Are you feeling stuck in a rut? Do you feel like your startup isn’t going in the right direction? It might be time to pivot.
Pivoting is one of the toughest decisions an entrepreneur has to make, but it can also be one of the most rewarding. It occurs when a startup swings from its core focus and changes course fundamentally. It might happen in the early or later stages and could imply discontinuing a crucial product or entering a totally new market. Many tech companies have successfully evolved through pivoting and become well-known unicorns. We’ve put together this guide to help you make an informed decision about whether or not pivoting is the right choice for your business. We’ll explore what factors should influence your decision, and how to make sure it’s successful.
When Should You Consider Pivoting Your Startup?
Customer Responses:
Listening to your customers can help you avoid losing business. If you notice that customer needs have shifted or customers are showing more interest in another product of yours, make sure to use this opportunity to pivot efficiently and effectively. If you find that your core product isn’t resonating with customers, it might be time to switch strategies. Don’t ignore feedback from customers — pay attention and use their insights to discern whether it’s time to initiate a change. However, customers have a tendency to provide misleading information when they try the product through beta testing, product demos, and freemium models. It is critical to understand the reasons for this, as well as the actual problem that the product is solving and how the market is willing to adopt it.
New Insights:
In most cases, startups pivot due to new insights – either about the customer or the product. Sometimes, these insights can be inspirational and open up entirely new pathways for you and your business. CEOs learn new perspectives, insights, and foresight by speaking with experts, customers, and other entrepreneurs. This also informs new wisdom on the way scale and opportunities are evaluated. A pivot might be rooted in the new understanding and focused on unlocking options that were previously not visible. In such situations, pivoting is a strategic decision that’s essential for success.
Economic Logic:
This refers to when a startup’s current offering isn’t generating enough sales or acquiring enough customers in order to support its operations and sustain itself over the long term. Sometimes startup owners may realize a different or easier way to monetize their product by altering their business models. Some examples are moving from low volume/high margin too low margin/high volume or shifting focus from a product to a platform or the other way. This sort of pivot can also be undertaken to optimize for valuation rather than for cash flow. A smart pivot can help businesses manage their resources more effectively and gain more traction in the market.
Market Crowding:
Finally, another common reason for pivoting is when there’s too much market crowding – that is when there are too many competitors selling similar products and services in an already crowded space. In such cases, pivoting can help businesses look further ahead and better differentiate themselves within their core customer base – allowing them to stand out among their peers. The original product idea might have made sense at a certain given point in time but is quickly replicated by others. This situation will lead to rethinking how you would differentiate by doing something different.
Making it happen
It is extremely rare for businesses to make a clean sweep of success. Large and small pivots are frequently an essential part of any company’s evolution, from products and services to marketing strategies. Making the tough decision to pivot your startup is a difficult one, but when it makes sense to do so, it can create incredible changes in your business that can pay off in the long run. Whether it’s diversifying your customer base, developing new products or services, or rethinking your business model, knowing when to pivot is one of the most important decisions that any entrepreneur can make.
No matter what changes you decide to make, it’s important to ensure that your team is on board with the decision and that you have the right resources to pull it through. We have incubation and acceleration programs in place at Eight2Five Innovation Hub to assist your startup business in discovering its market and successfully scaling up. We also provide knowledge and information to keep you informed about internal issues and market forces so you can recognize when a radical shift is required for success. Follow us on Facebook, LinkedIn, and Twitter for startup-related insights that can help you grow your business.
