Entrepreneurs rarely think about pivoting until their business fails. Nokia was the first company to produce touchscreen phones, but it failed to turn the company in that direction – and the rest is history. Entrepreneurs must keep an eye on the opportunities offered by the market to be ready to shift the course of their business at any moment. Even if you are satisfied with the way your business is going, it’s still important to identify the right time for pivoting. Pivoting is important because 70% of any startup’s success is market-dependent.
Any market changes can bring either new opportunities or create a threat. For me, being a founder means validating hypotheses and test data that helps me compete with Walmart and Amazon. There are plenty of examples of tech giants initially creating successful products such as Blackberry, but failing to pivot their business as the market shifted. Unlike the startups or companies practicing a more agile approach to business, firms such as Nokia were too lead-footed to make a sharp 180-degree turn when the situation required it. Nokia was the first company to produce touchscreen phones, but it failed to turn the company in that direction – and the rest is history.
Meanwhile, I believe that even if you are satisfied with the way your business is going, it’s still important to identify the right time for pivoting, otherwise you risk seriously mismanaging your company because 70% of any startup’s success is market-dependent.
Entrepreneurs rarely think about pivoting until their business fails. Such an approach is wrong because a founder must keep an eye on the opportunities offered by the market to be ready to shift the course of their business at any moment.
Speaking of personal experience, my first startup in the US was founded in California in 2019. Its goal was to optimize the restaurant procurement process on the U.S. market, and it demonstrated a robust monthly growth of 20%. However, in 2020, I changed the direction of my business and created a fresh food grocery delivery service with orders delivered within 10-15 minutes. With this experience behind me, I dare say that a pivot is not just for the times when a business goes the wrong way. In some cases, pivoting is necessary even if your business is doing well and showing sustainable growth.
4 Situations in Which a Startup Owner Should Think About Pivoting
Here are the four situations when an entrepreneur should consider making a pivot.
- Activities stop paying off and require an extra effort, which is often too risky.
- Only one of your products or services gets traction.
- The company is a part of a fast-growing industry where every change is perceived positively.
- The market changes just can’t be ignored.
Metrics You Should Be Tracking to Maintain Control Over Your business
All startups operate under the strain of financial uncertainty even when the economy is stable because their business model still requires consolidation. That doesn’t mean, however, that you should fumble in the dark, without using specific measurements to track your company’s performance.
Be sure to get feedback from the users, but keep in mind that you need all kinds of feedback, not just words of praise. Many entrepreneurs just want to get as much positive feedback as possible to publish it on their website and ignore the opportunity to collect ideas on ways to improve their business. Keep asking yourself about things missing from your service, and remember that you can always get lots of free ideas from your target audience.
Measure retention rates. Track customer activity irrespective of the number of transactions or their dollar value. Every customer is important.
Teach your salespeople to report back to you not just with the news of steady sales growth, but also with the stories of any unusual customer behavior that they notice. This is especially important for businesses that initially offer a wide range of services. Pay attention to the services that are suddenly in the greatest demand. Find out why this happened.
Keep an eye on your competitors. Sometimes, an entrepreneur can be so in love with their product that they have trouble accepting that their competitors might have a good idea. You may let your guard down, especially if your business is growing. Never do that and keep an eye out for everyone: the more competitors your niche has, the more details you will have to analyze, and the better decisions you will make.
Make Sure You Have the Right Team for Pivoting
Needless to say, pivoting is stressful for any team. No one wants to deal with change, and often employees either ignore the signals or even hide them from the management on purpose, believing that they can be disregarded if the business is going well as it is.
Encourage those who speak up about the need to change. In the meetings, employees usually like to report on how the sales are up and the costs are down. Demand that they try to answer some different questions. What are we missing? Where are we missing out?
Try to introduce a role of in-house critic that the employees can take turns playing. Ask everyone to try their hand at criticizing an idea or a report, even if at first glance they seem to have no problems.
How to Make Your Pivot as Effective as Possible
Tap into your core strengths. Choose the direction of your pivot depending on where your strengths lie, be it your technology expertise or your outstanding sales team.
Keep your long-term perspective in focus. Your strategic goal doesn’t have to change, but the steps you take to reach it can and should change depending on the market and the overall situation.
Use technology to make the right pivot. Your team must constantly monitor market trends, make test development, and prepare proposals for the turns your business can take. Take the wheel. In moments like this, you cannot put the responsibility on your team’s shoulders. Pivoting is what leaders do; just take the responsibility already.
Of course, it takes willpower and determination to make a pivot. But if you do everything right as a founder and a business owner – consistently validating different hypotheses, synchronizing commercial product metrics, and creating the right team for the move – this turn can create a truly stellar new opportunity.
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Pivoting Is an Opportunity: Even for a Growing Business
Source: Super Trending News PH
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