For entrepreneurs who are willing to take a risk on a big idea, the concept of shifting directions and changing up everything can be terrifying. Even so, customer habits change rapidly, along with digital trends, so a tolerance for risk is essential.
From an ice cream store that took a leap of faith beyond its state border to an intimate line that pulled its product from 700 retail stores based on a gut reaction–you’ll feel inspired by these daring women who pivoted their companies and changed everything.
Expanding into a new market before you’re ready
When the co-founder and CEO of Portland-based Salt & Straw Ice Cream, Kim Malek, was first building her business for three years, things started off slowly. Or rather, as she put it–her team was barely holding down the fort for their three locations in Oregon. Considering that she had cashed in her 401(k) and had a garage sale to drum up funding, everything she had was invested in her dream company. But then a phone call arrived from an idol that changed everything. At the time, they were a small team that wasn’t interested in moving beyond their home city, but Joan McNamara, from the iconic Joan’s On Third Los Angeles, asked to meet with Malek.
“She explained that she’d been tasting ice creams and really liked ours, wanted to know if we would be able to work with them on a program to scoop ice cream at their restaurant,” she explains. Though Malek didn’t feel certain, she couldn’t pass up on the chance, so along with her head ice cream maker (and cousin), they flew down to chat. “The meeting felt like family, and before we knew it, we’d crafted a plan to create local flavors made with farmers and local Los Angeles artisans just for them,” she said.
During this period of talking to locals, the idea of a brick and mortar in the city kept coming up, but they didn’t know how they could afford it. A random Supercuts shutting down allowed them the opportunity, and now they have five shops in Los Angeles. Another in San Diego, and in San Francisco, Seattle, and a new one in Downtown Disney.
While they never intended to leave their Portland roots, they now bring the local flavor of every spot into their ingredients, shifting their original mission. “Any business book you pick up would tell you that a key reason to grow is to leverage what you’re already doing, but we were turning that idea on its head–and people loved it,” Malek explained. Though this pivot means they now have six different menus to manage, all of which they change seasonally, it’s one that has been worth every investment. “Our family of over 500 employees who are a force for good in spreading a ripple effect of happiness through ice cream. To have all of these great folks’ attention and support makes me think we are on the right track,” she adds.
Cutting back the product line
As she was busy planning the launch of Sagely Naturals with her business partner, co-founder and chief marketing officer Kerrigan Behrens had one of the best kinds of problems: too many ideas. Though they understood and were dedicated to their mission–to provide people with natural, cannabis-derived products to alleviate their pain–they were having a hard time focusing. They knew there was a product for stress relief, insomnia, inflammation, and nearly everything else most people pop a pill for, but were they ready to start with a huge product line from the beginning? A trusted adviser told them “nope”–and suggested they pick one meaningful way to achieve their goal, and go from there.
Going back to the drawing board, they omitted a lot of their fantastical clutter and doubled down on the Relief & Recovery collection, since it was something most Americans deal with daily. “In retrospect, he was totally right; if we had tried to launch with multiple products spanning multiple collections, we would have been pulled in too many directions and we wouldn’t have been able to find our product market fit so quickly,” Behrens said. “Being focused is incredibly difficult but can make all the difference to the success of a startup.”
Did this intentional, targeted tactic work? Two years later, Behrens thinks it was the right move, since with fewer lines of products, they only needed one third of the capital they initially thought they did to launch their company. “That extra capital was crucial a few months later, once we had launched the initial product into the market and had actual customers to be able to talk to about their wants and needs,” she explained.
Perhaps more important, it taught Behrens an important lesson on how valuable flexibility is within a new company. “While it feels like every decision at the beginning of a business’s lifecycle could be game changing, the beauty of being a startup is that you can be nimble and pivot when needed. The number of customers that are affected by a change in the beginning stages of a business are so small compared to a few years into a business,” she continued. “It might not feel like it because your first customers are so important but pivoting is much easier early on than it is as you grow, both internally and externally.”
Making a drastic shift in their core mission
Founder and CEO of Farmgirl Flowers Christina Stembel says, technically speaking, her company has pivoted more times than she can count over the past eight years, but the greatest shift happened in January 2017. As any entrepreneur will tell you, the courage to jump off the ledge and start your own business comes from feeling extremely passionate about something. Whether a daily problem they want to solve or a hole in the market they can fill, at the core of every brave leader’s heart is a mission. For Stembel, sourcing from domestic growers was a huge part of Farmgirl Flowers: “One of the founding goals of the company was to support local agriculture, and I built the company around that goal completely. Not only was all of our infrastructure set up for domestic sourcing, but we were also fortunate that several media outlets wrote stories focused on that aspect of our company,” she explained.
But it wasn’t working.
Quickly, she ran out of flowers from domestic flower farms that were willing to sell to them, and Stembel exhausted all avenues in trying to get others onboard. She found herself in a spot where if she didn’t outsource internationally, she’d need to stop their growth completely. She knew she couldn’t put the brakes on, but she worried her customers were loyal because of Farmgirl’s mission to remain local, and didn’t want them to feel like she sold out. Not to mention that she had no experience with international supply chain, and flowers are perishable, so a mix-up could cost them a huge loss in inventory.
To mitigate the risk (and calm her fears), she held a focus group to understand how important sourcing local flowers was to their purchasing decision. To her surprise, customers weren’t that attached to the concept, so after running numbers one last time, she made the move. “I put a lot of thought in how to communicate the change, and decided that honesty is the best policy, so I wrote a letter to our customers and digital fans and followers explaining the why behind the change. And then I hit send and held my breath–no, really,” she continues. “And the amazing thing: the feedback was overwhelmingly positive.”
It was the right decision, since it allowed Farmgirl to improve its sourcing success by 65% from 2016 to 2017, and continue to grow revenue year-over-year by 50%. It might not have been easy–but it’s a lesson Stembel believes every entrepreneur has to learn on his or her own. “Get comfortable being uncomfortable, because even when you make the ‘right’ decision today it might not look that way tomorrow or next week or next month,” she adds. “The only constant in being an entrepreneur is change–and maybe stress.”
Shifting from retail to direct-to-consumer
When Joanna Griffiths, the founder and CEO of Knix started in 2013, she had a crazy idea: why not pitch a major department store to buy our product through a crowdfunding campaign? It worked–and it made history. Knix became the first brand to be discovered by a retailer through the platform. And at first, it was great: They had press coverage left and right, and they sold out within days of launching. However, she underestimated the time and resources it would take to service this chain, so with a small team of three, Knix somehow became a wholesale brand. “Everything we did revolved around getting into more retail doors. At our peak we were doing seven trade shows in a six-week period and were sold in more than 700 retail doors across North America,” Griffiths explained. “Things were growing, but the numbers weren’t adding up.”
Though she was making money on every pair of underwear sold, it wasn’t enough to go and replace the pair to keep growing. They weren’t sure what to do–and coincidentally enough, the launch of their first bra would show them the way. This was in the fall of 2015, and they decided to turn to crowdfunding to make it possible to launch their latest product. “Much to my surprise, in 30 days we blew past our $20,000 target, ultimately going on to pre-sell over $1.1 million in bras, and becoming the most popular fashion product in the history of the platform,” she explained. It opened her eyes, and she realized her customers would buy online. In response, she made a huge move: She pulled their products out of 700 retail doors, hired an entirely new team, and became a direct-to-consumer brand.
This pivot to digital was a success–to say the lease. In the first 30 days, they sold more than they had sold in the previous two years. And within the first month of selling online, they doubled their sales. Over the course of the next two years, they grew online sales by 2,000, or the equivalent of going from selling 350 packages monthly to shipping more than 40,000.
They’ve also launched T-shirts, a high-impact sports bra, and they continue to listen to customer feedback and employee happiness, too, since they’ve grown from five people to 40, with plans to hire another 20 in 2019. All of this resulted in a huge turning point for Griffiths, and her perspective on growing a business. “One of the hardest things that I have learned as a founder is how to say no. In the early days I was so eager for a sale that I would say yes to anyone that asked. What it meant is that we lacked focus and instead of being really good at one thing, we ended up being mediocre at a bunch,” she added. “I’ve learned now that focus is everything, and one of the most important roles that I have is saying no to the distractions so we can keep on our path.”
Failing and a new direction
No entrepreneur expects their company to quite literally crash down on the first week of maternity leave with their first child–but that’s where Erin Marchese, co-founder and chief operating officer of SVI World, found herself. This Dallas-based firm created talent performance products and services to help companies grow their workforce, and while today they’re on track, it took some major flows and one killer ebb to get here. Marchese said that during their early days, SVI World pursued business with the world’s largest companies, and for seven years, their business with one large client grew so big that a seven-figure contract landed on the table.
Though that’s impressive, there was an issue with it: It represented the majority of their business and the bulk of their work efforts. While, sure, Marchese explained, it would allow them to significantly grow their team, it was risky, thanks to the high percentage of the revenue the client represented on already razor-thin margins. If it crashed down, so would SVI World.
You can guess what happened: In the span of two weeks, the client’s internal reorganization meant an unexpected and immediate cancellation of this contract. “The result of this was that we lost most of our revenue, had to lay off a majority of our team, and were stuck with a significant amount of debt we had used to fund our expansion to serve the client. Our business was barely able to survive,” she explained. Along with her partners, they started paying the remaining employees out of their pocket, and though it was grim–Marchese says it was one of the best things that ever happened to them.
They shifted gears and decided to become a products-based business, focusing on licensing talent systems and off-the-shelf training. Three and a half years later, Marchese says they’ve fundamentally changed their business, sourcing most of their revenue from renewable license fees for their systems and intellectual properties. “We’re financially better than ever–with healthier margins and no debt. We have increased and diversified our client base,” she said. “And, the client that dropped us like a lead balloon is back, and we are doing fantastic work together that is healthier and more beneficial to both of our companies.”
For Marchese, it wasn’t just about pivoting–but doing so with a purpose. “While the pause in our business was forced by our client, our pivot was controlled by us. We knew our purpose, found a better way of getting there, and then never looked back,” she continues. “There’s comfort in pivoting toward your purpose and passion as an organization. It makes the trip down the scary road ahead worth the journey.”