Coronavirus (COVID-19) is hitting businesses hard. Demand for many traditional products and services has dwindled while social distancing has caused premises to shut.
While there is lots of government support available for businesses during the outbreak, some companies are reviewing whether it’s time to start a new line of business.
This approach, also known as “pivoting”, offers a way to open up new markets and new customers, even in circumstances like the current outbreak.
There can be several obstacles to overcome though, and you need to have the right checklist in place before you start.
Got 2 minutes? Use our new revenue streams checklist to get you quickly heading in the right direction
Got 10 minutes? Take advantage of our checklist and structured how-to guide below
Why pivot and how do you get it right?
Necessity may well be a common answer right now.
If coronavirus has hit your primary revenue stream or core products hard, then it’s likely you’re already considering this option. There are several examples out there of companies already pivoting.
Doing this as a precautionary measure is another reason. Maybe your industry hasn’t been hit hard yet, but you want to take some steps in case it is.
Either way, this is a significant decision to take, especially if it involves retooling your factory, machinery or teaching employees new skills. The important thing, even during a crisis like the coronavirus outbreak, is not to rush in before you’ve thought through some key things.
The checklist: What to know before targeting new revenue streams
Asking yourself a few key questions will ensure you’re ready to go at this full throttle.
- Do at least some baseline research on where demand might be and what type of demand isn’t being filled right now. Think as well about how this might change if current conditions persist for several months
- Work out how much investment you will need – and how much you’re willing to risk – to enter a new market
- Seek at least one second opinion before committing to your new market
Things to consider when pursuing a new revenue stream
Starting – and investing in – a new product line or service isn’t to be taken lightly. However, there are already lots of examples of businesses doing this during the coronavirus outbreak.
While the timescales are a lot quicker, there’s still a similar step-by-step process it’s worth taking to what is essentially product or service development.
The good news is that lots of examples are already emerging of companies opening up totally new revenue streams during this crisis.
If you’re going to follow their lead, here’s a step by step guide.
Step 1: Research your options
Right now, the most obvious area to pivot to involves meeting a crisis-related demand. That includes essential supplies, medical-related goods, or technologies and services that assist remote working.
You do have other options as well though. What you decide on comes down in part to good (albeit quick) research:
- Online or e-commerce sales are well worth considering. If you don’t sell this way yet, it’s maybe time to start. Using an existing platform like Amazon Marketplace, or Shopify offers a quick route to market
- Close parallels to existing lines are likely to prove easier. If you can adapt or stretch from what you already have, staff will be more familiar and likely have complementary sales and production skills
- If you are going down the ‘war effort’ route, look at groups that have been set up like Start-ups Against Corona for ideas and inspiration
Step 2: Decide on your new route and get started
In normal times, you might follow something like the seven-step process to new product development described by Idea Reality.
Even in the current crisis, this kind of thinking holds, you just have to accelerate each step. Barcelona’s IESE business school lists five steps to follow which includes some valuable reminders, even in a time of pandemic. As they put it:
- “If no one wants or needs your product, it is bound to fail”. Right now, ‘need’ probably trumps ‘want’ as a powerful motivator
- “Predict future buying habits as best as possible”. Again, very tricky right now but trying to think like the Kano Model on product development may help
- “Get opinions from users”. This is probably even more relevant during the outbreak when minds and needs narrow
- “Create prototypes and assess how they perform”. The dash towards hand sanitiser manufacturing is a good parallel here. Quick formulation and testing, followed by quick roll out
- “Decide on the positioning of the product or service”. IESE talk about factors like emotional versus functional factors. Right now, the latter feels more important
Step 3: Get everybody ready
Your workforce has probably already been through a rollercoaster over the past few weeks. Short, sharp, high intensity days and weeks may have been followed by being dispatched home to work. Or, if you’re still trading from the office or factory, emotions and concerns will be running high.
We’ve published advice elsewhere on Be the Business about looking after staff in the current climate. You’re going to need to consider the following as well as you gear up for new production, training and sales:
- Set aside enough time to bring them up to speed. You need staff excited by this and ready to dive head long into it
- Consider the best motivating factors. If you’re pivoting to things like hand sanitiser or maybe a community transport and logistics scheme, then being part of the ‘war effort’ is going to fire people’s imaginations. If your pivot is simply about keeping the business going and people in jobs, that’s a delicate but powerful motivator too
- Don’t forget training or other development. People may be unsure about making or selling new products, so take the time to go through what’s going to change and offer help as required
- Follow-up after the early stages. Hopefully, your pivot goes well and you see success quickly. But even if you do, not everyone on the team may feel that success
The American magazine Fast Company offers some valuable tips on motivating staff in a crisis or time of change. Its point about “focusing on one key success a day” is well worth bearing in mind.
Step 4: The distribution, marketing plan and launch
Normally, you might expect several weeks or months of planning a new product launch. A marketing budget and a detailed plan might well be part of it too.
In the absence of time (and probably budget), consider the following instead:
- You already have an existing customer base, so use it. They might not want or need your new product, but they may know others who do. Customers are your best advocates, so use them if you can to spread the word. Likewise, your suppliers may offer new routes as well
- Speak to the Government if you intend to help with the war effort. A dedicated team has been set up to coordinate businesses turning their hand to helping. This is your starting point if you’re going down this route
- Speak to your local Chamber of Commerce and other business organisations for help. They are coordinating businesses across the country and have lots of advice in the current situation
- Don’t forget your website and other marketing channels. Website updates are cheap and quick to make, and they give you something to point potential customers to quickly
Success in adversity
No one is sure how long the current situation will last, or how deep the impact will be.
The good news remains that there is a wealth of government support available for business.
Beyond this though, finding alternative revenue streams is well worth the effort. It’s far from the ideal circumstance in which to do so, but even now, a lot of the standard tips on how to develop and launch a new product still hold. Timeframes are shorter and markets are narrower, but there are opportunities to pursue if you can.