Did you know that in Australia over the last two financial years, over 2,100 retail businesses closed their doors or went into administration? To put it in perspective, that’s more than mining and manufacturing combined. Whether you want to blame it on globalisation, digitisation or poor management, the fact remains, it’s a pretty alarming statistic.
Eternally optimistic though, I try and look for the meaning in the message…
As a business owner, my greatest takeaway from this statistic is that more of us have to have the:
- courage to admit ahead of time when our business is on a downhill trajectory;
- discipline to revise our strategy and tactics; and
- conviction to execute a new plan.
In other words, we need to be comfortable pivoting.
If you’re not familiar with the term, pivoting is often described as the move from plan A to plan B, most often when there is acknowledgement that your business model isn’t working. And while it is common for start-ups, pivoting is both a tense – and exciting – moment because often the move to plan B is characterised by a newly formulated strategy for the business; one which considers how to better solve customer problems and how to build scale via a differentiated strategy.
Three years ago my husband and I launched our first ecommerce business. We were wildly excited and dare I say completely green. Every decision we made seemed to result in a dead end. We hadn’t completely understood what our ideal customer wanted from our product and we inadvertently built a (very costly) donkey.
Our first pivot came when we agreed it was time to cut our losses, stop throwing good money after bad, and change our strategy.
We repositioned our brand, sought out new customers and built new products specifically for them. Sales started to roll in. Slow at first, then with more momentum. Our growth in Australia led to sales in Europe and the USA.
But despite the sales, we were still finding it tough. The market we’d selected was a niche… and even at a global scale was too small to significantly grow beyond a hobby business. Somewhat dramatically, we forecast the slow and painful demise of our business unless we again pivoted into a more lucrative market.
Earlier in 2017, we did just that. We pivoted into a new market, but this time we created a new category for our product offering, one that hadn’t existed prior. And to complement our transformation, we changed our branding, our product mix and our price positioning. In essence, we reshaped our entire business.
On the surface our pivots might seem like knee-jerk reactions to sluggish sales. Or excessive overcorrections of poorly laid strategy.
But we see it differently.
We continue to see a bunch of similar sized ecommerce businesses all attempting to compete toe-to-toe until the last business is left standing. You only have to look at the stats on small business survival rates to know this isn’t a game you want to play.
Ultimately we’ve decided that to survive – and to significantly grow over the next three years – we need to differentiate our brand from the same-same propositions in the market.
We also believe that a great brand needs to be validated by great product. As part of our pivot strategy we elected to increase our price points so that we could focus on quality and premium positioning (particularly important at a time when global goliaths are preparing to enter the Australian market and dominate via a low cost price strategy). We can’t beat them, we won’t join them, and so we’ve got to differentiate from them.
And we are also banking on there being a significant market of customers who get what we’re about and who are excited to join our community and go on the journey with us.
Pivoting can be highly emotional and personally challenging; looking at yourself in the mirror is one thing, but looking your colleagues, friends and family to admit that your plan A missed the mark, is a bitter pill to swallow.
But with every newly formed pivot to plan B (…or C or D) comes the excitement and the promise that this time — with more experience and more street smarts — the foundations are being reinforced to future-proof our business.
