'Pivoting' Is a Cliché That Small Businesses Should Think About AnywayBy
In its 70 years on Mulberry Street, the Newark Nut Co. survived fires, relocations, and the World War II deployment of its immigrant founder, Sol Braverman. But when the peanut roaster and retail store was bulldozed in 2005 to make way for the New Jersey Devils’ Prudential Center, it looked like the family business was a goner.
Almost a decade later, however, the company has been reborn under the helm of Sol’s grandson, Jeff Braverman. He took the nut business online, rebranding as Nuts.com, and expanded its product line from 100 to 3,000 items, boosting sales tenfold to nearly $30 million in 2013. “We lost our retail storefront business, but it turned into an amazing thing for us,” Braverman says.
The word “pivot” is so worn out in startup circles that it became a running gag this spring on HBO’s Silicon Valley. But it’s not only tech founders who can switch gears, update business models, and reach new customers overnight. Quick thinking and nimble shifts have saved many traditional small businesses as well.
The squeeze of competition forced change on John Marick, chief executive of Oregon-based Consumer Cellular, a mobile phone carrier founded in 1995. The company did OK in the Pacific Northwest region, but as the telecom market became dominated by a few national carriers, Marick knew he needed to find a niche to differentiate his company.
In 2008, he hit on a counterintuitive strategy: “Most companies were going after power users, the youth market and early adopters. We decided to try marketing to 50-plus users,” Marick recalls. “It’s not a sexy demographic, so no one else was focused on it and that set us apart.”
He negotiated a deal to become the exclusive wireless provider for AARP, meaning he could market his cell phones and no-contract wireless service to the senior organization’s members and use its logo. Sales took off immediately, he says, growing from $50 million in 2008 to $335 million in 2013.
Meeting AARP’s standards meant that Consumer Cellular had to boost its customer service and offer extremely consumer-friendly contracts. Doing so has earned the company top ratings from Consumer Reports for the past four years. “We’re just about to hit our 1.5 millionth customer, and 80 percent of them are 50 and above,” Marick says. With more than 100 million Americans 50 and up, he feels he has plenty of room to keep growing.
Sometimes change is forced on small business owners who have no choice but to react quickly or go under. That was the case for Todd Ebert, CEO of Amerinet, a health-care group purchasing company based in St. Louis. In 2012, its headquarters was hit by a hailstorm that left 10,000 holes and flooded the interior. (Ebert was running a half-marathon in a downpour 300 miles away in Nashville when it happened.)
Amerinet had a disaster plan and a backup generator in place, and three months earlier had finished digitizing all its paper records. But when employees were unable to work on-site, the business had to go virtual overnight—or die.
“We had to upgrade our network and supply laptops very quickly to employees who did not have them,” Ebert says. For the next nine months, while its office was repaired, Amerinet’s 100 employees in St. Louis worked from home and held meetings in local Starbucks and Panera Bread outlets.
By the time the building was rehabbed, those employees were lobbying to continue telecommuting. “I’m 59—I’m the old guy of the group—and I was skeptical. But we did a study that showed productivity did not suffer, it actually went up,” Ebert says.
Amerinet sold its refurbished headquarters and leased a space about 25 percent smaller, where the executive team reports most days and employees have desks they can use as needed. Ebert holds regular lunch meetings to facilitate socializing and keep everyone in the loop.
Since the storm, retention is up, costs are down, and employees couldn’t be happier with the arrangement. “Being semi-virtual has helped with recruitment, even among the senior-level people I interview,” Ebert says. “They like that idea a lot.”