August 6, 2020 | Small Business COVID Resiliency: 12 Ways to Reimagine Your Business Model | By: Matthew Wagner, Ph.D., Vice President of Revitalization Programs |
As we approach the five-month mark of the global pandemic within the U.S., Main Street businesses are still adapting to the ever-changing realities of operating a business during a public health crisis. Adjusting to reopening guidelines that change on a regular basis as conditions unfold, coupled with lingering safety concerns among many consumers and an economy hampered by millions of unemployed, has resulted in a highly volatile and cloudy situation for small businesses to navigate as they try to pivot to new consumer norms.
In a normal business life cycle, as many as 20 percent of businesses undergo a pivot at some point in the lifetime of the company, according to research by the American software entrepreneur Mitch Kapor. While the coronavirus crisis has required nearly every business to adjust their business model, the research suggests that making a pivot is a normal practice and one that can result in great success. And in fact, the ability to pivot is a valuable business skillset that can provide additional long-term resiliency.
Here are 12 ways businesses can reimagine their business models:
Obvious but will Remain Relevant
1) Create an E-Commerce Sales Channel – In our April 2020 report, “The Impact of COVID19 on Small Business,” we reported that nearly two-thirds of small businesses did not have an e-commerce sales channel. And for those that did, the channel represented between 1% and 25% of sales volume. As such, while obvious, e-commerce represents both a short-term pivot and one that will remain critical post-COVID. For small business owners seeking guidance, the space is rich with new resources from large tech players like GoDaddy’s Stand for Small site that offers tools and expert advice from a growing number of companies dedicated to helping businesses grow their online presence. Also, consider Ebay’s Up and Running program or existing platforms such as Etsy or Facebook to quickly ramp up e-commerce sales with an eye toward further pivots post-COVID.
2) Offer Delivery – What was primarily the domain of small restaurants and national restaurant chain and franchises at the onset of COVID, many retail segments ranging from bookstores to grocery stores are now also offering delivery as a way to reach consumers under stay-at-home orders. While an added expense, consumers have likely formed new habits around convenience during this time that we should expect delivery service to continue post-COVID.
3) Offer Pick-Up – Like delivery services, “pick-up” will be a value-added service offering that many small businesses will maintain post-COVID. Place managers and local government officials will need to figure out how to ensure that pick-up is still possible when district and downtown parking demand inevitably increases post-pandemic. For example, managing parking turnover through “pick-up zones” will be a critical feature to ensuring that this new business pivot remains relevant long-term from a physical space perspective.
4) Add Outdoor Dining – In a University of Maryland/Washington Post poll from April, consumers indicated that indoor dining was by far the most uncomfortable business to patronize upon reopening proclamations around the country. As such, an obvious pivot for restaurants is to leverage any outdoor space, whether public or private to provide a safer alternative to indoor dining. As we have seen across the country, municipal governments have been very active in providing for sidewalk and street access for use. While a short-term remedy, winter and any future demand on parking will determine its staying power as a long-term pivot.
Leverage Your Uniqueness
1) Launch a Subscription Service – A model for many businesses ranging from wine of the month clubs to dog treats and toys, subscriptions represent an intriguing model for many Main Street businesses that can provide consistent, unique product offerings on a rotating basis. Wister’s, a floral business located in South Boston, Virginia, offers customers a “Vase of the Month” club membership. Subscriptions are offered month-to-month, or in 3-, 6-, and 12-month options complete with a new vase and unique floral arrangement. Offering this service reduces normal pricing for the customer but represents known recurring revenues for the business further building customer loyalty. As another example, restaurants could offer a flat rate for a set number of meals per week or per month with limited menu choices. This limits expensive food inventory given the set meals and provides some guarantee of demand, limiting waste.
2) Move to Small Scale Production – For many existing businesses, especially in the food sector, there may be the opportunity to take something you were known for within your store/restaurant and produce it more widely for outside distribution. Euphoria Coffee in West Union, Iowa did just. Leveraging the growing popularity of their coffee sold in their café, they are producing and bagging their roasted coffee for customers to buy online and are seeking out wholesale opportunities.
3) Additional Pivots for Restaurants – The following represent a number of additional pivots for restaurants to consider (But might transfer to other business segments):
a) Offer a combination of precooked dishes with sides or additions that could be prepared at home using ingredients supplied by the restaurant.
b) Create virtual product demos – short videos that show the chef walking you through meal preparation creates an experiential opportunity for customers.
c) Leverage your supplier/vendor networks to offer groceries and fresh products for downtown and district residents.
Leverage Your Space
1) Start a Ghost Kitchen – Sometimes referred to as dark kitchens and virtual kitchens, ghost kitchens represent a new opportunity for struggling restaurants, social clubs, and/or churches with commercial kitchens to leverage their facilities as a revenue source. Ghost kitchens are commonly considered a professional food preparation and cooking facility set up for the preparation of delivery-only meals.They contain the kitchen equipment and facilities needed for the preparation of restaurant meals but has no dining area for walk-in customers. According to Technomic, sales via ghost restaurants from 300 facilities in the United States will rise in 2020 by a projected 25% each year for the next 5 years—an estimated $300 million in yearly sales. User targets for the space include caterers, small-scale food producers, and food trucks.
2) Provide In-Store Space for Pop-Ups – There are a number of factors in which this opportunity makes great sense for many mom and pop retailers. First, the rise in the number of side-hustle businesses pre-COVID has only continued to accelerate with the growing number of recently unemployed looking to start their own business, resulting in a growing supply of pop-up vendors. Second, adding new inventory may be difficult for many small businesses struggling with sales—pop-ups can help keep stores fresh and drive additional traffic as well as revenues for sales. Note there is an emerging service industry dedicated to connecting crafters, artisans and artists to in-store pop-up opportunities. HandMade in Farmville, Virginia, specializes in those connections as well as hosting virtual and in-store pop-up promotional events to activate spaces.
3) Transition Space from Tourism to Support Remote Workers – With the tremendous expansion of remote workers, consider offering your downtown Airbnb unit or hotel conference space at a low-cost daily rate for local remote workers. As we have all witnessed from daily Zoom calls, many remote workers are perhaps needing a break from family, may be uncomfortable with sharing a co-working space, need enhanced and/or stable internet service, or simply looking for a change of pace to work
Leverage Your Know-How Skills
1) Share Your Know-How with Content – We all are doing much more at home now—cooking, gardening, and home decorating. While there is a lot of YouTube and other platform content for consumers, a trusted voice coming from a local retailer brings authenticity and can help maintain that customer relationship. While it may not bring customers sales in the short-term, customer loyalty will remain post-COVID. In addition, it may be a great way to attract new customers. For example, a bike store could create a video on how to tune up an old bike (and for bike stores it may relieve the heavy demand and backlog you have now). Make the video accessible on your website or Facebook page if they subscribe to your newsletter or provide an email address.
2) Produce Specialty Kits – As leisure time grows for some due to lack of commute and spending more time at home, consumers are developing new hobbies ranging from the creative arts to cooking. Leverage your inventory supply and critical know-how to shift from things like in-store instruction to kits people can use at home. Examples range from how to make one of your restaurant’s favorite dishes complete with ingredients and how-to guide, or instructions on how to make your own clay pottery creation.
3) Host an Auction – Add some excitement by recreating the in-person experience of discovering a bargain or unique product by hosting your own QVC-style “Auction.” The owner of Blue Willow Boutique, based in Maryville, Missouri, created her own mini version of QVC using Facebook Live to create a buzz for her items. She learned that by assigning a number to each piece of clothing she showcased was the easiest way for customers to tell her exactly what they wanted in the video chat feed. As an added bonus, as items were snatched up in real time, she created that “buy it before it’s gone" feeling.
Leverage New Consumer Trends
1) Launch a New Venture – Every business and product has a life cycle. Pivoting your business model is a highly effective way for extending that life cycle. However, we have also seen that COVID has created new business opportunities based on everything from the rise in remote work to increases in outdoor recreation, gardening, and cooking from home. Evaluate your skills and know-how to retool in a new direction that leverages the profound shifts occurring as a result of the pandemic.
2) Add a Social Component to Your Business – People are looking to support those in-need, whether it’s through food banks, shopping local, or donating plasma. If you are a small-scale producer, consider following the Toms model of “buy one and give away another” to someone in need. Some farmers at local Farmer’s Markets are doubling the federal Supplemental Nutrition Assistance Program (SNAP) vouchers in order to supplement and provide additional nutritional during this time of need.
Like most things in business, a little bit of strategy can go a long way. Rather than taking a try and see if it works approach, we would suggest that while many of these scenarios can work across a variety of business segments, it’s always good to evaluate your own situation with an understanding as to your current position, product mix, expertise, and certainly the ability financially to execute. Also, seek out guidance and further assistance as you examine your pivot options. Free counseling and guidance are available through Main Street partners like Small Business Development Centers, Women and Minority Business Centers, Veteran’s Business Outreach Centers and SCORE Chapters.
Disclaimer: This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for legal, insurance, liability, tax, or accounting advice. You should consult your own legal, insurance, tax, and accounting advisors for guidance on these matters.
Meet the Author
Matthew Wagner, Ph.D., Vice President of Revitalization Programs: Matthew Wagner, Ph.D. serves as Vice President of Revitalization Programs at the National Main Street Center, Inc. In this role, he is responsible for driving the Center’s field service initiatives including the development and delivery of technical services for Main Street America and Urban Main programs, directing the Center’s new research agenda, as well as professional development programming through the Main Street America Institute.
Read Matthew's bio.