These entrepreneurs had to change their business model in the middle of the pandemic. They did so successfully.

3, 2021

7 min read

This article was translated from our Spanish edition using AI technologies. Errors may exist due to this process.

Opinions expressed by Entrepreneur contributors are their own.

They say out there that you should not take a step back even to gain momentum. However, in the business world there is the concept ‘pivotar’ (or ‘pivot’, in English), which contradicts that saying for good. Pivoting is changing your original business model , modifying and optimizing the key activities of your company to achieve greater profitability and have a more sustainable and efficient growth.

It is not surprising that many entrepreneurs reach a point where they need to pivot. Sometimes a business grows very fast and sales stagnate, then it is time to make profound changes to continue.

In other cases, after some time operating, the entrepreneur realizes that the idea is not really that profitable or presents challenges that he cannot face, and he has to rethink.

That was just what happened with Mubit , a Mexican startup that was initially called ‘the Airbnb of storage’, but had to radically change its business model in order to grow.

How did Mubit work before?

The company originally from Guadalajara, Jalisco , began as a platform to connect people who needed a place to store things, with owners of available spaces: warehouses, premises, offices, garages or an empty room inside the house.

In an interview with Entrepreneur en Español , Pablo Palomar , founder and CEO of Mubit , recounted the obstacles that made the original model untenable.

“First, the numbers did not give, that simple. What we made was a small commission of 15%, and the rents were quite cheap. So operating costs and expenses grew, but not profits, “ explained Palomar.

“On the other hand, houses and offices are not made to store things. We also had no control over storage spaces or what customers kept, “he added.

Under that scheme, they had a lot of trouble ensuring that customers found adequate spaces to store their items.

“People seek to have their things in specific areas and do not want to pay for a space larger than they need, or smaller, because their things do not fit,” says the founder of Mubit. “It can be very complicated, especially the security issue: both people who keep other people’s things worry, and also those who store their things in someone else’s place. That creates a bit of friction. “

In December 2019, Pablo accepted that things were not going as expected , and began to plan the change of business model.

Restart a business in the midst of a pandemic

“We started from scratch again, because the whole page was no longer useful to us,” said Palomar. The new Mubit scheme was fully implemented in January 2020, unaware that the Covid-19 pandemic was looming.

“With everything and that it was a difficult year, we had good growth. From the first month we saw a drastic change in billing and sales, because we also helped many people in the pandemic ”, says the businessman.

Pablo remembers that when the confinements began, many students returned to their cities of origin, but they could not take all their things. “Instead of paying for an apartment, you pay a much cheaper rent with us,” he says. “The same with the offices that closed, instead of paying 40 or 50 thousand pesos for a place or an office, because here you pay a rent of 5, 8 or 10 thousand pesos.”

The businessman claims that the health emergency helped his company a lot. “It was a need that remained in the market, it helped us and especially the clients to lower their expenses and costs.”

Same brand, different concept

“Before, if you had a space, a warehouse, an office, you could rent it with us, like an Airbnb to store things. That scheme has already disappeared, we no longer have anything to do with that business model, ”explains Palomar, who is a lawyer by profession and decided to follow his dream as an entrepreneur.

Now, Mubit offers a comprehensive storage and collection service that, from their perspective, is much more convenient for customers.

Instead of being intermediaries in the rental of private spaces, the company acquired its own huge warehouse to store all kinds of objects. This is located in Guadalajara, Jalisco, so Mubit’s operations went from covering the entire Mexican territory, to being only local. While this can be seen as a setback, the founder says it has turned out to be much more profitable and now sees greater potential for growth.

Mubit’s operation took a radical turn, although they keep contracting online, now they offer to go to the home for the things that are going to be stored. Its team of professionals is in charge of making a digital inventory with photos, packaging the objects and carefully transferring them to the winery. There they will remain in an assigned space, with 24/7 security to guarantee their integrity.

Credit: Courtesy of Mubit

At that time, an account is created for each customer on their website , from which they can control inventory, payments and billing. In addition, if the client needs to take something out, he only has to place the order from his account and the company takes the requested items to the address indicated, on the specified date and time.

Thus, the client no longer has to go out to look for a warehouse, worry about packing things or transporting them on their own.

Payments can be made on a monthly basis, either by electronic transfer, deposit in a branch or at any Oxxo, or as a recurring direct debit to the credit or debit card.

Pablo highlights that another advantage is that the client only pays for the space they occupy, no more and no less. “For saying, if you have 10 beds saved and pay 3,000 pesos a month and then decide to take 5 beds and now you occupy half the space, the following month you will pay a much lower rent,” he explained.

Present and future of Mubit

With the change, the company reports an average monthly growth of 17% in billing . They currently have more than 150 active clients and some 20,000 items stored in their warehouse, with a capacity of 4,000 cubic meters.

Last March, Mubit was one of seven Latin American companies selected by investment firm 500 Startups for its acceleration program. This consists of a capital injection of $ 60,000 and a 16-week course.

Pablo Palomar is confident that an upcoming round of funding will help them expand to other cities. He plans to open his next winery “by the end of 2022” , although he has not yet decided in which city in the country it will be located.

“The biggest challenge is to grow faster and accelerate all the goals we have. It was really a ‘pivot’ of a business model that did not generate one that seems to be very profitable and with high growth ”, concludes the businessman.

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