Four years ago, entrepreneur Jack Delosa was faced with losing almost A$1 million every month.
The dire circumstance forced The Entourage Founder to take drastic action that involved cutting staff and rethinking his business model. Because of this tough pivot, the educational institution for entrepreneurs is now more viable than ever.
"That was an incredibly challenging period for us," Delosa tells The CEO Magazine. "We had to go from 90 people down to 40 within a day. We needed to restructure the business and we needed to build new products because we didn’t have anything that was going to last longer than a few months.
"In 2016, we were as bad as we could be."
The global COVID-19 pandemic means the business founder is facing new challenges, although not nearly as critical as those of four years ago.
"We’re challenged by it, but we’re not having our existence threatened," he explains. "We’re in a fortunate position where we don’t need to worry about our own survival, and we can focus on providing leadership to our members and community."
Understanding business categories
"Businesses need to know which category they fit into," Delosa says. "While we’re all in the same economy, not all businesses are affected equally."
The entrepreneur says to overcome difficulties, executives need to first understand the current situation the business faces in order to be put back on the path to success.
"If you’re going to charter a course of where you are and where you need to be, you really need to know where you started from," he says.
The business author believes every company can fit within four categories, which are the starting points to boosting business.
Category 1 – distressed
"Survival is threatened and they’re fighting for existence."
Category 2 – challenged
"You’ve seen a decline in sales, but if you manage it well the existence of the business shouldn’t come under threat."
Category 3 – doing well
"These are the ones who have seen a slight uplift as a result of what’s going on with COVID-19. This could be digital marketers or professional services."
Category 4 – boom
"You’ve experienced a huge uplift as a result of the current climate."
Overcoming the novel coronavirus
While businesses are beginning to reopen across Australia and various parts of the world, the struggles are far from over.
"You need to become really prepared to make significantly lower sales for the next nine to 12 months and you need to prepare to have a heightened customer attrition – so you’ll lose more over the next few months," Delosa says.
After understanding the cash position of your company, the entrepreneur suggests repositioning the brand accordingly.
"Pivot your products and services to be contextually relevant to the fields we find ourselves in. For some, that might be turning a store into an online store," he explains. "Market accordingly and you go from a business being in distress to a business doing well."
Some businesses will be able to reinvent themselves during these testing times while thought leaders will be given the push they need to give their ideas legs.
"If 2016 taught me anything, it’s that periods of our greatest challenges are periods of our greatest growth," Delosa reflects. "Challenge forces innovation. Necessity is the mother of innovation.
"I think we will see more grassroots innovation over the next 18 months than we’ve seen over the past 10 years at an SME level.
"The innovation that will occur out of this and the growth that will occur is unprecedented in our lifetime."
Is the pivot truly sustainable?
A member of The Entourage successfully transformed their bricks-and-mortar store into an ecommerce site bringing in A$100,000 of sales and thousands of new customers in the weeks after Australia went into coronavirus lockdown.
Following the move online, the company saw an increase in social media followers and an increase of registered email addresses.
"While that period will be a spike in revenue and may not be sustained, what will absolutely be true is that going online through different platforms will better position them than if they didn’t pivot at all," Delosa says.
For business leaders, the way to overcoming pandemic challenges will be the key to thriving.
"The number one skill is to make the best move when there are no good moves," he explains. "As human beings, when we’re placed under fear and stress, our natural response is to become less decisive and retreat. If you do that in this kind of environment, your business will die.
"Become more decisive than you usually are and come at it with a spirit of pivot. Lean into it; don’t retreat but run towards it.
"Entrepreneurs that lean into it will come out of it faster, smarter, better, maybe back a few years financially but it will set them up for much higher levels of success in their lives."
Feature image: Facebook