How To Pivot A Business Successfully [+ When To Do It]
Changes and adjustments are a natural part of operating a business because you are always looking to improve.
The most critical decision a business owner can make is to stay the course vs. change direction.
What is pivoting?
A pivot means changing the direction of a business to improve it. Pivoting can mean changing the whole business direction or some parts of it to meet the needs of the market.
The main goal of a pivot is to help a company improve revenue or survive in the market.
Below are some examples of pivoting:
• You change your business model completely (like Netflix changed from DVD rental chain to on-demand streaming platform)
• Turning one feature of a product into the product itself, resulting in a simpler, more streamlined offering.
• Changing a platform, say, from an app to software or vice versa.
• Employing a new revenue model to increase monetization.
Above are only a few examples of pivoting a business.
When is it the right time to pivot?
A company should only consider pivoting when it’s absolutely necessary to survive in the market. It should be the last resort when all other options have been exhausted.
It may be the right time to pivot your business if:
• You’re consistently making financial losses and can’t seem to see a way of turning things around
• You’re in an oversaturated market where too many businesses are offering the same things.
• Only one of your company’s features or services gets traction
• Customers aren’t responding to your products like you thought they would
Business change is complex, especially for modern businesses. Transformation takes time.
How to pivot a business?
Once you have identified the weak points, you need to establish a new profitable strategy and direction for your company.
Sit down with your team, hire external experts, look at the emerging trends in the market and speak to your customers to come up with better solutions.
Once you’ve decided on a new business direction do this:
1. Act quickly and decisively
Once you’ve decided on a new business model or direction, get started immediately. Resources will need to be directed to new projects and a new brand strategy.
2. Inform all stakeholders including customers
Investors, shareholders, and your team need to be informed as soon as possible. Use customers as a source for information about their desires.
3. Hire for skills you lack
What new skills do you need to hire to learn to create a successful product?
4. Develop a new business plan
Create a snapshot of the current state of your business, the desired end goal, and the steps you will take to get there.
Run best and worst-case forecasting scenarios based on anticipated customer response.
Review your budgets and cash flow.
Think of pivoting as a second chance for you to run your business successfully. It worked for Netflix – and lots of other businesses – so it can work for you, too.