Pivoting & Repurposing a Business
It is no secret that Covid-19 has had a big impact on many SMEs in the UK. A recent study by the Office for National Statistics showed that nearly 40% of businesses in the UK had a substantially lower turnover. With the current level of disruption likely to remain for some time, many businesses are adapting their practices to continue trading in some form.
For businesses which have been negatively impacted by Covid-19 and are considering how to adapt, they have two main choices:
- Continue trading – providing the same product / service in broadly the same way to the same customers (e.g. restaurants providing take away service); and
- Repurposing or pivoting the business to provide a new service (which is now in high demand) to a new customer
In either case the benefit of adapting is that the business remains open, employees are retained, and the organisation is seen as being agile and innovative.
In the case of repurposing there may also be an additional benefit of strengthening the values and reputation of the business as it has risen to support the community in a health crisis.
Some businesses will be able to continue trading and repurpose. In this case the business owner should consider whether the business can do both activities or have to make a decision between the two.
When a business chooses to continue to trade it means that there is still demand from the customer and (somehow) they can deliver that service. The obvious example is a restaurant that now provides take away food or a pub providing alcohol sales for take away. However, many businesses can continue to provide a service where it may not be immediately obvious.
A hairdresser for example may still be able to sell their product range online, provide an online tutorial for basic hairdressing and even do virtual hairdressing appointments.
E R Grove clients Music Education Solutions® were initially extremely concerned about the impact of Covid-19 as the majority of their income relies on live training events. However, they were able to adapt these to be delivered via Zoom, and as a result have yet to lose any of the work that they had booked in for this period. They also already had a small suite of online self-study courses which had been a very minor part of their overall business for the last 5 years, and chose to discount these by almost 90% in order to support the education sector. They are now facing unprecedented demand and have actually had to expand their team in order to be able to keep up with all the extra orders!
Repurposing / Pivoting
When a business chooses to repurpose, this is to address an increase in demand for a product / service as a result of Covid-19. Some of the high-profile repurposing’s have been to address the UK Government Ventilator Challenge (e.g. McLaren and Dyson), and the hand sanitizer shortage (e.g Brewdog and Absolut Vodka).
Knowing there was a PPE shortage, and wanting to help the NHS and the general public, E R Grove clients Central Tapes & Adhesives have added PPE Face Shields and Hand Sanitiser to their list of products which you can purchase here. Since they are still taking orders for their usual products, this is a great example of a business that has been able to continue trading and repurpose!
Many of the examples above also have a positive PR impact, however, for a business owner trying to find a way to keep their business operating it is important to find a substantive pivot with sustainable financial performance.
Determining the selling price for the new product / service is a key sensitivity. Some repurposed businesses have decided to give away their product (e.g. BrewDog producing hand sanitizer is giving it away to the NHS) and in other circumstances the business is free to select the price.
Whilst high demand can often lead to pricing power, in these exceptional circumstances it is key to remember the wider context of the crisis and the potential reputation impact of setting prices too high.
When considering any change, a business should ensure it has the necessary permissions and approvals before progressing. In some cases, the government has made this easier – for example extending permitted development rights for restaurants so they do not need to apply for planning permission to provide take away food.