SMB Group’s 2021 SMB Technology Directions for a Changing World study revealed that just over half of small business (1–99 employees) respondents strongly agreed or agreed that they had made significant changes to their business strategies due to COVID-19.
One dramatic case in point is Museum Hack, which pivoted to become a completely different business. Since its inception in 2013, Museum Hack had offered “renegade, small group tours for people who think they don’t like museums.” Before the pandemic hit, the company had grown to offer both public and private tours in several major U.S. cities, employ 11 full-time workers and more than 40 part-time employees, and earn over $3 million in annual revenues.
But in March 2020, COVID-19 hit Museum Hack hard. By the middle of the month, all tours were canceled and museums had shut down. The inevitable question arose: What do we do now?
Brainstorming Ideas and Acting Fast
Museum Hack owner Michael Alexis acted quickly to cut expenses—which, unfortunately, included layoffs. The next step was to brainstorm with his remaining team of five employees to come up with new business ideas that would be viable during the pandemic.
After searching on Google Trends to see which of their ideas might be gaining traction in the market, Michael realized, “It was clear that with so many employees working at home, businesses were looking for ways to create virtual comradery.” Michael made the decision to take advantage of this opportunity, and the new company TeamBuilding was born.
Work began right away to create different options, from Online Office Games to Tiny Campfire (read more about these and others here), which run on Zoom and other video-conferencing services. Michael (who had built other websites before) built a website for the company in 24 hours, and it went live immediately.
In just over one year, TeamBuilding has grown to offer 22 different types of virtual team-building events, from mystery and espionage to trivia and cocktail parties. Michael was able to hire back many of his Museum Hack employees and contractors—and hire new people. TeamBuilding now employs 55 full-time and more than 50 part-time employees to serve a worldwide audience. In its first year, TeamBuilding has already outpaced the eight-year-old Museum Hack in annual revenues.
TeamBuilding’s bet to move from providing physical-world services to virtual ones has paid off—and it’s not alone. SMB Group research indicates that 28% of small businesses added virtual services to replace or augment their offerings in the physical world—and 89% strongly agreed/agreed that this change was valuable in helping their businesses to sustain themselves during and recover after the pandemic.
Using Technology to Enable the Pivot
It goes without saying that Michael and his team had the creativity and courage necessary to make this big leap. But, as Michael notes, “Technology provided the tools TeamBuilding needed to get the new business up, running and successful.”
Museum Hack had already been operating as a virtual company before the pandemic, taking a cloud-first approach to automate and streamline operations. When it came time to pivot, the team had many of the tools needed to get a new business up and running quickly.
When Museum Hack floundered, getting an accurate read on things such as the amount of cash in the bank and the company’s cash flow became a top priority. Museum Hack was already using Xero’s cloud-based accounting software, so Michael could easily scrutinize expenses and see where he’d need to cut back when COVID-19 struck.
Then, as TeamBuilding’s business started to gain traction, Xero’s online invoicing capabilities allowed the company to get money back in the business as quickly as possible. Xero also connects to TeamBuilding’s Chase accounts for easy imports and bank reconciliation.
TeamBuilding is also making heavy use of Xero’s categorization capabilities to see how different events and packages are selling and then adjust the lineup accordingly.
According to Michael, “Xero’s categorization gives us details on each expense category, so we can see what’s paying off, where we can cut expenses, and how to profitably price different events.” For instance, some event types involve shipping costs. Using data in Xero, Michael could analyze total costs for each event—and if one was not profitable, he could either find a way to lower costs or delete the event type.
With the shift to virtual events, organizations in English-speaking companies in countries such as Germany, Spain, Singapore and Japan were interested in TeamBuilding’s events. Xero’s support for multi-currency transactions facilitated billing and payments in these international markets.
TeamBuilding relies on about a dozen or so other applications, such as Proposify and Help Scout. The company uses Zapier to integrate them with Xero to create workflows that automate repetitive actions and tasks across different applications.
Ready for What Comes Next
As the impact of COVID-19 subsides, no one can predict exactly how things will unfold. Although TeamBuilding is happy to focus on virtual events for now, it is closely monitoring trends to stay ahead of where the puck is going. Will demand for in-person events surge as health and safety restrictions are lifted, or will it be more of a trickle, with many people continuing to be concerned about health hazards?
However, according to Michael, TeamBuilding’s digital-first, cloud-first strategy provides the agility and flexibility the company will need to track trends and tackle whatever new opportunities and challenges arise.
Technology isn’t the only variable at play when it comes to business viability and growth. However, it has become increasingly intertwined with business success. The right technology solutions can help businesses get the insights they need to make better decisions, and to adapt their business models and practices to tap into new opportunities.
SMB Group research data supports this. Just about one-third of small businesses had digital transformation initiatives underway when the pandemic struck. These SMBs were X times more likely to have enjoyed an uptick in revenues from 2019 to 2020 than those without any digital transformation plans. They were also Y times more likely to expect revenues to rise in 2021 than small businesses.
Change isn’t always easy, but it is the only constant. As both the old “normal” and the pandemic recede into the rearview mirror, the performance gap between SMBs that transform and digitize their businesses and those that don’t will only continue to grow.
© SMB Group, 2021
This post was sponsored by Xero.
Source: Laurie McCabe’s Blog