How to find a new market during COVID 19

If you are one of the businesses impacted negatively by COVID 19 its likely you have already made several changes,

That may be enough for you to stabilise your business. Or it may not. You may need to find a new market during COVID 19.

Its usually quite hard to decrease costs fast enough and far enough to compensate for a revenue slide.

If you can’t move fast enough, a 10% revenue slide means a 10% operating profit reduction (EBIT). And a 10% operating profit decline is often a 50-100% reduction in the profit dollars in your business. Or put another way – it can be the difference between being profitable or being dangerously close to below break-even and losing money.

In the situation where there is a rapid revenue shock to your business, there isn’t time to wait until your current market recovers. What you need to do is find new revenue as fast as you can.

New revenue can come from any of the three following places

Solution 1   A new product or service to your existing customers

Solution 2   A new business model to your existing market

Solution 3   And/or one or both above to a new set of customers or market

Let’s take a look at a few examples,

• A Gin distillery starts making hand sanitiser (Solutions 1 and 3 above – new product plus potentially new customers – certainly a new market)
• A packaging group starts making face masks and PPE ( 1 and 3)
• A catering company starts offering home delivery (2 and 3)
• A retail outlet launches a dark store (2)

But how should you go about generating strategy alternatives to find a new market during COVID 19? And how should you go about choosing the right bets to place to minimise your risk?

Many Australian businesses turn to an Innovation process in these situations. These can be good to generate ideas but innovation, by its nature, is quite customer focused and incremental. This may not be what is needed right now. Innovation is best when it is Solution (1) above that you are looking for. Its tough for typical innovation processes to generate alternate business models and can be problematic if you don’t have access to the ‘new customers’ and ‘new markets’ in Solutions (2) and (3).

Here are some quick hacks for you to get both,

• The generation of new business models and
• A sense of predicted success in deploying them to attract new market segments and customers

Hack 1 – Identify your current business model(s) and try to place your business into a new square in the matrix

Hack 2 – Identify which of these play into permanent, not cyclical,  trends.

For example – if your Business Model is PHYSICAL : connection you could try DIGITAL : connection

And no doubt you would identify a shift to online purchase. This one is straightforward so go deeper and try each business model matrix square

Hack 3 – when testing which new business model you might launch, first identify the characteristics of your industry (eg high barriers to entry, high fixed assets, exemplary service standards) and then check if other industries that have these characteristics have your proposed business model in operation and how successful they are. This is one of the most powerful ways to get a shift to new markets and customers.

Its hacking because its fast, not because it isn’t sophisticated, as it draws on all your existing strategy smarts.