Recently, I have had to look at a business that lost momentum over time, in a bid to get it going once again. Sales had gradually reduced to a slow trot and founders were wondering what to do. When you start a business, it is exciting to tick off milestones on a list, but after that initial buzz from early adopters, it usually requires an extra effort to stay the course. In other cases, it may make more sense to pivot away from your original strategy, only after getting proper feedback and research, of course.
The startup world is filled with buzzwords and there seems to be a new one once in a while. One of the older ones however, is the pivot. So what is pivoting, and how does it affect you as a business owner? Pivoting generally refers to a shift in strategy to apply a new approach regarding a startup’s business model. Before a business is started, its founders have an idea of what they want to offer and how they want to conduct their business. Plans are made for which niche the business will operate in, the kind of customers it will go after, its range of product offerings, unique selling proposition, and even its value system. However, only few businesses turn out the way they were envisioned. Most times, it is necessary to make a few changes along the way in order to keep the business afloat or deliver value.
A pivot may become necessary for any number of reasons but should always be driven by specific feedback. Take the time to obtain the information you need, to help you decide what needs to be changed urgently, and to what degree. A few of the more common ways you could pivot involve:
· You may need to strip down your product to fewer features, resulting in a simpler offering or developing your product to become a feature in a larger suite of features for another product. Occasionally, a more radical move is needed and a complete change of products is made by a business.
· Changing your marketplace or platform, for instance, introducing an app or opening brick and mortar outlets. · Engaging a new revenue model to increase inflow.
· Modifying your target market demographics. Sometimes, it may be necessary to increase or change your target market to either add to the number of customers you have, or focus on the highest paying clientele.
· Switching to a more lucrative business model. Usually, businesses that start off by offering a subscription based service may have to switch to an ad based revenue model. Some businesses have to morph from B2P to B2B or vice versa.
Pivoting is more a mindset than an event along the life cycle of a startup, more evolution than big bang. Although it is often employed as a last ditch effort to staying afloat, it doesn’t have to be so. You don’t need to wait for a crisis to happen before thinking of it. Some of the highest earning and best performing products have to undergo some form of pivoting in order to keep ahead of the pack. And so, while most pivot to stay alive, others do so to stay ahead. Many people are stuck between sticking to an original plan long enough to make a bigger impact in the marketplace, and switching things up for the same reason.
In order to avoid moving your business into a worse position, here are a few factors to consider so you can be sure if you actually do need to proceed:
· A limited response from your target market. It is normal to do some customer development along with PR to generate some buzz before a product launch and try to ride the wave for as long as possible but if you notice that the market is not responding to your product at all, you should consider finding out why and begin preparing for change.
· Pace of business has slowed to a drag. If progress has become slow and it is difficult to get going again, you may have to take an honest look at your strategy to identify something that needs new life. If the work put into a business is not reflected in the inflow, then you may have to consider doing things differently.
· Partial success or failure. If you notice that some aspects of your company are succeeding while the rest are not performing well, then it may mean that you should either change what is not working, or completely stop doing it. Resources can then be better utilized in the areas that are performing optimally.
· Too much competition. Usually during product development, it is advisable to find a niche and stay there for as long as you can, but there is nothing to stop other businesses from entering your niche. Competition can be stiff and damaging for startups, especially in a restricted or contracting market, and if much larger companies with more funding and a built-in audience are involved. In the face of rigid competition, it may be necessary to modify any number of things from product offering, platform and technology to business model.
It is important to know when to pivot your company and if you have made that decision, here are a few tips that will guide you along the way:
· Firstly, do some research. Pivoting should not be a stab in the dark, hoping to achieve your aim. It is a carefully calculated decision that should be based on information that you have collected from your market. Customer reviews and feedback come in handy at this point. It is easy to learn both the pain points your customers are facing and the expectations they have of your product. Before any pivoting is done, have an honest, down to earth, and thorough look at your situation and the way out so that the pivot does not end up taking you in the wrong direction.
· Use what you already have. Creator of the Lean Startup methodology Eric Ries teaches that pivots imply keeping one foot firmly in place as you shift the other in a new direction. Once you have decided a new direction to head in, identify parts of your existing business structure that can be integrated into the new idea. Useful units can easily be adapted to serve your new goal.
· Do it immediately. If you eventually have to pivot, then it is much more profitable to do it as soon as possible. This will help you avoid losing market share and customer loyalty, and significant funding that would usually have been spent in marketing and PR while trying to sell the old product. Sometimes, a company may need to pivot multiple times before it reaches market saturation, so you might as well get on with it.
Carrying out a successful pivot is hard work, but it is all worth it if you end up achieving the main objectives you started out with. If you do so, you will be in good company.
Groupon started out as a platform designed to rally members of the public around social and charitable causes, called The Point. It started to fizzle after a successful launch and a later addition to the platform (Groupon) where customers could try to negotiate a discount by pooling their money started getting more traction. After a while, it became the central platform.
Before Google bought Youtube for $65 billion, it started out as a video-based dating service. Users could upload short videos of their ideal partner and also browse for potential matches. Its creators realized its potential as a host of online videos, and pivoted away from the dating industry.
In 2004, Shopify’s founders tried to sell snowboarding equipment online. In order to do so, they built an ecommerce site from scratch. Apparently, they didn’t like what was available then. Their online store, called the Snowdevil, was a bit of a failure but they got good feedback for the storefront itself. So they switched both product offering and business model to building online storefronts for other startup businesses. Look how that turned out.
Starting a business and growing it to a reasonable level requires a lot, so you have to understand that you may not get it all right the first time. Keep an open mind and don’t be afraid to make changes where necessary. Remember to prepare and plan carefully.