When we talk about a pivot in business, we’re usually referring to the way companies make substantial changes to one or more aspects of their operations. These changes may reflect anything from a revised pricing model, to a reworking of the new client acquisition process. Regardless of size or form however, the question on every entrepreneur’s mind is: how do I know when it’s time for a pivot?
Why Companies Pivot
As a business owner, you’re probably familiar with the concept of expecting the unexpected. But while reacting to change is a normal part of running a successful business, that doesn’t make unexpected events any less difficult to deal with. Whether it’s the new competition you never saw coming, or an unforeseen economic downturn, even the best-laid business plans can go awry. The result?
- Sales and revenue drop off,
- Customer bases dry up and stagnate, and
- Clients become increasingly dissatisfied
Alternatively, what may have started out as a great business idea simply never lived up to its potential.
It’s circumstances like these that cause many entrepreneurs to reconsider their business models, strategies, and operational approaches. In fact, most organizations make the decision to pivot when some element of the way they conduct their business isn’t working anymore – or has failed to meet their or their investors’ expectations.
5 Signs it May Be Time for Your Business to Pivot
So, how do you know when it’s time for a pivot? Some business owners mistakenly believe that their company has to be failing before they take it in a different direction. But pivoting isn’t always a sign of desperation. Sometimes it’s just a way to improve your operations, and discover growth opportunities you may have overlooked.
According to venture capitalist Alan Spoon, “Businesses can grow beyond their initial dreams by re-imagining their assets and talents, thinking more broadly about the customer problems they solve, and accessing growth capital to seize the new high ground.”
So with that inspirational outlook in mind, here are 5 key signs it may be time for your business to pivot:
- Your initial business concept didn’t get any traction: This may be the case if either your revenue, or the consumer response to what you’re selling, indicates a severe lack of momentum. Make sure the research supporting your revised business plan is as thorough, timely, and realistic as possible.
- Your target market’s needs are changing: Customer tastes and preferences are always evolving. Sometimes clients are looking for a different way to be served and sometimes they want to see improvements made to your product or service.
- You’re experiencing a decline in profits or customers: Is your company’s performance or productivity deteriorating? Are you having trouble hanging on to your staff? Are customer leads generating buyers less often? A strategic pivot may be in order.
- You’re no longer growing: Keeping up with changing market needs – as well as with your competitors – is only possible through regular growth. Do key metrics and measurements show your business has stalled?
- You want to reach a new level of performance or profit: One of the best reasons to pivot is to break out of old habits, routines, and processes that may be preventing your business from achieving greater success.
In many cases, pivoting is a means to help your business recover from tough times, or revamp an unsustainable business model. But whatever the reason behind your pivot, remember that a change in tactics has very little to do with giving up and everything to do with making different – and ultimately, sounder – decisions.