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Adjusting to the new normal by pivoting

In changing times, you have to adapt to the new normal in order to survive. Your Startup Guru

Pivoting in Business

I just got off a call with a client to discuss a brilliant pivot for the business he purchased using a business plan I created for him last year.  The pivot was an adaptation to the new normal and to mitigate the losses from the delayed renovation and opening caused by COVID-19.  A pivot usually occurs when a company makes a major change to their business after determining that their product/service isn’t meeting the needs of their intended market.

How to Pivot

This call reminded me of some other recent examples of businesses changing their operations to survive and sometimes thrive in the COVID-19 economy:

  • You might have heard of the now-famous Goat-2-Meeting.  That is the creation of Sweet Farm Foundation, a non-profit animal sanctuary in Northern California that is offering videos of their animals to be used for Zoom meeting backgrounds.  Due to the popularity of their service, sales are slightly higher than this time last year.
  • Lumen Couture makes wearables, which are fashion items that embed electronics and technology into stuff you can wear.  They design fancy, red-carpet-type gowns that shimmer and sparkle when you’re walking for very high-end events and ceremonies.  Because events and ceremonies are now on hold, they shifted most of their business to making masks, which people do want now. They designed a black mask that has a screen across the front almost like a scoreboard, saying things like, “six feet away.”
  • Golem Bookshop, an independent bookstore in Turin, Italy started free deliveries by bicycle in Turin in response to a shutdown order in March and began offering curated selections of books – themes like revolution, obscure authors you’ll love, indie books.  Customers loved the selections so much they started shipping orders all over Italy.  Normally Golem sells about $7,000 worth of books per month but in April, they sold almost $20,000 worth of books; it was actually their best month ever.

In times of crisis, coming up with a profit or even surpassing last year’s sales is ideal but anything to mitigate the cash hemorrhage is fine.  To pivot, for example, a business might have to change its revenue model which means potentially canceling contracts with existing vendors.  This is one of many crucial decisions that the business has to make because once the pandemic passes and the current new normal makes way for the new-new normal, it may be difficult to get supplies in time and at the original pricing.

Each business is different and solutions are not one-size-fits-all.  Contact us and let’s figure out what the best steps your business should take to adapt to the new normal.

Just a friendly reminder

To buy local today if possible

Another successful launch

raffle rush

Raffle Rush is a useful app where if you’re at an event, you can enter draws to win exciting prizes throughout the day.  All you need to do is download the app, sign up and scan the relevant QR code. And voila! You’re ready to up your chances of scoring big. Your email is your sole ticket to success!

Your Startup Guru worked with Anthony to create a business plan which allowed him to find financing to help launch Raffle Rush.

A great episode from a great podcast

Peloton - Your Startup Guru

NPR’s How I Built This is a fantastic podcast that brings the stories behind some of the world’s best-known companies. How I Built This interviews innovators, entrepreneurs and idealists about the movements they built.

Peloton co-founder:  John Foley

In this episode, they interview John Foley, one of the co-founders of Peloton; the fitness and media company that you’ve probably seen commercials for.

In the interview, they greatly undervalued John Foley’s network and experience but nonetheless, this episode touched on several relevant topics my clients often face.  I picked this episode because it was a little more in-depth and enlightening than other episodes in that Foley he talks about:

  • having the discussion with this wife about moving in with her parents if the company fails,
  • how everyone is similarly able including Harvard MBAs,
  • the CEO being the janitor when starting out; something I discussed in a previous post about bootstrapping
  • how VCs are not very adventurous,
  • how Peloton is only recently profitable after 7 years

There are also great questions asked by interviewer that touches on market trends such as arcades no longer thriving due to user experience-to-price dynamics (i.e. video game consoles vs arcades due to quality of experience), penetration/awareness strategy which led to their distribution model given that malls are making an industry correction, and lastly the trademark question: “How much of this was because of your intelligence and hard work, and how much of this was just luck?”

FYI, I always discuss market and industry trends, launch and penetration strategy, as well as bootstrapping in all my business plans.

The entire podcast can be heard here

The Importance of Planning

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Excess inventory, cost management, and other issues are a reality for most businesses.  When uncontrolled, a business can face inadequate cash reserves and even bankruptcy.

To mitigate these issues, proper industry and market research coupled with financial planning for contingencies is crucial for any business.  Whether you’re in the ideation phase or are already up and running, knowing how much to allocate to the various activities a business engages in is difficult so contact me and let’s create a strategy that works for your business.

Festivals, Farmer’s Markets, Conventions, oh my!

ultra-music-festival-week-1-miami-fl-2013
Ultra Music Festival – Miami, Florida

It’s summer and festival season is here.  Events are big business with over 87 million people attending trade shows, conventions, & conferences; while 32 million people attend music festival.  Some annual industry and market stats:

  • Trade shows, conventions, conferences
    • Number: 284,600 annually
      • There are 248 convention centers in the US with a total of 56.29M prime exhibit space.
      • The majority of conventions (21%) have 1,000 – 2,499 attendees
    • Participants: 87,728,000
      • Average attendee spends 8.3 hours viewing trade show exhibits
      • 81% of trade show attendees have buying authority
  • Music festivals, fairs, and other festivals
    • Number: 1,413 annually. Music festivals alone total over 800 annually
    • Attendees: Over 102 million people annually. 32 million people go to at least one music festival annually.
      • Attendees spend on average, $207 a year on live music events and digital music/streaming
      • 1/3 of all festival fans go to more than one festival per year
  • Farmers’ Markets
    • Number: +8,400 markets that convene regularly
    • Attendees: 310,800,000
      • Farmers’ market shoppers spend a mean dollars/week was $25.38
      • Shopper visit an average of 6.12 times/month

What It Means To You

Events are targeted.  So attendees are in your market, many in your target market.  Renting a booth, depending on the event, can be fairly inexpensive.  This is an economical means of raising awareness for your product/service for the following reasons:

  1. You are not locked into a commercial lease contract
  2. Can test the viability of your product/service
  3. Get targeted market feedback

Some of what you may need depending on the event:

  • Mobile merchant services such as Square
  • Email collection method
  • Banners and booth appeal
  • Ready-for-market product/service
    • Or compelling marketing materials (videos, images, samples) of your product/service.

Read more about festivals and marketing.

Contact me and let’s see what strategy works best for your business.

The importance of niche-ing

Question:  How should new products/services be created?

A)  Make a novel untested product/service then find customers for the product/service?

Or

B)  Find a group of customers, find one of that group’s unmet need, then create a product/service to address than unmet need?

Answer:  B

Explanation:  The development process of the product/service will take time regardless of choice A or B.  However, with choice B, the likelihood of having to rework the product/service to make it more closely meet the needs of the target market is lower.  Also, with choice B, you have a better idea of the size of the target market.  Having a market large enough to grow your business is very important.  More on that below.

A great example of choice B is Girls Auto Clinic.  Girls Auto Clinic is a brilliant combination of female-focused auto repair shop and salon.

Girls Auto Clinic - Your Startup Guru

Founder Patrice Banks felt what many of us feel when car issues come up:

“I felt like an auto-airhead. I hated all my experiences going in for an oil change, being upsold all the time for an air filter,’ she said. “Any time a dashboard light came on, I panicked.” – Patrice Banks, Girls Auto Clinic Founder

Of course many people come up with business ideas like how Patrice did:  through personal experience.  However, where most people fail to consider is that their own experience might be too niche.  In other words, the market might be too small.  How do you know if your market is too niche?  Market research.  Market research is a process of analyzing factors such as demographics, purchasing habits, direct and indirect competitors, macro and microeconomics, and other elements.  As much art as science, thorough market research is a critical step before moving forward with any concept.

Market research is one of the many services Your Startup Guru offers at the most competitive prices in the industry.  Contact me and let’s find your niche for your new business.

Market adjustment in the retail space

According to a new Credit Suisse report, up to 25% of U.S. shopping malls may close in the next five years.

newsouthchinamall-downemptyhall

What are the reasons?  Of course Amazon and online shopping is a major reason.  However, another factor is mall overexpansion.  Currently there around 1,200 malls in the US.  Between 1970 and 2015, the number malls grew more than twice as fast as the population.  As such, it is predicted that within the next 10 years, that number will decline to 900.

Of course brick-and-mortar retail stores will never completely disappear because of the needs listed above and because of the fact that humans are social by nature.  Just the type and make-up of retail stores will change.  Possibly pop-up stores (a strategy utilized with great effect by Halloween stores) will become more common?

Another considerationmacys_dep_store

What to do with vacant buildings?  That’s a lot of land that could be used for other use.  Maybe mall owners will lower their rental rates.  In some areas of Manhattan, retail rents have declined 10-15%.

More housing? Closures from major chains like Macy’s and J.C. Penney are pouring up to 37 million square feet of space back into the market.  That could reduce some housing costs.  Although, generally more expensive housing markets have greater discretionary spending which is often used for shopping.  Also, the time and cost to demolish existing structures, rezone, and rebuild into residential properties along with its infrastructural linkages is not insignificant.

Some mall owners have indicated that vacant properties will be renovated and updated in efforts to attract new tenants and raise rental rates.

What to do?mindmap-2123973_640

Who knows that the future will bring but keep in mind that juggernauts like Walmart, Macy’s, and Sears are affected so starting a service or online store that doesn’t compete with what Amazon sells is a safer option.  Brand your own product (e.g. Bonobo, Dollar Shave Club), and controlling your own distribution is another option (of course be aware of knock-offs).  B2B businesses (e.g. no one buys industrial components at malls) are insulated from mall closures.

Services such as dentistry, restaurants, car mechanics, large difficult-to-ship products such as mattresses, etc. will remain (so far) an insulated industry.

Analyses such as what I have done above is a small and cursory part of the industry/market analysis and strategy consulting services I provide to clients.

Business PLAN vs. Business MODEL

Control Leave Mark Production Planning Marker Hand
Image courtesy of Max Pixel

 

Sometimes my clients ask for a business plan but aren’t yet seeking funding or aren’t beyond the ideation/conceptualization stage.  This is where a business model is helpful.

“I have an idea for a product/service.  How do I monetize?”

At this stage, you don’t need to exactly know the details of marketing strategy, distribution channels, location, etc. unless it is crucial to your business model.

At the ideation/conceptualization stage, you need to know who your market (i.e. customers) is, growth rate of the industry, who your competitors are, the major costs to bring your product/service to market, and any other major hurdles (e.g. regulatory) that might be a barrier to entry.  Business models are 30,000 foot views for seeing if the business is feasible and viable.  Why decide on the color the napkin if you’re not sure if there’ll be a wedding, right?

Once we have a good understanding of IF the business is likely to succeed, then we can investigate further and do a feasibility study.  Feasibility studies go even deeper to include details of the operation, marketing, product/service, and other pertinent information specific to the industry/sector that your company will occupy.  Feasibility studies can be easily adjusted into a business plan by adding revenue projections and investment asks.

Business model should not be confused with revenue model.  Revenue model is a piece of the business model.  In other words, how the company generates revenue:  production, subscription, advertising, commission, etc.

 

 

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