A start-up business or booming enterprise usually focuses on developing a customer database and then expanding. Pivoting becomes an option for companies when their business model fails and does not generate enough investment return. While pivoting a failing business may give a new direction, it also means that you need to start from scratch and forget all previous investments you have put in. If you consider pivoting a business to save your capital investment, you must first find out what it entails before proceeding.
What is Pivoting?
Pivoting means either slightly or entirely changing the direction of a company if the current services or model cannot meet the demands of the market. Businesses also consider pivoting if they are no longer generating enough revenue or have not achieved their business goals within a specific period of time. The primary purpose of pivoting is to help businesses survive or further improve their market reach. But the method on how to pivot an existing business will matter, and that often includes developing a new strategy or introducing a fresh concept to the public.
Not in all cases, pivoting means employing dramatic changes to help a company establish a new reputation. A company may simply need to resolve a particular problem or modify an aspect of business operation. An example of pivoting is converting a valuable product feature into a new product. Some businesses are changing the platform, for instance, from being a manufacturer to a developer.
As an example of pivoting in relation to cost reduction, a business uses different technology to either improve or create a more reliable product. If the current business setup does not generate customers, sometimes a company switches customer focus to enhance product viability. To pivot your business also includes employing a new revenue model to create broader opportunities and monetization potential.
When is it the right time and Ways to Pivot your Business?
The decision should not be abrupt when you consider pivoting, but this is not a direct answer to all your business problems. Businesses must only consider pivoting if the conceived business model or structure no longer works, especially if all options and adjustments have been exhausted. It may be time to pivot a business if:
· The competition is fierce, and you are not able to penetrate the mainstream market
· Not enough leads, revenue, or queries are generated within a set period of time
· Customers appreciate just one of your many services and products
· You are not seeing any expected progress even if you have invested resources and time tremendously
· Consistent high bounce rate, subpar traffic performance, and poor ranking
· No response received from customers
· Your perspective about the industry or business landscape has changed
· You have already changed your marketing strategy many times, and you are still not getting results
Focus on a feature instead of an entire solution
You can integrate many exciting features into your products, but not all may resolve the specific concerns of your customers. The more features you introduce to customers, the more you confuse them on what features they will benefit from. Consider focusing on a feature or service you know has a good chance of progressing and delivering results. You don’t have to remove business features that you think are not delivering, but they can still help improve your new marketing strategy once you decide to pivot. You also increase the marketability of a product when you target specific customers who are precisely looking for a solution using that particular feature.
Pick goals that align with your business
Once you decide to pivot an existing business, you need to set new goals and priorities. You can compare previous business goals; however, they should no longer align with your pivoted business unless you have no major changes for your next endeavor. Decide on revenue goals, marketing tactics, target customers, customer approach, and measurable results you want to integrate and achieve. Conduct product evaluation, business auditing, and optimization reviews to determine which aspects of the new business you will focus on.
Understand your target audience and their problems
If you can’t generate enough customer response and revenue but see no problem with the current strategy, you probably just need to change your target audience. You may want to consider using SaaS (Software as a Service), a distribution model aiming at customers suitable for a B2B or B2C business setup. A digital marketing company can help deliver more sales and customer traction to you. Analyze carefully if you really need pivoting because of poor product performance or just because of an ineffective marketing strategy.
Analyze what your competitors are doing
If you have decided to go pivoting, carefully analyze how direct competitors are performing and formulate a better marketing strategy. You will not see a significant difference in the results if you only offer the same line of features and products close to your competitors’ price range. Instead, consider formulating unique service and product offerings or bundled deals to make your pivoted business more competitive. Aside from competitor analysis, evaluate whether you need a new direction or just an expansion of your current business model.
Speak the language of your audience
Pivoting is not always offering new products and services. If you have an excellent idea that you want to implement in your new business, you should send the message to the target audience in a language that they can easily understand. It’s a good idea to focus on one feature of your business that you know can deliver results and promote it to the appropriate audience. Remember that you should pay attention to the range of customers capable of understanding your business, rather than introducing services to the way you want.
Strategize before you make a move
You can’t do pivoting alone because you need cooperation from everyone involved in your business. Strive to communicate your new set of business goals to your employees to get the company’s new direction fully materialized. Consider testing the pivoting strategy on products, services, and advertising campaigns while monitoring its progress with your core department. Include project execution, review, auditing, and modifications in your strategy to see how your pivoted business runs.
How to Know if You Should Pivot?
It does not mean that if pivoting has worked in other successful businesses, you should think that pivoting is already the answer to an otherwise failing business. As mentioned earlier, pivoting can only help enhance your business direction or survive the ever-increasing competition in your industry. You should only consider pivoting if you think you have exhausted all the available options to produce good results. To avoid committing a misinformed decision, carefully evaluate whether you have encountered the apparent signs that you need to pivot to be discussed below:
Your Company is Always Playing Catch-Up
An obvious sign that you need pivoting when you have a hard time keeping up with other players in your industry. If you notice that your business is progressing very slowly, you may need to think about pivoting despite the tremendous effort, resources, and time you put into it. It is probably not your company that needs pivoting, but the current product lines, marketing strategy, or revenue model you are implementing.
There’s Too Much Competition
In any industry, the level of competition is always intensifying. You may have a unique idea that you want to introduce to your target audience. Still, larger enterprises may have already done so with bigger revolving funds, resources, and talent in a better approach than yours. If the marketing strategy you are implementing in the present setup is not progressing that much, you may need to think of something less competitive but has great potential to expand.
Your Company Has Hit a Plateau
Hitting the plateau is something that you don’t want to happen to your business. Still, it is inevitable, especially if you notice your company is underperforming and not generating sufficient revenue. There are many possible reasons for this, and your team may not be motivated to perform, or your current marketing campaign is no longer effective. Whatever the reason is, you need to pinpoint the exact problems and provide solutions as urgently as possible. Otherwise, you should consider pivoting, although it is not necessary for you to implement drastic changes. You just need to identify which aspect of the business operation should be revamped.
One Thing Gets the Most Traction
As much as you want to see all aspects of your business succeed, there is still the possibility of not progressing or delivering optimum results. If you have a product, service, or business strategy working for you and the rest may seem to fail, and perhaps you should consider pivoting and just focus on the features that perform. By redirecting to the feature or aspect that delivers consistently, your business will experience progress and increased productivity.
There’s Limited Response from Your Marketplace
Even if you have done the prior research, customer development, and marketing strategy that will be used in your product or business launch, there is no guarantee that you will generate an adequate response from your prospective customers. Many of your target customers may commit to purchase or at least negotiate, but there is still a probability that they will not proceed. Analyze whether you are hitting the right customers or whether the marketing campaign you are using is appropriate to determine which aspect of the business requires adjustments.
Your Perspective Has Changed
If your company has been operating for quite some time and it is not progressing according to your goals and expectations, sooner or later, the vision and direction of your business will change. You can potentially discover a more lucrative avenue to generate sales through continuous research and evaluation of the current business strategy. The time will come when you will realize that the course your business is taking is not right and may need serious pivoting.
Know When it’s Time to Persevere and When it’s Time to Quit
Roadblocks to success are expected when you manage a business, but you need to discern the difference between an obstacle and an impossibility. Whenever you are experiencing a business challenge, and you have done all forms of product research, customer development, and funding strategy, and still not progressing according to expectations, you should think about whether you have already reached the plateau or continue. . Your decision on whether to continue or pivot depends on the actual performance of the business structure and outcome of the revenue goal. If you think you have already invested heavily in terms of finances, human resources, time, and research, and things still have not worked out for you, pivoting might be the answer for this.
How to Pivot Effectively
Once you decide to pivot the business after doing all the possible solutions, you need to consider the factors that will influence your revamping efforts. The following suggestions will help reduce the risk associated with pivoting and achieve the target outcome:
Do it as soon as you can
The number of times you can pivot is not limited, depending on the financial resources and time you are willing to sacrifice. Many enterprises have experienced multiple pivoting, so you should not stop pursuing a new course until you nail down the right direction for your company. However, consider pivoting as soon as possible to avoid wasting resources, effort, and time to figure out what will work for your business the best.
Pick new goals that align with your vision
Entrepreneurship is hard, and it will require sacrifice, patience, and consistent perseverance because this takes time before you see any good result. Even if you are moving into a new business, your vision should not deviate from the new business goals you want to achieve unless you change your vision in life. Strive to align new business goals, priorities, and strategies with the present vision, so you can create a solid direction that you and the rest of your team will follow.
Don’t scrap that work you’ve already done
Not in all cases a drastic change will be required once you pivot your business. You probably just need a few adjustments, rectifications, and redirection once you have decided which course your company is going. You can still incorporate other portions of the previous business plan or goals into your pivoted business, especially if you have invested heavily in finances, time, and energy just to build your dream business before.
Listen to your customers
Customer feedback plays a pivotal role in the product innovation and customer development efforts you make, but it can also indicate whether your current business needs pivoting. Whether you receive negative or positive feedback, it’s still good to listen to what customers have to say, so you can determine which aspect of business products or features should be given enough attention in your next endeavor.
Make sure your pivot presents opportunities for growth
While pivoting can help remove your business from an endless roadblock, there is still a great possibility to encounter challenges again in your next business venture, just under different circumstances. To avoid wasting your pivoting effort, ensure you have a clear opportunity for growth and increased productivity. It is not worth risking pivoting your old business if you face the same smaller market, less diverse target demography, and intense competition in your next business. Consider waiting for another opportunity to expand or switch completely to a new direction.
Business Pivot Examples
Countless businesses have gone through pivoting. Some succeeded, and some failed, while others repeated pivoting for several times more. As long as you have the resources and determination to move ahead, there is an opportunity waiting for your business to strike. Business pivoting has been successful for numerous classes of companies, including:
Netflix is an outstanding example of a pivoted business that has taken advantage of the emerging tech consumer market. It started as a VDV distributor and delivery service provider but gradually became the mainstream provider of comprehensive audio and video streaming. Netflix has become a staple in many residential communities today, especially to viewers looking for quality entertainment. Many consumers no longer own DVD players because they are now accustomed to streaming videos that can be accessed on various electronic devices, from mobile phones to smart TVs.
PayPal has not stopped from being only a payment processing platform and eBay business partner. It has gained global recognition as the preferred payment processor for many remittances, online shopping, and bank transfer industries. From being a web-based platform, PayPal has adapted to the emergence of online banking and smartphones. It is now a booming brand of alternative banking integrated into a diverse range of service-oriented businesses.
Who would have thought Nintendo started with service-oriented industries and products like vacuum cleaners, commercial kitchens, hotels, and ramen noodles? Nintendo is now one of the most in-demand gaming brands globally, offering realistic and entertaining games in 3D view. Nintendo’s entry into the gaming industry has not been easy, but it worked its way up the ranks due to continuous reinvention and technology adaptation.
Western Union began as a telegram service provider during the early 1930s.
Unfortunately, they have lost market demand since the use of telephones became popular in American homes before.
However, Western Union has moved from being a telegram service company to a secure money-wire service provider.
Western Union now offers comprehensive global remittance services with highly competitive rates despite the growth of many money transfer brands in the industry.
Instagram started as an online enterprise named Burbn, allowing users to check in at a particular destination or make plans on where to stay. It has also become an interesting platform for individuals who want to meet new friends or hang out with friends. However, founder Kevin Systrom saw the platform’s huge potential with its photo-sharing feature. Burbn was eventually renamed Instagram, which is now widely used in photo sharing, social networking, and advertising for various industries. Instagram is currently integrated with the largest social media platform Facebook.
Starbucks was previously recognized as a specialized espresso maker and coffee bean provider. But it has pivoted from being a coffee bean supplier to being a prominent and cozy coffee shop. Starbucks still offers delicious coffee beans to their retail partners up to this day, but the coffee brand has also expanded further to many strategic locations worldwide.
Honda was launched as a motorcycle manufacturer, aiming to compete with Harley Davidson in the biking industry in the early 1950s. But most of its motorcycle designs are not appropriate on freeways. Honda moved into off-road motorcycling due to its relatively smaller bike size and eventually penetrated numerous markets around the globe. Today, Honda is one of the most successful vehicle manufacturing companies, offering a wide range of automotive vehicles, from motorbikes to SUVs.
Pivots can bring dramatic effects on various types of businesses. Pivoting starts with a firm decision, and as a business owner, you must be willing to implement changes that will help make your company strategy profitable. These changes may be what your customers are looking for, but never forget to measure the risk associated with this kind of maneuver.
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