Sometimes, no matter how well you plan, you will need to make a change. When you spend years planning your business and conducting market research, it can be hard to face the reality that you might need to pivot.
But pivoting and starting anew can also mean starting from scratch and giving up on all the investment you put into your company. So how can you make sure you should be changing course and if you determine that you should, how should you go about the process?
We talked to business leaders to learn the best practices for pivoting your business to find out.
When is the Right Time?
“Pivoting isn’t going to magically solve all your problems,” says Cole Steverson, COO of Hybrid2Go, “So make sure you know that going in and only pivot if you absolutely need to.” Pivoting should be your last option unless you are a company like Slack that fell into pivoting due to an internal development.
Pivoting otherwise means that you need to make a complete change in the direction of your company because your products or services aren’t a fit for the current market. “But keep in mind that your goal when pivoting should be to boost revenue and avoid going under, not just changing what you sell,” Cole Steverson added.
To make sure the time is right, John Jacob, CEO at Hoist recommends considering the following: “If you are not seeing progress after nearly exhausting resources and finances, or there is too much competition, it might be worth considering a pivot. Ditto if your growth has plateaued. You need more than one product or service to gain traction if you want to avoid a pivot and if customers are not responding the way you had planned, you should be really examining a switch.”
Ross Cohen, Co-Founder and COO of BeenVerified, added, “If you’re not confident that your product has found its audience, you may have created a product before addressing a real need in the marketplace.” You should ask yourself if your product is serving your audience and, if it isn’t, can you fix it by making a change?
Now, Listen to Your Customers
If your customers have already made it clear that there isn’t a market, use them to figure out where to go next. “Understanding who your customers are, what their biggest pain points are, and how your company’s solutions and skills can address market demand will help you understand if there needs to be a business shift,” says Brad Hunstable, CEO of Ustream.
Your customers may be using products in a way that you hadn’t thought of or they may be requesting a feature routinely that you are overlooking. Again, look at Slack. Originally a video game company, the company realized that players were using the in-game chat feature more than the actual game. Once this was recognized, Slack pivoted to improving the chat and making their company based on what was working.
“If customers are not engaging with your product routinely, that is a dead giveaway that it is time to pivot,” says Drew Sherman, Director of Marketing and Communications at Carvaygo. “If 50% of customers are not engaging regularly, you need to consider switching things up.”
If many customers are singling out a certain feature or offering as their favorite, take note and make that a focus of the new iteration of your company. When it comes time to a pivot, “focus on a single feature instead of a brand-new solution,” adds Chris Bridges, CEO at VITAL. “You don’t want to overwhelm people with your new offering. Focus on what was working for your last venture and build out from that.”
Keep Employees and Stakeholders in the Loop
Your employees are everything when it comes to business, so make sure to be transparent with them about your decision to pivot. “You need to make sure that your team knows what is going on,” says Reece Kresser, Co-Founder at Zizi. “Chances are they have already seen the writing on the wall if things aren’t going well, so you are better off putting them at ease and explaining your thinking. They might even have a few insights into the situation you may have overlooked.”
Your employees will be able to handle the switch if you keep them abreast of developments and allow them to understand why things are happening. “A pivot is going to be disruptive so you are going to make sure everyone is on the same page,” Reece Kresser added. “It is a good time to improve company dialogue and increase employee trust.”
Stakeholders should also be kept in the loop. If you are planning a major change to your business model, the people who invested in your original idea are going to want to know, mentions Ryan Rottman, Co-Founder and CEO at OSDB. “Try to get them onboard by being open about what isn’t working and why a pivot will help fix what is wrong. Like your employees, they might have insights you aren’t aware of, which can inform the direction that you decide to take things.”
Hire New Employees If Needed, Too
Hopefully, you will have everyone you need to pull off your pivot, but more likely than not you will need to fill some gaps. You might need to hire people who better fit the new direction you are planning to take the company.
“Don’t be afraid of new hires to make things work,” says Nick King, CEO at Vint. Nick King adds, “Introducing new roles could be key to making your new business soar. Just make sure that you are open with existing employees about why you need to turn to external specialists instead of keeping things in-house so that they don’t feel overlooked.” Again, communication is going to be an important part of your pivot at every step.
Understand the Competition
Just as it was crucial to understand what you were going to be up against when you first launched your company, so will it be to understand competition when you begin to pivot.
“Look at what those who are already in your next industry are doing,” says John Berry, CEO and Managing Partner at Berry Law. “How is your solution going to improve on what is already out there? Don’t make the same mistakes that have you considering pivoting. Understand whether or not you will really be able to go to war with the businesses that already exist in the space you aim to disrupt.”
You should also be looking at the competition in the market you just left. What was it that made it hard for you to thrive in that market and how are things going to change when you launch in your new market? What was your competition doing that allowed them to survive while you needed to pivot? You can learn a lot from your mistakes! Bring this knowledge with you to your new venture so you are better armed to meet adversity head-on.
Focus on Core Competencies
Tony Chan, CEO and Co-Founder at CloudForecast advises those that are considering a pivot focus on their strengths. “You need to be able to provide results to your new customers. If you decide to operate way outside of your company’s skill set, you are going to run into problems quickly. Figure out how your company can use its current skill set to disrupt a neighboring industry and work off of that.”
Tony Chan mentions finding a road that will complement what you are already offering. “If you are a captioning company looking to pivot to video embed, that makes more sense than going from captioning to Fintech. You will probably be able to keep a lot of customers if you find a path that is somewhat related to what you are already doing. You don’t have to start completely from scratch with a brand-new company and offering. It is more about focusing on what is working and cutting what isn’t.”
If you are already making the move into uncharted waters, you don’t want to move into a line of business that you are completely in the dark about. “Repurpose and re-imagine instead of ripping it all down.”
Embrace the Change
“The process of going through a pivot is very dramatic,” says Umer Usman, Head of Growth at AvantStay. “It means you have to let go of your past mistakes and face a whole new world of uncertainty. It is scary and it is risky. But you have to embrace the newness and focus on creating the best offering you can for your prospective clients.”
Pivoting is a difficult decision to make and one that requires a lot of time and effort. Embrace the challenges and meet them head-on to come out the other side better than you were before.
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