s abundance of products and ability to deliver quickly, the demand grew exponentially. Zoom, now a household name in the workplace solution industry, saw their revenue double in just its first fiscal quarter this year to $328m, according to The Guardian, due largely to the need for businesses to collaborate virtually in a near-global remote working environment. Besides ecommerce and workplace solutions, we’ve also seen an increase in the demand for food delivery services, cleaning services, liquor stores, supermarkets, in-home entertainment, and in-home workout products. Many businesses in these industries benefited from soaring demand and didn’t have to worry about the pandemic ruining them - however, they were not in the majority.
The number of businesses that had to close their doors and lost months of business due to Shelter in Place restrictions is significantly larger than those that thrived. With small businesses forced to close and not prepared to power through a pandemic that took away many of the ways they had functioned before, businesses had to come up with adjustments and alternatives to current market practices in order to prepare for the years beyond 2020. They were now in survival mode. Their only hope of bringing their businesses back to life rested on the effectiveness of pivoting their business in a new direction: one that would hopefully allow them to survive the pandemic.
A number of small businesses have executed a pivot with success to date. Fast Company reports that Necker’s Toyland, a toy store in Simsbury, CT, overcame their physical store closure by offering customers a virtual shopping experience, complete with store clerks for assistance in advising on, finding and pricing merchandise. This way, they help customers select toys which can then be picked up curbside or delivered to nearby towns. Fast Company also reports that Owner Jill Carlisle of La De Da! in Chicago promised her customers help on identifying the perfect gift from her shop by learning about their likes and dislikes online. Today she offers a Google Form online, where her customers can respond to the same kind of questions she’d ask in store to help her customers to find the ideal gift for them without having to leave their homes.
Forbes describes a fitness company whose cofounder and co-CEO who saw the pandemic coming after reading online about Wall Street analysts and hedge fund managers following the development of a novel coronavirus emerging in Wuhan, China . The man, Jeff Davidson of Camp Gladiator, began to plan a remote version of the business with his team, with the strategic pivot expected to be ready by 2022 in order to adjust to the new landscape. Since Camp Gladiator’s fitness classes are run outdoors by 1,000 instructors across the country, they never had the need for buildings or indoor workspace. With the launch of their virtual classes fast tracked to March 16, Camp Gladiator more than doubled the number of classes that had taken place outside, from 4,000 to 10,000 over Zoom. They also retained 97% of their customer base at 80,000, added 20,000 more, and increased revenue by $70,000.
For a successful business pivot to work in today’s business age, according to the Harvard Business Review, businesses must follow three conditions.
The first: “a pivot must align the firm with one or more of the long-term trends created or intensified by the pandemic, including remote work, shorter supply chains, social distancing, consumer introspection, and enhanced use of technology”. For example, if a restaurant wants to continue to operate while adhering to government guidelines, a great way to pivot their business would be to enhance their online and social media presence. Increasing online presence allows loyal customers to keep up with you regularly and allows for new customers to come across your pages. Offering deals or online contests via social media allows for increased social interaction as well as a possible uptick in loyal customers.
Second, pivots must also be “a lateral extension of the firm’s existing capabilities, cementing — not undermining — its strategic intent.” Camp Gladiator is a fitness company whose customers used to attend outdoor classes across the country. Now, they’ve pivoted to a virtual platform where they can just as effectively serve their customers at home. This is a fine example of a business cementing it’s “strategic intent” or business strategy - offering fitness classes - by using a lateral extension of its existing capabilities - moving from big outdoor areas to Zoom.
Finally, HBR writes, “pivots must offer a sustainable path to profitability, one that preserves and enhances brand value in the minds of consumers.” The pandemic has wreaked havoc on the economy, but that does not mean all small businesses will face their demise. However, for those that do not pivot in the direction of increasing their use of technology, appealing to remote working, and streamlined business operations, they might be in for a rude awakening.
The likelihood that we see the pandemic’s impact on the economy and current industry practices well beyond the next year or two is very high, and with that in mind, struggling businesses need to start thinking about making a pivot to adapt to the new norm of doing business before it’s too late.