The COVID-19 pandemic has presented entrepreneurs, and the entire world with many challenges apart from taking care of their health — there’s the challenge to work efficiently from home and another for pivoting the business — and all are essential to keeping the economy alive.
Pivoting has actually been done before and is simply another way of innovating your business. Of course, pivoting a business is easier for some than others as those with steep learning curves may just need a few days or weeks to study, test, and implement their new strategies and products. For example, brands like Louis Vuitton, Zara, and Prada had no need for drastic changes as pivoting simply entailed changes in patterns and type of cloth to make masks and protective gear for medical frontliners. As opposed to say make-up brands like L’Oreal and Estée Lauder that reconfigured their facilities to manufacture hand sanitizers instead, which require major changes to inventories at hand.
After almost two months of lockdown (with a few relaxed restrictions), the facts tell us that businesses in medical supplies and equipment, pharmacies, groceries and supermarkets, and logistics are among the top booming industries during this pandemic.
The question for entrepreneurs in the non-essential industries is whether to jump the bandwagon or not.
BUT FIRST: Pivot if Feasible and Sustainable in the Short-term
It’s tempting to go full speed now that your business may be on a total operations holiday, however, make sure your business is equipped and ready to take it on, and that you’ve got enough cash flow.
- Checking for feasibility entails a SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis that can determine your competitive advantage amid market opportunities and threats for your new offering.
It’s simply asking the right questions like is your business really suited for pivoting to industries that have the lowest exposure during this pandemic? What roles will managers take? Who will oversee the upskilling and operations? Will it require a skeletal force and if so, what measures will you implement to ensure the safety and protection of your employees?
- Depending on which business you are interested to pivot to, make sure that you can deliver on value. Especially if you plan to create Personal Protective Equipment (PPE) for medical frontliners, ensure that these comply with the Department of Health (DOH) and the Philippine General Hospital’s standards for PPE.
How else can you provide value? The best way is to play up on convenience. Come up with both conventional and unique ways to provide customers with convenience during the Enhanced Community Quarantine. Even if Metro Manila transitions into a General Community Quarantine after May 15, many Filipinos would still be cautious to fall back on their old purchase and lifestyle habits.
E-commerce will only get stronger in the coming days and so will the logistics industry. If you don’t have an online purchase portal, look for the right partner to provide this service. Regardless if you’re pivoting in the short-term or not, it’s about time you set this up, because this will be one way to set up your business for the new economy.
- A third step before going into pivot action would be to define your target customers. It generally follows that if you selected the winning industries to pivot to during this recession, then you’re targeting the general public as well. Coming from a totally different industry or not, there’s an opportunity to find new customers to cater to, that means scaling down on a specific segment so you can also focus on specific functionalities and customise your offerings.
Remember, this is ideally for the short-term. As you tread a new industry, remember to regularly observe the market for supply continuity and demand movement.
Short-term Pivot Go-to’s
1. Produce an essential item
The medical supplies and equipment may fall into market saturation when infected rate numbers begin to decline. Daily statistics show that the Philippines is not yet on that path and while a very small number of the population has been tested so far, the great need for PPE and medical equipment continues.
Depending on your estimated sales volume for the industry you’ve set your business reconfiguration to, make sure that if it’s in the top three essential businesses, that you produce these at 100 percent quality and at rapid speed.
Lightings and furniture businesses have also pivoted to distributing UV-light lamps, which is fast becoming a trend amongst middle to upper-class households for round-the-clock disinfection of their homes. Similarly, tech and appliance businesses are creating sanitizing gadgets, which is at the top of the list for those who need to get back on the road soon.
If you decide to pivot into creating sanitizing gadgets, this might end up becoming a fulltime pivot so make sure to set your products apart in the market and this might just become not just a new source of income but growth in the future.
2. Provide an essential service
Angkas pivoted to delivering food and essential supplies instead of driving Filipino commuters, mainly so that its motorcycle drivers can earn for their daily living expenses. If you’re in the trucking business and haven’t done so already, partner with manufacturers in the essential industries to deliver to distributors on time. If you have a fleet of vehicles, consider partnering with other businesses that have pivoted to producing essential goods, to decongest the buildup of thousands of deliveries for food and other essential goods.
Many established online businesses have also pivoted their businesses for good like Thinking Machines, which specialises in data science and AI platforms that help organisations make better informed decisions. They are currently helping the DOH identify areas with high vulnerability to COVID-19 but have low access to adequate health facilities.
You may say that companies who have offered their services to the government for free are usually well-established companies with good liquidity. Weigh in your needs and the benefits of pivoting by providing a much-needed service. If your company needs cash flow, then taking this route is not the best solution. If you are able to operate with your current at the moment however, squeezing some corporate social responsibility can go back your way through a larger network of contacts, brand awareness, etc.
3. Expand Your Business Offering
For those among the essential businesses continuing to operate, you can expand your business by providing paired options or value packages that have risen in demand during the ECQ and will most likely stay relevant as society continues to follow social distancing guidelines. This would be most relevant to food and restaurant industries. Pivot away from selling goods that will continue to be irrelevant to people’s lives and
While other businesses have strategically downsized to make their cash flow more efficient, others have gained traction by producing more — content. Now that many are home, many look for content on lifestyle tips, trends, fitness, etc. Digital content is one channel your business can retain loyalty and reach out to more customers during this time.
Expanding also means enabling your business to have a digital presence, whether it's through having an e-commerce platform or engaging with customers online.
Getting Down to Business
Pivoting or innovating your business to stay for good will most likely lead you to leveraging through working capital financing. Zero liquidity may have led you to consider the thought of pivoting and to implement this great idea, an entrepreneur must first get financing.
During this time, speed and convenience are key factors to getting a business loan. First Circle offers working capital financing where applying and getting the loan requires neither a face-to-face meeting nor collateral.
First Circle provides online short-term financing through our Purchase Order and Invoice Financing products. Since the ECQ we have provided our clients with flexible payment terms. We try to adjust to our customers’ needs whenever possible.
As long as you’ve done the important steps above to ensure that you’re on your way to reopening your revenue stream, you should be on to a good start. It should remind you of when you first started your business: hands on deck, tight management, a lot of reconfiguring and experimenting to get things right and make your products and services better.
Need business financing today? Apply for one with First Circle by clicking here.