It’s a classic dilemma: You have a business idea that you’ve poured your sweat and soul into, only to have it become clear that the idea won’t be as successful as you need it to be. What should you do? Before you give up and walk away, consider whether the idea can be tweaked.
This kind of course correction is called a pivot, and it happens more often than you may realize. In fact, some large companies have had to perform pivots to grow into the household names they’ve become — including PayPal, the business messaging app Slack, and Flickr. Now a big name in Silicon Valley and beyond, Instagram actually started as a company called Burbn and went through a major change before becoming the social network it is today.
The point is, there’s no need to feel down about performing a pivot. Knowing that you need to change the way you’re doing things is a sign of savvy business strategy and adaptability. Continuing to evaluate your business and pivot in real time when necessary is important for growth.
Below, we’ll walk you through what pivoting means, the types of pivots you can make, and when you should perform a startup pivot. We’ll also discuss how to make changes that will be good for your business and your bottom line.
What is a pivot?
If you’ve been working through your startup business plan or your business has launched, but you aren’t making profits or attracting customers, it might be time to consider a pivot. Pivoting means exactly what it sounds like: changing direction to gain more revenue and stay competitive. It’s a term that was first used by Eric Ries in his book “The Lean Startup.” His idea is that no company stays stagnant from its original business plan and will go through several iterations before becoming successful.
Making a pivot can be good for your startup for a few reasons. It allows you to look at your business model with fresh eyes. Maybe there’s a piece of your business that works well given the opportunity and will allow you to expand into a new direction or market. You may also realize that the product or service you offer is no longer needed, but something else is. Successful startups identify the right need and fill it.
If you’ve tried everything else, but your business isn’t thriving, it’s worth the effort to try a pivot before you walk away. Pivoting can offer your company a fresh life. How you pivot, though, is important.
When You Should Pivot Your Business
Although pivoting is not a cure-all for every business problem, you should consider it before throwing in the towel. Below are some specific situations where a pivot makes sense:
- You’re unsure about your business’s financial future: If it seems like no matter what you do or how hard you work, you’re not able to make enough of a profit, a pivot may make sense. You may need to pivot your product or service, your revenue model, or your customer base in this case. Consider, too, which aspects of your offerings work. You may need to redirect your attention and resources to what works for your target market. For example, let’s say you own a bakery and sell a miscellaneous assortment of baked goods, but most of your revenue stems from your popular custom cakes, and you’re losing money from other baked goods. In that case, you may want to consider pivoting to selling only the custom cakes.
- Oversaturated market: Even the most unique concepts will eventually face competition. Too many businesses doing the same or similar work — or a large company coming into your territory — can cause your market share to dwindle. It might be time to consider pivoting something about your product to serve the customer better or in a different way or even open a new market for your business. You may also be able to change how you bring in revenue or your use of technology.
- Passion for the business is shrinking: This can be about two things, and both need consideration. First, look internally. Have you or your team lost motivation or traction? Take a moment to check-in and ask why — make sure you don’t shy away from honest feedback. The second consideration is external. Have customers responded to what you offer? If not, what needs to change so that they will? It might be messaging or pricing or something else.
- Market trends outside of your control: Let’s face it. We can’t always predict the future. At the beginning of 2020, who predicted how a global pandemic would change the landscape of almost every industry? Outside the startup world, even large businesses can flounder. Due to COVID-19, businesses everywhere had to look at how they operated and make some, often hard, decisions about how to survive in a changing world.
How to Pivot Your Business
If a pivot seems right for your business, it’s time to learn the steps involved. The steps you should follow are the same, no matter if your goal is to become a heavy hitter like Apple or start earning money from your podcast. Once you’ve decided to pivot, though, remember to move quickly. Small business and startup pivots are easier and more impactful at an early stage.
As an example, let’s say Joann Smith has recently started a business as a freelance writer. She’s worked hard but just hasn’t found the clients she needs to be profitable. There is a lot of competition in her market, and it’s time to make a change. Joann needs to pivot. To do so, she will:
- Establish a new vision
- Seek feedback
- Identify areas of growth and new business goals
- Continue to innovate and adapt
Establish a new vision
It’s time to think about what your company has been doing and where it can go from here. For example, Starbucks started selling espresso machines before it pivoted into the giant that it’s become. Can you take what you already do and refocus or make tweaks to find a more profitable course or a new product to offer your customers? What are the new goals you need to establish to continue on this course?
Joann knows that most of the companies she has reached out to have freelancers they are working with and are saturated with pitches and proposals. However, she remembers talking with a friend who volunteers with a local nonprofit. They mentioned the organization was looking for someone to write a speech for their CEO. She never really thought about speech writing or working for nonprofits but thinks perhaps it’s a niche she should consider for her business model. With a little research, Joann finds that most of her local nonprofits don’t employ anyone on their staff to handle communications, and she realizes this is an opportunity area.
It’s important, with any major business decision, not to work in a vacuum. Feedback is essential when undertaking a pivot for your startup. You might be reassessing due to negative customer feedback or a lack of sales. Many startups fail because of poor market fit. Customer or client feedback can ensure that your new direction will work for your company and those it serves.
After Joann realized working with nonprofits might be a good idea for her business, she made some calls. She used her network to set up phone calls with several local nonprofit leaders and pitched her ideas. Two leaders gave her feedback that they need occasional speeches, but not that many. One asked if she would also consider development materials for the fundraising team. The other leader mentioned annual reports. She incorporated their feedback into her planning. She also made some connections who might hire her.
Identify areas of growth and new business goals
It won’t do much good to conduct a pivot without thinking about where your startup is going, what you want to achieve, and how you’ll know if you’re achieving it. If you don’t plan specific goals and the measurables for those goals, you may find yourself having to pivot again.
Once Joann had a chance to incorporate the feedback she received into her plan, she sat down to determine what she needed to succeed and how many projects she needed to work on that year to achieve her goals.
Continue to innovate and adapt
Once you’ve pivoted your business and move forward, remember that you’ll need to continue to evaluate your path and innovate to keep up with a changing market. After executing a successful pivot, sitting back and doing everything the same is a sure way to watch business dwindle again.
After a year of working with nonprofits, Joann achieved her goals but realized that a lot of these projects were one-time requests. She continued to talk with her network in the industry and find new ways for partnerships.
Pivoting for Success
Pivoting your startup business is a big undertaking and not one to take lightly. However, it can save you from having to abandon your big idea. Being willing to consider a pivot for your company shows you are adaptable and skilled at making decisions. A successful pivot will ensure a proper market fit and can mean good things for your business.
Entrepreneurship is a lot of work, but don’t let starting, running, and growing your business overwhelm you. Learn more about how ZenBusiness can help you with your small business’s needs today.