The COVID-19 pandemic has upended plans for 2020 and beyond. Changing the way you do business can help you survive the crisis and build long-term resilience. Here are tips and tools to help you identify and maximise opportunities to help your business survive and revive.
Adapt to survive and revive
Business as usual no longer applies, thanks to the COVID-19 pandemic. You might be thinking about how to change what you offer or how you operate. Or you might be looking into starting a new business.
You might first focus on survival by cutting costs and improving cash flow. Eventually, you have to look further ahead and think about how to adapt. This might mean new ways of doing business, or new products or services to offer customers. You might look for unmet needs and think about how your business could meet those needs.
According to the New Zealand Business Performance Panel, it helps to break it down into these four steps:
1. Identify what customers want or value — including their attitude to price vs quality.
2. Decide on a new offering likely to appeal to your target customers, eg a service that complements your products or vice versa.
3. Check your business is set up to deliver this new product or service.
4. Figure out how to position yourself in the market.
Step 1: Identify what customers want or value
To pivot your business, start by thinking about what your customers value:
Price. Some customers care most about what something is going to cost them. They will put up with average or lower quality if it means they can pay less.
Quality. Other customers look at form and function. They will pay more for something that’s higher quality, fashionable, or can do more.
Customisation. A third group will pay more for something tailored to meet their needs.
It’s best to focus on one of these customer segments, rather than try to deliver to all three. Focusing on all three is likely to have less impact and cost you more money.
Example: A small events company in Nelson finds itself with few bookings due to the COVID-19 pandemic. It needs to pivot to stay afloat. The owner reflects on what was popular pre-pandemic. Many bookings included catering showcasing regional specialties. Their customers like local food from local producers, which fits in the customisation value segment.
Step 2: Work out new offerings
What else can you offer to deliver value and cater to your customers’ tastes? This might be something new to your business, new to your market or new to your industry.
It’s common for service businesses to look into product lines, and product businesses to explore services that align with what they offer.
Example: The events company owner decides to offer meal box subscriptions with:
- ingredients from local suppliers
- recipes by catering staff.
If the meal boxes prove popular, the events company could explore new options like limited edition sauces or cooking classes with its head chef.
Step 3: Assess your business set-up
Having identified options to meet the needs of your target customers, check if your business can provide the new product or service — and what might need to change to do so.
First, check if you have the key resources required to offer this new product or service. Do you have enough staff, do they have the right skills?. For example, the events company pivoting to meal bags looks into redeploying staff to packing and deliveries. The owner also assesses their local food supplier network.
Next, check if your production set-up can deliver what’s required. You may have to dial up aspects that align with your new plans, and reduce or close those that don’t. For example, the events company might renew its lease on a small commercial kitchen to make sauces and prep ingredients for its new meal bags. But they sell equipment previously used to make celebration cakes for events.
Step 4: Assess your market position
Figure out how to position your new product or service to stand out in the market. Think about the customer segment you decided to focus on in step 1 — people motivated by price, or quality, or customisation.
Make sure your product or service delivers to this segment of the market. Ditto your operations, production and key resources, including staff and suppliers.
Also think about your competitors, old and new:
- Might any current competitors pivot in a similar way?
- Who will you compete against with your new offering? How are they doing?
- How will your new offering boost your point of difference?
Example: The events company was previously known for hosting gatherings in a converted apple cool store. While not low-priced, their events cost less than competitors using fancier venues.
As they want to showcase local foods in their meal boxes and at events, they likely need to move up the price bracket in relation to competitors. They will also need to carefully market their meal boxes to catch the attention of people keen to support local producers. This sets them apart from their competitors, who have pivoted to offer virtual events.
SOURCE: BUSINESS.GOVT.NZ
