When do I Pivot my Business and How do I know that is it the Right Time to Change?

jamesk

November 17, 2024

Every business goes through highs and lows. There are times when your revenue as well as customer engagement are through the roof. At other times, you see a drop in both these things, and that can leave you frustrated.

When your business is constantly declining in terms of profits as well as overall efficiency and you are not able to meet your revenue targets it is time to consider other possibilities.

It doesn’t mean that you should completely shut down and give up. One effective strategy in this scenario is pivoting which can not only save your business but can also ensure its long-term growth.

Pivoting is when a business tries to adopt a new model to serve its customers through an alternative product or service based on revenue and customer behavior.

This blog delves into the ins and outs of pivoting to help you understand whether your business needs it or not so keep on reading till the end.

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What is a Pivot?
Some Important Considerations Before Pivoting
Types of Pivots
Signs that Show It is Time to Pivot
Effective Ways to Pivot Your Business
Managing Employees
Customer Communication
Shifting to Online Services
Taking Up Online Tools

What is a Pivot?

Pivoting simply means taking on sales information and based on that shifting your focus towards an element of your business that is flourishing the most. This certain element might not be the main crux of your initial business model but it is the only thing that can serve as the key to the success of your business.

You can also look at pivoting as a structured course correction that aims to test a new hypothesis or strategy about your products, strategy, and overall business model.

A fine example of pivoting is when a restaurant initiates providing a daily meal plan instead of only an eat-in option. Another example is when a physical fitness center offers online classes and moves away from in-person sessions which makes things easier for the clients.

New businesses especially need to have a pivoting mindset if they are to succeed in their ventures. Regular pivoting based on facts and ground realities can help these businesses adapt their strategies for the better. Following this essential start up advice can give you a head start at this crucial time.

Some Important Considerations Before Pivoting

Before you jump ahead and start pivoting your business you need to consider the following few points.

Is your staff motivated and committed to this change of direction and if not why?
What is the skill set of your staff and how will they benefit from the pivot?
Do you have enough resources and time to make the change last for at least 6 months?
Do your investors have confidence in your new proposed course of action?
Can your new business model capitalize on your existing customer base?
How easily and quickly can your business go digital?

If the answers to these questions are positive then there is a high possibility the pivot will prove effective for your business growth. If the answers are in negative then instead of keep going it is better to temporarily halt your operations. This will help you preserve your cash and give you enough time to wait for the business or market conditions to improve.

Types of Pivots

Following are a few main types of pivoting that are often done by successful brands

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Zoom-In

This approach involves turning a single feature of a product into a different product while cutting other aspects of the product away. This enables businesses to find and retain focus by delivering MVP or minimum viable products quickly.

Zoom-Out

In this approach, an entire product is made to be a part of another much larger product or system. This type is used when a product is no longer able to support the users or a specific market segment.

Customer Segment

There are cases when a product is designed and launched keeping a certain customer segment in mind but it ends up being used more by another customer segment not included in the original product vision. This pivoting helps you reposition and optimize the product adoption for a more appreciative market segment.

Customer Need

This pivot is done when the problem that a product solves is of no value to the customers. It mainly focuses on designing products that solve problems that are worth solving and hence worth paying for by the customers.

Platform

This pivot involves transitioning from an application to a platform or the other way around. A certain platform may not work for your future products and you might be required to change it.

Business Architecture

This involves the change of a business from a high margin low volume architecture to a low margin high volume architecture and vice versa.

Value Capture

In this type, the company changes the way it captures value. It is basically a monetization or revenue model for a product. An example is when an app gives you a free version with minimum features and then asks you to pay to use its full features.

Engine of Growth

This involves choosing the right engine of growth among the three options i.e., viral (users promoting the product), sticky (customer retention), or paid growth models (advertising). Using the right model increases both the profitability as well as the speed of your growth.

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Channel

This type of pivoting focuses on selecting a different and more effective delivery channel for your products. This usually involves considering things like unique pricing, competitive positioning adjustments, features, etc.

Technology

In this type, a startup uses a completely different technology to deliver the same solution. In this approach, companies transition to newer technologies or to the ones that provide both better speed as well as pricing.

Signs that Show It is Time to Pivot

Here are a few signs that indicate it is time for you to pivot your business

You are not Getting Desired Results

You need to pivot when you do not get the results you expected or hypothesized at the start. If none of the fiscal goals and brand recognition targets have been met since you have set up your startup then it is time you changed your approach.

Your Business is Always Playing Catch-up

You need to transform your product, market, or revenue model if your business is progressing too slowly. If you are always playing catch up and never getting ahead, pivoting is your only hope.

Consistently Reducing ROI

Your failing metrics in ROI or bottlenecks in the sales funnel are also signs that you need to change your strategy. You need to change your marketing strategies or find other brand-building opportunities in this case.

Competition Has Increased

If there are several other bigger companies with more resources as well as built-in audiences in the competition you will need to pivot to survive. Doing something completely different can improve your chances of success in this case.

You Have Hit a Plateau

A plateau is when there is extremely slow or no growth in your business which is caused by inefficient strategies, boredom, or lack of motivation in the team and the management. This is the time when you need to take an objective look at your company and consider pivoting.

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One Business Aspect Gets the Most Traction

If only one aspect of your company is succeeding while others are suffering miserably it is time to let these go and focus entirely on things that generate the most value.

By ditching what isn’t working and focusing on stuff that is generating more revenue your business can experience a boost in productivity as well as profits.

Effective Ways to Pivot Your Business

Following are a few effective ways a business can pivot

By focusing on a single aspect of your business that generates the most value and tailoring the operations to this aspect. You can use this feature to stand out and draw more customers. And when things come back on track you can start bringing the other aspects as well.
Try different platforms to see what works best for your business the best.
Regularly review your client base to plan the expansion better.
Reconsider your pricing to keep it competitive.
Consider the effects of changing your current model to a more positive one that has a good social and environmental impact. This can take you closer to newer markets that appreciate that model.
Figure out a new, unique, and innovative aspect of your business that draws the attention of the customers. This can give you an edge over your competitors.
Experiment with different business models and accounting software implementation to find one that works best for you. For example, if your trade is direct with the customers and it is not working you can consider working with a distributor instead.

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Following are a few points that will further ensure a successful pivot for your business

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Managing Employees

You need to make sure your employees are comfortable with the pivot. You need to make it so that they are able to adapt to the changing environment. You can do this by implementing a work-from-home policy and providing support so that there is minimum productivity loss during this time.

Make sure all the basic things like conferencing software, internet connections, and workstations are in the best shape. You can also promote regular communication as well as a working routine to help the employees settle into the new working conditions.

Customer Communication

You can experiment with newer ways to communicate with your customers. You can reach them via SMS, WhatsApp, social media, video conferences, or webinars.

Shifting to Online Services

You can transition from physical stores to Shopify or other online e-commerce platforms.

You can also provide services like tutoring, counseling, fitness classes, or others via video conferences. You can also create online payment gateways to ensure the faster collection of payments.

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Taking Up Online Tools

You can implement online tools like Xero accounting to handle your finances better. You can also use project or job management tools like WorkflowMax to ensure your every project is completed on time and with minimum errors. These tools promote better collaboration between different teams which yields faster and better results.

Conclusion

Pivoting your business is a great way to give it a new life and purpose. It is extremely important for the survival of enterprises that are unable to meet their fiscal goals or to connect with their target audience effectively.

Successful businesses tend to pivot often as it gives them an opportunity to explore new opportunities and enter less competitive markets.

This way they are able to stay relevant even in less ideal situations and you can do that too by simply mastering the art of pivoting.

Visit Alpha Pro Partners today to get the best bookkeeping, Xero accounting, and tax services to ensure a successful pivot for your businesses all over the UAE.

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FAQs

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How to know your business needs to pivot?

A lack of positive feedback from customers, poor ROI, and failure to meet the revenue targets are signs that your business needs to pivot.

Under what conditions should a business go for pivoting?

A business needs to pivot when the demand for its products or services is consistently declining.

What changes can a business make when it pivots?

These include redefining your company’s values, business model, target audience, or product offerings.

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How to tell if my business is doing good?

If your revenue growth and profits are increasing consistently then it is a good sign that shows your business is doing well.

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When should a startup consider pivoting?

A startup needs to pivot if its progress is much slower than anticipated despite the amount of work.

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What is an example of a pivot in business?

Airbnb is a prime example of pivoting. The business initially focused on conference attendees but started catering to travelers which significantly boosted its revenue.

Should I consider pivoting for my business?

You need to pivot your business if you notice a decrease in revenue. Another sign is when you see your customers moving to your competitors.

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How do you know if a business is struggling?

A business is considered to be struggling when there is reduced cash flow, a decrease in sales, more customer complaints, piling up bills, and low staff retention.

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Why is it a necessity for a business to pivot?

Pivoting is necessary when your business is not able to find a product-market fit. It is done to ensure your business is able to meet the needs of its target audience at all times.