This Week@Work; Pavlo took you off the beaten track, and you’re not going alone. In a tough business environment, you can’t tackle every single challenge alone. Surround yourself with trusted allies to get out of your head – it makes the climbs more manageable, interesting, and rewarding.
This Week@Work Pavlo had a number of conversations about business valuations, and how to design your business so that you can generate income AND deepen value for a premium valuation for exit. If you think, plan and act both in the present and future, you can have your cake and eat it.
If you’re struggling to reach your customers, to tell them about your product or service, you’re probably focussing on the wrong issue.
First, you need to understand precisely what problem you solve… for who… and how you do that, consistently… which will enable you to figure out how best to reach them so that your message lands.
It has become one of the worst pieces of jargon through the Covid-19 pandemic and lockdown, and one that Pavlo has steered clear of. But at its simplest, the word pivot means you need to find revenue from a different place and space.
The word was popularised 15 years ago on the West Coast of the USA where the startup industry was booming. Investors into that market were engaging in what is called portfolio investing, but which Pavlo calls ‘roulette investing’ – throwing money at a host of business plans and ideas. When these failed, the investor would ask: ‘What Now?’ and the startup would say: “We have to pivot”. And this is possible in the startup environment because they have nothing to lose as they haven’t built up a legacy business.
It is very different when you have an established business with the baggage of your business, in these instances, you need to pivot very differently.
Listen to Pavlo discuss how establish businesses did, and should pivot on The Money Show on 702 & CapeTalk:
To make his point about how different businesses pivoted, Pavlo reminded us of a massive phenomenon at the very beginning of lockdown: everyone was stockpiling toilet paper. Why? His view is that in a crisis, the fist thing we do is to ACT to avert the crisis, we do something, even if it is misguided to make us feel as if we have some form of control over the crisis.
Pavlo witnessed similar behavior among business owners. He saw established businesses making pivots based on their own biases. Their history and legacy were affecting their decisions and actions as they tried to find ways to bring in revenues.
The first grouping were those businesses that had invested plant and equipment that the business owned. Consider a fleet of trucks, or workshops or fridges. The tendency was to look at the equipment lying idle, and figure out what they could use that for to make something new or store something different.
Very often those types of businesses are run by people with an engineering background, and these are people who are good at working with their hands… making something or doing something. So making or doing something new was their place of safety – their toilet paper stockpile.
The 2nd pivot grouping was with those who had created their own product or service. Whether it was baked goods or a scientific invention, or a service innovation. These business owners went back to their product or service and figured out how to make the product or service better. Whatever their strength was, they focused their energy there, that was their safe space.
Finally there were pivots where business owners moved towards their customers and suppliers. They sought to understand what those suppliers were doing differently, and how they needed to pivot to be relevant to them.
Pavlo believes that going to your customers is always a good idea as that is where the revenue is going to come from first. And he shares a technique you can apply to get it right.
Pavlo has developed an incredibly simple but effective technique called The Onion Peeler to understand where your strengths lie in your business.
Every business has a core and strategic competence. It might be in your services, skills, or with your customers. Without it you don’t exist at all as a business.
The middle layer is not core but absolutely strategic. For example – technology, accounting, inventory management or whatever it is that enables your business but is not what your business does.
The outer layer is what you can shed, it is not core nor strategic. You can buy it as and when you need it.
If you apply this to your approach to pivoting – take what is essential to your business and take that to your customers and ask them what has changed about their needs that mean they no longer need your core offering, in the same way.
The customer that guides your pivot will be the first one to pay for the pivoted offering.