In 1998 during the dot-com boom, Chris Mittelstaedt, founder and CEO of The FruitGuys, began delivering farm-fresh fruit to offices in Silicon Valley as a healthy alternative to sodas and sweets. Business quickly took off, but just three years later he found it necessary to make a major business pivot.
When the dot-com bubble burst in 2001, Mittelstaedt lost half of his clientele overnight. He had to start delivering product himself. The FruitGuys also struggled during the Great Recession of 2008.
Despite experiencing market dives that could have been business busters, today the company delivers to more than 3,000 companies nationwide, with warehouses in 13 cities and annual sales just over $30 million.
“Because we were smaller and only located in the Bay Area at the time, the dot-com bust hit us harder than the recession," says Mittelstaedt. “In both cases, the instinct to survive and do anything and everything required to stay alive became the driving force."
Rather than close down, Mittelstaedt hunkered down.
“The ability to do a business pivot while managing expenses in a tight economy goes way beyond multitasking," says Mittelstaedt. “Pivoting is a twist and a rotation at the same time. The only way to stay afloat is to give nothing less than all of the energy, focus and skill you have to muster."
Dips in Business Can Bring Great Lessons
Whatever the circumstances that lead to a business pivot, entrepreneurs find that the need to reassess and refocus brings invaluable experiences.
Such was the case with Miko Branch, CEO of curly and textured hair product line Miss Jessie's. She almost lost her brand shortly after launching several years ago. Now Miss Jessie's is a multi-million dollar business. Branch attributes her business's success to the stumbles the company experienced along the way.
—Eric Casaburi, author
“If it weren't for our failures early on, we wouldn't have experienced the level of success and acquired the innovation necessary to create a business from scratch," says Branch, who co-founded Miss Jessie's with her late sister, Titi Branch. “We became trailblazers and leaders in the beauty business because we always think outside the box and came up with a master plan."
There's no better feeling than when a company pulls out of a death spiral and soars, adds Terry Duncan, president of Duncan Management Inc., a business development company.
“The revived, inspired and rewarding metamorphosis of a once struggling business to a stable company is highly satisfying," Duncan says. "The lessons learned from this experience are comparable to what you learn starting a new business."
Steps to Ensuring a Strong Business
Being prepared and ready to execute a business pivot at a moment's notice can lead to success. The following tips can help achieve such a balance.
1. Be open to new ideas.
“The best way to recover from faulty business steps is to be open to new suggestions," says Duncan. “There are always lessons to learn. The experience leads to rewarding adventures that fortify the core of your business."
Branch agrees. “Be open to new concepts and innovative thinking," she says. "You never know where your next big idea will come from. Try to understand how these new concepts or approaches can enhance and improve your business."
2. Maintain a positive cash flow.
“I believe that running a business based on making money where you are, rather than hoping someday you'll make money at scale, allows for quick decision making when it comes to difficult choices and pivots," says Mittelstaedt. “This method has kept me honest about where we are and what we can do at any given time. It also enables us to quickly adapt to change."
3. Believe in your product and take necessary risks.
Alex Pollak is CEO and founder of ParaDocs Worldwide Inc., an events medical services company that staffs events across the country. When he started his business, he invested his savings in operational insurance.
“It was an incredibly expensive investment that, if it didn't pay off, could have ended my business," says Pollak. “The first year, we had two events requiring high premiums and barely covered the costs. That was scary, but it taught me to believe in my product and take risks."
4. Embrace the business pivot.
“No company rises straight to success," Casaburi says. “There's always some regression, but those times create pivots and necessary changes. A business pivot gets your company to the next level.
“Temporarily making less money is painful, but often good things come from being uncomfortable," he continues. “When your business dips, it triggers resourcefulness, and that strengthens the fate of your company."
Read more articles on pivoting.