Adapting Your Business for Change

The need to adapt your business or pivot in a new direction entirely can result from several situations. Here are a few of the most common along with challenges and possible solutions:

• Economic Downturns: Recessions, inflation, or shifts in the economy can affect customer spending, supplier or inventory prices, and your overall cash flow.
  • Example challenge: You sell homemade candies, and economic conditions have impacted the cost of your supplies and inventory.
  • Possible solution: You could examine whether there is a less expensive way to package your products. Perhaps branded stickers that could be applied to plain boxes and bags would be more cost effective packaging than branded boxes and bags.
    
    
• Changing Consumer Behavior: Changes in consumer needs, preferences, or values can impact demand for your products or services. 
  • Example challenge: You own a residential cleaning business, and you notice a shift in preference for non-toxic, eco-friendly cleaning products. You may need to adapt in order to retain your customers.
  • Possible solution: While these products may be more expensive, you could also update your services to offer customized cleaning plans (green, pet-friendly, allergen-free) with specific pricing.
    
    
• Competition: New or aggressive competition may necessitate a reevaluation of your market position, pricing strategies, or product offerings.
  • Example challenge: You own a restaurant, and a national restaurant chain opens nearby, offering similar food at lower prices. You may need to adapt your business.
  • Possible solution: You could differentiate your menu by highlighting locally sourced ingredients, family recipes, and a unique menu; enhance the customer experience in your restaurant; and perhaps offer loyalty rewards to retain customers.
    
    
• Supply Chain Disruptions: A supply chain is a network of all the people, organizations, and activities involved in creating and delivering a product or service to the customer. If suppliers are unable to meet demand, or if logistics are disrupted, your business may need to find alternative solutions or adjust operations. Visit MOBI’s Business Operations session to learn about supply chains, supply chain management, and how to create a resilient supply chain (meaning a supply chain that can withstand, adapt to, or recover quickly from disruptions).
  
  
• Technological Changes: As technology evolves, businesses must keep up with digital transformation, whether by adopting new tools, systems, or platforms to enhance their services or streamline operations.
  • Example challenge: Your business only accepts cash payments, and you find you are turning business away because customers don’t have cash.
  • Possible solution: You may consider adding electronic payment options for greater flexibility.

As a business owner, one of the most important skills you can develop is the ability to recognize early warning signs that indicate a shift in your business might be needed. Often, these signs come long before a major crisis hits, and addressing them early can help you adapt before it’s too late. Below are some common warning signs. 

• Declining Sales or Revenue
• If you notice a steady decline in sales or revenue, this is often one of the first signs that something in your business might need to change. This could be due to a range of factors such as reduced customer demand, increased competition, or shifts in market conditions. Keep an eye on your cash flow, as it can provide an early indication that a business model adjustment or change in offerings is necessary. (Visit MOBI’s session on Accounting and Cash Flow to learn how to track cash flow.) Regularly track your sales data and compare it with past performance to understand when it is within a range that is acceptable for your business operations.

• Customer Feedback and Complaints
• Your customers are often the first to notice when something is amiss, and they can provide valuable insights. Pay attention to negative feedback, whether it’s complaints about your products or services, long response times, or dissatisfaction with your brand. Customer satisfaction is a powerful indicator of business health. A shift may be needed if you hear recurring complaints or if there’s a significant drop in customer loyalty. Visit MOBI’s Customer Feedback and Experience session to learn more how to collect, track, and take action on customer feedback.

• Market Trends or External Forces
• External factors, such as shifts in industry trends, customer behavior, or even global events, can indicate that your current approach is no longer as effective. For example, the rise of digital platforms, sustainability concerns, or changing economic conditions could signal that your products or services need to be adapted to meet new demands.

• Staff Turnover or Low Morale
• If you notice members of your team (employees and/or contractors) are leaving your business at a higher rate or show low morale (the overall attitude, satisfaction, and motivation of your team), it can indicate problems within your business that need to be addressed. This could be related to changes in company culture, leadership issues, or dissatisfaction with the business’s direction. You may need to adapt if your employees no longer feel motivated, or if you struggle to attract or retain talent. Be sure to offer opportunities for your team to provide feedback on the work environment and areas that could be improved.

• Outdated Technology or Processes
• If you’re using outdated technology or inefficient processes that no longer serve your business needs, it’s a clear sign that a shift is needed. Tech advancements and more efficient processes are constant, and businesses that don’t keep up may start to fall behind. This could impact your ability to compete effectively, deliver excellent customer service, or maintain efficient operations.

When adapting to change, business owners should focus on several key considerations:

• Understanding the Root Cause: Before you make changes, understand what’s driving the need for adaptation. Is it a market shift, internal inefficiencies, or external pressures like regulation changes or consumer expectations?
  
  
• Assessing the Impact: Consider how the changes will affect your customers, employees, and other stakeholders. Will this adaptation improve their experience, or will it create more challenges?
  
  
• Evaluating Resources: Do you have the financial and human resources to adapt? Can you invest in new technology, training, or marketing efforts? Analyzing your resource capacity will help you decide whether to make small adjustments or implement a large-scale transformation.
  
  
• Long-Term vs. Short-Term Needs: Some adaptations may be short-term fixes, while others require a more substantial pivot. Consider whether your changes are a response to a temporary challenge or a permanent shift in your business model.
  
  
• Risk vs. Reward: Any change comes with risks. Before you commit to a new direction, think about the potential rewards and whether the risks are manageable. Having a backup plan or contingency strategy can help mitigate any unforeseen outcomes.

Understanding when to take action is just as important as recognizing the signs that change is necessary. It’s easy for business owners to wait or hope that challenges will get better on their own, but timely action can make all the difference in a business’s ability to adapt successfully.

Here are some tips for knowing when to take action.

• When You’ve Collected Enough Data
  • Before taking drastic action, make sure you’ve collected enough information to support your decision. Analyze data in categories such as sales and revenue trends, customer engagement and feedback, operational performance, financial data, and market conditions. Don’t act solely on gut feeling—take a strategic approach by backing your decision with solid data. It’s a good idea to create a list of key performance indicators (KPIs) for your business in the above categories and track them regularly. If you notice a downward trend, take a closer look and start planning changes.

• When You See a Shift in Your Industry
• If you notice that your competitors are adjusting their strategies or a new trend is emerging in your industry, it’s a good indicator that action is needed on your part. If others are responding to changes and you don’t, you could fall behind in the market. Set aside time each month to research competitors, industry trends, and customer preferences. If you see competitors making changes that align with shifting customer demands, consider how you can adapt similarly.

• When You Start Losing Customers
• If you begin to lose customers to competitors, it's essential to act quickly. This could mean adjusting your product offerings, pricing strategy, or marketing approach to recapture your audience. Track your customer retention rates and engagement regularly. A sudden drop is a clear sign that action is needed. Reconnect with your existing customers to learn why they might be leaving, and use that information to adjust your approach.

• When You Have a Clear, Alternative Solution
• It’s important to have a clear plan before making a major change. If you see the signs that a shift is necessary but aren’t sure how to proceed, take time to develop an alternative solution that can address the problem effectively. Whether it’s improving your product, shifting to a new marketing strategy, or adopting new technology, knowing what steps to take will help guide your transition. Brainstorm several potential solutions to the challenge at hand and evaluate their impact, feasibility, cost, and long-term benefits. Once you’ve identified a clear path forward, take action confidently.

• When You Have the Resources to Implement Change
• Change often requires resources—whether that’s money, additional staff, or time. If you’re facing a situation where change is necessary but you lack the resources to implement it, don’t rush the process. Review your budget, resources, and capacity before taking on significant changes. Prioritize investments that will deliver long-term value and make sure you’re ready to fully pursue the adaptation needed.

As noted through several examples provided earlier in this session, there are many causes and conditions that can necessitate a change in your business. The way you should address the need for change will vary depending on your business and the specific cause, and in every situation there may be multiple options. As you brainstorm and consider the possibilities for your business, here are a few common ways to pivot:

• Diversify Your Revenue Streams: If you rely heavily on one product, service, or customer base, diversifying, or creating alternate sources of revenue, can reduce your risk. Consider offering new products, expanding to new markets, or introducing alternative ways to sell, like subscription models or online services.
  
  
• Embrace Technology: Many businesses have adapted by integrating new technologies. For example, shifting from in-person services to online platforms or investing in ecommerce can help businesses maintain a strong presence while reaching a broader audience. Visit MOBI’s Ecommerce session to learn more about selling online.
  
  
• Revise Your Business Model: Sometimes, the entire business model needs to be adjusted. For example, if your physical store traffic has dwindled, a shift to a direct-to-consumer model, delivery service, or online store might make sense. Additionally, subscription or membership models can provide a steady stream of income.
  
  
• Strengthen Relationships with Customers: Maintaining trust and connection with your customers during tough times is crucial. Increase your communication—whether through social media, email newsletters, or personal outreach—and let them know how you're adapting to meet their needs. Offering flexible payment options, loyalty programs, or personalized services can help maintain customer loyalty.
  
  
• Innovate Your Marketing: In times of change, traditional marketing might not be as effective. Think about how you can creatively market your products or services. This could mean increasing your social media presence, leveraging influencer marketing, or adjusting your messaging to focus on empathy, sustainability, or convenience—whatever resonates most with your audience during this time. Visit MOBI’s Marketing and Advanced Digital Marketing sessions for more information.
  
  
• Cut Costs without Sacrificing Quality: In some situations, a business may need to cut back on certain expenses. However, it’s important to do this strategically. Consider renegotiating contracts with suppliers, eliminating less popular products, or finding more efficient ways to operate without compromising the quality your customers expect.
  
  
• Empower Your Team: When businesses adapt, it’s important to involve your team in the process. Share the vision for the changes, listen to their feedback, and provide necessary training. A motivated and informed team will be your greatest asset in navigating through challenges.
  
  
• Stay Flexible and Monitor Progress: Change doesn’t happen overnight. Set clear milestones and regularly evaluate your progress. Be open to making adjustments as you go. Staying flexible and responsive will allow you to continuously improve your business model and operations.

After implementing a change or adapting your business, it’s essential to continue regularly tracking your KPIs to measure the impact of the change. Gather feedback from both customers and employees to assess how the adjustment is resonating and whether it’s meeting their needs. Stay flexible and monitor progress closely, making adjustments as necessary based on real-time results. Regularly evaluate your new approach against your initial goals to ensure that it’s improving your business operations, increasing customer satisfaction, and driving growth. Finally, be prepared to continuously review and adjust your approach, making minor changes and refining it as you learn from the outcomes.

Adapting your business in the face of challenges is a critical skill that can lead to growth, resilience, and long-term success. By understanding the driving forces behind the need for change, evaluating your resources, and implementing practical strategies, you can navigate obstacles more effectively. Remember, adaptability is not just about surviving in tough times—it’s about positioning your business for a stronger future, no matter what comes your way. Additional information regarding navigating difficult obstacles for your business can be found in MOBI’s Saving Your Business session.

THE TOP 10 DO'S

1. Monitor early warning signs by tracking sales, customer feedback, market trends, and employee morale.
2. Collect enough data to back your decision before taking action.
3. Be proactive in addressing challenges early before they escalate.
4. Be open to experimenting with new business models or revenue stream
5. Embrace new technologies to improve your efficiency and customer experience.
6. Focus on customer feedback and use it to guide your business decisions.
7. Involve your team in the process of change to gain support and new perspectives.
8. Create a strategic plan for adapting, including long-term goals and immediate steps.
9. Evaluate your resources before implementing changes to ensure you can support them.
10. Communicate openly and frequently with your customers, employees, and stakeholders about changes.

THE TOP 10 DON'TS

1. Don’t ignore signs of change until the problem becomes too big to manage.
2. Don’t make decisions without data; always base your decisions on solid evidence, not just intuition.
3. Don’t resist necessary changes because you’re attached to the old way of doing things.
4. Don’t overextend financially; avoid making costly changes unless your business can support them.
5. Don’t overlook customer feedback; ignoring complaints and feedback can damage customer loyalty.
6. Don’t overlook the power and opportunity of innovation.
7. Don’t overcomplicate adaptations; keep changes simple and manageable, especially during tough times.
8. Don’t limit your adaptation to only short-term solutions, ensure changes benefit your long-term success.
9. Don’t underestimate the importance of company culture; low morale and high turnover should never be ignored.
10. Don’t forget to track the impact of changes, monitor progress and be ready to adjust if needed.

If you are currently writing or have developed a business plan, consider taking a moment now to include any information about your business related to this session. As a reminder, MOBI’s free Business Plan Template and any worksheets, checklists, and templates from this course are available for you to download. Just visit the list of MOBI Resource Documents on the Resources & Tools page of our website.

Here are some key terms and definitions used in this session or related to this session:

For some tips for small business owners download this Adapting in the Midst of Change infographic.