Pivoting is the Key to Economic Survival in Uncertain Times

About 25 years ago, a gentleman arrived in my office requesting business assistance.  He told me that he made wooden bowls and needed my advice on marketing them. I asked him if he could make anything else from wood, and he told me yes, "but I like making bowls." I tried my hardest to convince him that he needed to look at other products, but he would not compromise and insist on specializing in this single product. Unfortunately, this gentleman never found a market for his bowls and was quickly out of business.

About five years later, another client came to me wanting advice after starting a new business enterprise during an economic downturn. The client had lost his job and had parlayed his meager severance package into a business opportunity. He had purchased an old brick building on the outskirts of town after taking a home landscaping course and then proceeded to start a small retail garden center in an already saturated garden center market.

This client revealed to me that his first year in business was a real struggle and that he quickly realized that a four-week home landscaping course at the local community college did not prepare him for his role of a landscape designer, contractor, nurseryman, and business manager. This entrepreneur mistakenly thought that people would break down his business doors to purchase his plants or request his landscape services. When the anticipated revenue stream from landscape and garden center sales failed to materialize, he realized that he needed help in making a business pivot.

Pivot is a verb meaning "to turn." When you pivot in business you are changing direction and business pivots can be either a long-term planned change in direction like a gradual course correction or they can be quickly enacted in response to emerging issues or trends. In the case of this specific garden center enterprise, the pivot needed to be quick and decisive, or complete business failure was imminent.

When you pilot a small boat, you can change course direction very quickly when an obstacle lies in your path. If you are operating a large ocean liner and an obstacle like an iceberg appears immediately in front of you it may be difficult to pivot or turn away from the obstacle without hitting it. This garden center was a small, single operator business, essentially a dinghy amidst a sea of large ocean liners and icebergs. This entrepreneur could keep "making bowls" like the first client and lose everything or make the fast pivot to find an "open ocean" and new business success.

A fast business pivot can be risky, but if the alternative is a business failure then consider exploring a way to mitigate the risk before making the pivot. In the case of this garden center entrepreneur a quick competitor analysis in the marketplace revealed that no garden center in his area carried pet food, aquatic plants, or birdseed. He immediately re-allocated his retail display space and began tracking sales within the retail sales area to govern future changes in his retail product mix. These small business pivots made an almost immediate change in his cash flow. Pet food sales provided a regular boost in weekly revenue and the addition of the bulk birdseed and bird feeding supplies provided a winter retail niche that his competitors had not seized on. When the client began selling pond and bog plants and later goldfish and koi the following spring, he was focused succinctly on retail sales because of his gross failure as a landscape designer/contractor. Within weeks after selling his first water lily came a request from a customer about building a water feature on their property. A few short months later his garden center became synonymous with water gardens and pond construction in the surrounding community. The landscaping equipment and trucks that had been under-utilized the previous season were now operating 6 days a week installing water gardens and aquatic landscapes across a multi-county area.

Sometimes a business pivot arises out of an extreme necessity and at other times it is part of the natural evolution of the market as it matures. COVID-19 forced many businesses to make quick unplanned pivots to dodge looming "icebergs". Smaller more agile businesses often were able to pivot more quickly to take advantage of opportunities for curbside pick-up, backyard vegetable production, and contactless service than large less nimble firms. While we don't know what lies ahead in 2021, stay agile and be prepared to make a business pivot to ensure green industry profitability in the coming season.

Photo: Tom Ford, Penn State