Metamorphosis_Body.jpgby Jen Hickey.

 

As an entrepreneur, your ability to speed up and slow down and master those sharp curves is what keeps your business running. But what happens when market forces call for a transformation of your business? Rather than trying to retool that old model to fit new demands, it may be time to shift gears and head up that hill if new growth opportunities present themselves. How such change is navigated will determine whether you’ll be able to make that climb or run out of steam. 

Metamorphosis_PQ.jpg

Selling to your customer’s customers

Barbara Kantor launched Vedante Corp. after moving to Boulder, Colorado from Los Angeles. Building on her 20 years in the wholesale apparel industry, she expected to sell her fashionable “super-reflective” outdoor gear for people and their pets to the same market. And Kantor’s products proved to be a hit at her first tradeshow in September 2008. But then the bottom fell out from the economy and those retailers were afraid to commit to orders. So, to prove product viability to investors, Kantor began selling directly to consumers through Amazon as a third-party seller. Soon, her products were outselling all the other competitive brands, so Amazon began buying direct; her products have been in the top 10 of their category on Amazon ever since.

 

“Even though I didn’t know anything about e-commerce, I learned quickly by seeing what works and eliminating what’s not working,” notes Kantor. “There’s been a huge flux in the industry. It used to be taboo to compete with retailers. Now you see wholesale manufacturers setting up their own e-commerce sites. The old retail rule book doesn’t work anymore.”

 

While Amazon remains Vedante’s biggest customer, Kantor also sells directly to other e-commerce sites and retailers in select U.S. cities. She has also outsourced shipping/packaging to a fulfillment center just outside of a large, centrally located transportation hub—the Denver International Airport. “As I don’t have a lot of overhead, I can ramp up and down very fast depending on what’s happening in the market,” Kantor points out. “While it was not part of the original business plan, the e-business model has helped us grow.”

 

Change can be a small business’s best friend

“Whatever a business starts out as, in terms of size, scope, focus, or control, the competencies needed from leadership, employees, and the organization shift,” notes Karl A. Schoemer, president and founder of VisionQuest Solutions and author of Change Is Your Competitive Advantage. “Change is not singular, but a constant process that will need to be repeated over and over again, depending on what the marketplace demands.” Businesses that can foster a “change adaptive culture’” will be able to identify market and consumer trends earlier and pivot to meet those demands more quickly and effectively. “How well a business can get their people engaged in the change process becomes part of their competitive advantage,” says Schoemer.


Unexpected problems can be golden opportunities

Steli Efti and his partners founded SwipeGood in Mountain View, California in late 2010. Their product, which allowed users to round up credit and debt card purchases to the nearest whole dollar and donate the change to charity, achieved some initial growth by having nonprofits advertise SwipeGood’s service in their marketing emails. As more and larger charities partnered with them, however, those new opportunities did not translate into growth. So, rather than directly targeting consumers, they decided to shift to an enterprise approach and build out a a corporate-giving program. To do that, they needed a sales team and different technological support to convince businesses to buy their solution. But Efti and were frustrated with how time-consuming the process was. That’s when they realized there was a much larger problem that needed solving..

 

While still running SwipeGood, they began devoting one day a week to exploring this perceived hole in the marketplace  “We thought even if the idea didn’t pan out, it would be rejuvenating to explore this new opportunity,” explains Efti. “Once we saw how much momentum and traction it had, we gradually devoted more time to it.” After exhausting all options for growing SwipeGood, they decided to completely to abandon it and devote all their resources to a new venture, Elastic, Inc., which offers startups sales communications tools and a scalable sales force, with the entire platform managed via the cloud. “Often great new ideas fail because they weren’t marketed successfully,” Efti points out. “We sought want to level the playing field for startups, which don’t have the time or money to go out and market and sell their product.”

 

To avoid confusion in the market, the company didn’t officially rebrand itself until the end of June, even  though its internal emphasis had been focused on the Elastic concept for the last eight months “We wanted to be completely sure this idea would work long term before we made it public,” Efti notes. “We didn’t want to cause confusion in the market.” Elastic has grown from its three original founders to 15 employees and has another 20 to 30 freelancers who work on various sales campaigns. Elastic has helped close over 300 deals for 13 different startups, generating millions in sales. And this has also made their investors happy. “While the idea is important, they invested in our team first,” notes Efti.

 

Failure is merely an invitation to a different kind of success

Often roadblocks can lead entrepreneurs to solutions that create better opportunities for growth than their original idea. In late 2011, Amelia Dunne and her partner set out to create a real-time, geo-based mobile app for small businesses to promote deals to local users. However, they found it difficult to find the right people and get objective feedback on the viability of their product.

 

“Most of the people we talked to seemed to like the idea,” notes Dunne. “But we couldn’t get 10 businesses to say yes to the product.” And when they talked to other startups in the Bay Area, they found they were all going through the same time-consuming process of posting ads on Craigslist or meeting potential customers through their networks. Dunne and her partner realized a better tool was needed for idea validation and in February  they started working on the new concept using the code from their original app.

 

“We were going to build it just to move forward with our original idea,” explains Dunne. “But we started getting calls from startup friends wanting to use it before it was even finished. It was clear this was a much larger, more immediate problem that needed solving.” In May, Dunne and her partner publicly launched AskYourUsers.com, a marketplace where businesses can find and hire anonymous LinkedIn professionals outside their own networks for online feedback and consulting tasks. Within a month, thousands of micro-consultants had already signed up, and more are joining every day.

 

Those small businesses that can ‘pivot’ quickly to changes big and small in their industry and larger economy will not only survive but thrive. “Businesses should be constantly looking at what their customers are asking of them and what they need to do to deliver,” advises Schoemer. “Change has its own momentum. You can’t stop it, but you can steer the process in a more productive direction.”