When it comes to business, how you envision something may not be how it actually turns out. There are so many factors that contribute to the success of a business, and it’s not possible to control all of them. As a result, you may find yourself in a situation where you have to pivot the business. Be sure to take stock of your reusable resources and understand all of your options before you make the decision to pivot.
Understanding the Concept of Pivoting
In business, pivoting means shifting the business to a new strategy. This concept has seen traction thanks to Eric Ries, author of "The Lean Startup," as well as other entrepreneurship experts. The pivot a business makes can be a small detail with massive ripple effects, or it can be a large change that affects every area of the organization.
There are many reasons to pivot in business, such as market fluctuations, supply issues or target market shifts, but most of them come down to sales. If the original idea is no longer working, then it may be time to make a change. Pivoting requires thorough research on your available options to see where you may find the most success.
Examples of pivots a company can make include:
- Targeting a different segment of the market
- Developing a new product or product line
- Changing the revenue model or business model to improve profitability
- Altering the process to change the product or service
Knowing When It’s Time to Pivot
The point of a successful pivot is to move your small business into a position where it can find more success. However, for many entrepreneurs in the startup world, it’s difficult to know when to make the actual pivot. For many small-business owners, there is an emotional connection with the business, and it can be hard to scrap your original business idea in favor of another.
There are a number of events and issues that may mean your business needs to go in another direction:
- Your target customer is no longer interested: The group you were targeting may have experienced a shift in their customer journey and no longer care about or need your product or service.
- Your competition is increasing: As new competitors pop up, it may be more difficult for your business to maintain market share.
- Your company is not growing: Staying at a plateau isn’t the goal for most driven entrepreneurs. If your revenue is the same year after year, you may need to make a change.
- Your business is lopsided: If only one of your products or services sells well while the others fail, it may mean you need to capitalize on the success and shift direction.
Looking at the Alternatives
Before you decide to pivot your small business, be sure to consider all of your options. It’s important to run the numbers on each scenario so that you know which road has the best chance of success and which one carries the most risk. You don’t want to be in a position where you have to make yet another change a year down the road.
Your decision-making process for your new business strategy should include an evaluation of various possibilities:
- Switching to a more profitable business model: If it’s profitability that’s the problem, you may need to rethink your pricing strategy, expenses and business model. If you’re selling direct to consumers, consider adding a subscription model to lower your cost per customer acquisition or trying the indirect route and working with a middleman.
- Working on a new customer need: Maybe your target market is the same, but their needs have changed. Consider what else you can offer them to make their life easier. This may include adding new products or services. For example, if you run a hair salon, you can consider adding nail services as well.
- Getting more focused on your offerings: Sometimes, less is more, and instead of adding products, services or features, you may need to take some away. Narrowing your scope can help your business to be more profitable and can increase your conversion rate by targeting your customers more effectively.
- Creating a sub-brand: Your pivot may include branching off a section of the business to focus on another area. The spinoff brand can target a different market segment with a product iteration, like gluten-free baked goods from a bakery.
- Realigning your resources: Sometimes, the problem can be solved by reworking your organizational structure and putting the right people in the right places. It’s possible that your business isn’t able to find success because you don’t have the right expertise in house or don’t have an efficient business process.
When you’re setting your new course correction, keep in mind that not all pivots look the same. Sometimes, making a small shift can change the trajectory of your business just as effectively as a big one.
Taking Stock of Your Resources
Business pivots can be stressful, expensive and time consuming. Before you implement any plans for your new business strategy, take a look at your current resources. For example, assess the skills and expertise of your staff; your team may be well-positioned to help you in your new venture. You may also need to hire additional employees who bring new skills to your business.
Consider your current contacts in the business, such as partners, manufacturers, suppliers and business services. You may be able to leverage these contacts for your business pivot. For example, your accountant may be able to advise you on how to shift your business model, or your supplier may be able to help you figure out your retail pricing strategy.
Crafting a New Plan
Once you’re figured out which direction you’re taking, be sure to align the rest of your business to support the pivot. This means doing additional research on your customer segment so that your marketing strategy effectively targets their needs and goals. You’ll also need to consider sales training for your employees so they know how to promote your new products, services or process.
Whether your pivot involves a new product or service or a change in pricing strategy, remember that there will be trickle-down effects to every part of your business. Keep operations smooth by carefully planning your pivot with key members of your organization so that everybody is ready to make the change together.
Handling the Logistics
When you’re ready to implement your new business strategy, it’s important to work through the logistics so your business transformation is a smooth one. Consider whether you need to:
- Create a new business name or brand
- Get a new business license and EIN
- Acquire new space for your business or sell existing space
- Lay off any staff or hire new staff
- Train your staff for the new business offering
- Sell your old products, supplies or inventory
- Sell your old equipment or reuse it in your new business
- Develop new partnerships with suppliers or manufacturers
- Engage outside services such as accounting, marketing or website management
Be sure to develop your strategy for notifying customers of your shift well in advance. By being transparent with your target market, you may be able to develop loyalty toward your new venture before it’s even up and running. Plus, letting your customers know you’re changing direction can incentivize them to stock up on your old products, giving you a revenue boost.
- Business.com: How to Pivot Your Business Successfully
- Entrepreneur: 8 Ways To Pivot Your Business To Kickstart Growth
- Entrepreneur: When to Pivot Your Business – and When You Should Just Quit
- Founder Institute: What Pivoting is, When to Pivot, and How to Pivot Effectively
- Small Business Trends: 4 Alternatives to a Business Pivot
Anam Ahmed is a Toronto-based writer and editor with over a decade of experience helping small businesses and entrepreneurs reach new heights. She has experience ghostwriting and editing business books, especially those in the "For Dummies" series, in addition to writing and editing web content for the brand. Anam works as a marketing strategist and copywriter, collaborating with everyone from Fortune 500 companies to start-ups, lifestyle bloggers to professional athletes. As a small business owner herself, she is well-versed in what it takes to run and market a small business. Anam earned an M.A. from the University of Toronto and a B.A.H. from Queen's University. Learn more at www.anamahmed.ca.