Many existing businesses pivoted from their regular operations into a different sort of enterprise during the COVID-19 pandemic. For example, a distributor of consumer goods may have shifted into medical supplies to help fill a void. Interestingly, some businesses that made a move emerged in better shape than they were before the pandemic.
Entrepreneurs who launched new business ventures within the last year or so may find themselves in a similar spot. It's not too early for these businesses to shift gears or even adopt a complete overhaul. Here are some situations that might require start-ups to pivot in the current environment, along with ways to increase a start-up's chances for success in the future.
The reasons for pivoting vary from company to company, but five common situations that might require a change of direction include:
1. Financial distress. A start-up is often the culmination of years of hard work and planning. It's rewarding to see your dream come to realization. However, things don't always work out as planned. If the business isn't economically viable, you could go down with the ship if you don't change course in time.
Don't let pride get in your way. If your start-up is floundering, take an objective look at what you're "doing wrong" and what you're "doing right." Use this information to determine if a pivot makes sense and where the best jumping-off point is.
2. Unclear focus. Does your business have one product or service that clearly stands out from the others? You may want to focus on that aspect or even make it your company's sole offering. The goal is to be smarter about how you conduct business and derive the most revenue from the operation.
This often involves cost-cutting and streamlining processes to be more efficient. Typically, you'll end up putting less into the company and getting more out of it. Identify your "golden goose" and tap into this market.
3. Weak demand. Even though you likely conducted in-depth market due diligence before opening day, your products or services may not resonate with customers according to your plan. You might have overestimated demand or set your prices too high or too low.
Pivoting doesn't have to mean going back to square one. More often, it requires a change in your business model relating to its target market or pricing. Perhaps you might redefine your target audience to widen the appeal or position your offering as a no-frills, budget-friendly alternative. These subtle changes can shine new light on how customers view your business.
4. High level of competition. You may be facing stiffer competition than you originally expected. If there's one player dominating the market or a large number of competitors vying for market share, it may be tough to make inroads.
A pivot can help set you apart from the pack. In this case, the makeover could be more drastic than simply realigning your products or services. For example, you might seek to compete in a completely different niche. Shake things up if you're stuck behind the leaders with little or no chance to catch up.
5. Change of heart. In some cases, a pivot may be warranted just because you want one. This could relate to a change in the way you feel about your business, a shift in your values or perspective, or simply wanderlust.
This type of pivot can be tricky to navigate and involves considerable risk, especially if you've been profitable up to now. Nevertheless, one benefit of owning your own business is the freedom to call the shots.
Change can be intimidating, especially when you've already invested significant sweat equity in a new business venture. Rather than relying on gut instinct, here's a systematic approach to facilitate a smooth transition to your new-and-improved business model:
Pivoting, whether it's for an existing company or a recent start-up, is a major undertaking. Fortunately, you don't have to go it alone. Rely on your professional business advisors for guidance.
Although some of the most successful pivots have occurred in recent years, others go way back, even to the first half of the 20th century. Here are 10 noteworthy pivots, listed in alphabetical order:
This compilation is far from complete. Will your company make the list some day?
Get in touch today and find out how we can help you meet your objectives.