Pivot means to shift or turn in a new direction. A business pivot is a change in the direction of a business. In this article we discuss about business pivot. We also present 7 tips for a successful pivot by startups.
What is a Business Pivot?
A business pivot is a structured course correction designed to test a new fundamental hypothesis about the product, strategy, and engine of growth.
Eric Reis, author of the The Lean Startup
A pivot is a shift in strategy for a startup. The primary objective is to improve revenue or simply survive.
Wilbur Labs, a San Francisco based startup studio, surveyed 150 founders and found that 55% of them reported having to pivot their startups to avoid failure.
A business pivot is a key strategic move for a company. It might involve a dramatic change.
Types of Business Pivot
Pivoting your business might not always require a drastic change impacting the entire company. A pivot can be a shift in the following aspects of your business:
- Target Customer: a shift in your focus from B2C to B2B customers
- Market Segment: from students to employed professionals
- Platform: you might consider shifting to an App from a website-based solution
- Revenue Model: introduce an ad-based revenue model instead of freemium
- Distribution Channel: a move from direct sales to sales through retailers
- Pricing Strategy: you might decide to shift from bundle pricing to cost plus pricing
- Overall Industry: a complete shift from hardware to software
Right Time for a Business Pivot
How do you know if it is time to make a pivot your business?
The following signs will tell you that a business pivot might be necessary:
- Your business progress is very slow despite your efforts
- There is too much competition
- Only one of your products/services has traction
- There isn’t enough market for your products/services
- You have found a more attractive business opportunity
- Your perspective about the industry has changed
- You have lost your passion
7 Tips for a Successful Business Pivot
Tips for a successful business pivot are:
- Focus on features that work
- Involve your stakeholders
- Act fast
- Focus on re-skilling
- Re-look at your product-market fit
- Create a pivot strategy
- Define new goals
We have briefly explained each of the 7 tips for successfully pivoting your business.
1. Focus on features that work
It is possible that one or more features of your product or service are working well. You can explore if it is possible to convert that feature into the product itself.
Your approach should be to focus on individual features instead of the entire solution. You can then direct all your resources towards the features that are working well.
2. Involve your stakeholders
You need to explain to your employees and investors the need for a pivot. If you involve your employees, they can actually provide valuable insights on how to pivot – what features to focus upon or what technology to use.
Pivots can be confusing as well as disruptive for your organization. You need to ensure open communication with your employees so that they can successfully execute your business pivot.
Ensuring that your investors are onboard is particularly vital. They might withdraw support for your startup. This can be a survival risk for your business.
3. Act fast
Once you have taken the decision that a pivot is required, you need to act fast. You will need to start working on the new strategy quickly and decisively.
Speed is a key success criterion for a successful business pivot.
4. Focus on re-skilling
A business pivot might require you to acquire new skills for your business. This can involve training of existing employees as well as making new hires.
You may also need to get help from external consultants/specialists for specific skills that your company requires.
5. Re-look at your product-market fit
Are you selling the right product to the wrong customers? Your target audience might be retail customers while your product is ideal for the B2B segment.
In this case, pivoting your business and selling to B2B customers might be the solution to increase your sales. You might not have to change your product at all.
6. Create a pivot strategy
It is vital for you to create a comprehensive pivot strategy covering the following areas:
- Pivot goals and timelines
- New products/services to be offered
- Product-market fit
- Skill sets required for new business model
- Risk management
- Funding the business pivot
- Scalability of the new model
- Testing the new business model
7. Define new goals
Since pivoting your business will be a shift in your company’s direction, you will need to define new goals. This will include new business metrics for traction, revenue, profit, etc.
Example of a Successful Business Pivot
Have you heard of an app called Burbn?
Burbn was developed in 2009 as a social media app for users to check in their location, post their plans and share photos.
The Burbn leadership team found that the most commonly used feature of their App was sharing photos. They decided to stick to this feature and stripped Burbn down to its photo, comments and like functions.
Burbn was renamed as Instagram and launched in October 2010. By mid-December, the number of users had reached 1 million. In April 2012, Facebook acquired Instagram for USD 1 billion.
Burbn’s transition to Instagram is a brilliant example of a business pivot.
In Conclusion
You should consider a pivot when you are left with no other option to revive your business. You should explore this when you have come to the conclusion that your business model is not viable and your business will not survive.
As a founder, it can be comforting for you to know that when you have no other option, you can consider a pivoting your business.
To learn more about topics on business strategy, you can read some excellent articles in our blogs section.
Other References
Please refer to the following articles for further references on pivoting your business.
- How To Pivot Successfully In Business
- When, Why, & How to Pivot a Startup Business
- What Pivoting is, When to Pivot, and How to Pivot Effectively
One reply on “Business Pivot – 7 Tips For Success for Startups”
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