Most businesses launch with a solid idea of the products and services they intend to provide. And while having a crystal-clear vision is important for an aspiring entrepreneur, business owners must sometimes alter the direction of the company based on the market’s response. That type of alteration is usually made when a business’ future hangs in the balance, and is known as “pivoting.”
Business owners usually decide to pivot based on external factors, such as lukewarm audience reception or challenges from superior competitor offerings. A pivot does not include small changes like pricing alterations. Instead, it is a change in the direction and focus of your business and products.
While pivoting is common in the startup world, larger companies often engage in this practice as well. A now-famous pivot occurred in recent years, when a company called Odeo changed its focus from podcasts to social media. Today, that company is known as Twitter.
Clearly, pivoting can be a game changer for businesses of all sizes. Some entrepreneurs, however, often struggle to determine when is the right time to pivot. Here are a few signs that your current business may need to make one of its own.
Lack of Investors
Wondering why financiers aren’t rushing to invest in your business? If it’s suffering from a lack of funding, a pivot may be in order. While a few rejections are par for the course and shouldn’t dissuade you, companies that consistently struggle to find investors may be dealing with flawed products or marketing plans. Don’t be afraid to alter your product—or even start from scratch—to find your cash cow.
In some cases, investors may just not understand what it is that you do. If your product offers functionality on multiple levels, you may need to focus in on one key feature while your business is getting off the ground. Should your company prove a success, you can always go back and expand your product and service offerings at a later date. Just make sure that the feature you focus on is the same one your customers want.
Lack of Audience
It doesn’t matter how exciting your product or service line is if no one is lining up to purchase your goods. One of the most common reasons for pivoting is lacking an audience for your products. If you find yourself in this situation, you may need to change your product to better meet customers’ needs or change your target audience. For example, when Starbucks realized that no one was buying its espresso machines, the company switched its focus to brewing coffee in-house and selling to individual consumers. In this way, the business used its existing products to fill a different need in the marketplace.
Along with creating products without a clear audience in mind, startups often make the mistake of targeting too many people at first. The goal is to focus on convincing a specific group of customers that they need your product rather than selling to everyone in the market. Targeting too large a market segment confuses people and may even turn off some of the clients you hope to persuade.
Sales Are Slowing Down
If sales figures are stagnant, it may be time to pivot to a more lucrative business model. While a financial slowdown can be indicative of a poorly conceived product, it may just reveal that your prices are too high or low, or that you’re targeting the wrong audience. Additionally, low proceeds can suggest that your marketing campaign is insufficient in some way. To correct the issue, a business needs to find out what adjustments are required to ensure the profits of your products reflect the value they offer consumers.
Increase in Competition
Every business has competitors with which it must contend. If you’re consistently losing customers to your competitors, it may be time to rethink your business concept. These days, few business ideas are truly original, and success relies on providing greater value than your rivals. From offering lower prices to providing superior benefits and features, there are various ways in which a company can distinguish itself from the crowd.
Still, if your opponent is constantly pulling ahead in the polls, it may be a sign that you should make a change. Pay attention to what your customers are saying; if a majority of them think there’s a problem with your product, they may just be right.
You don’t have to abandon your business’ goals or values in order to pivot effectively. The truth is that business owners shouldn’t be afraid to adjust their original intentions in pursuit of growth. By considering the needs and wants of your customers, you can keep your startup business competitive for years to come.