Did you know that Twitter didn’t start as a social media platform? The company was started in 2005, it was known as Odeo – a podcasting platform that found itself going nowhere fast. Fortunately, its founders saw opportunity in creating a platform for liveblogging using short status updates. And that is how Odeo pivoted to the wildly successful Twitter we know today.
The global pandemic has had economic ramifications for many businesses. Pivoting is one of the smartest moves that entrepreneurs are making to ensure survival of their businesses. Pivoting means fundamentally changing your business model when you realise that the current products or services aren’t meeting the market needs. Businesses pivot to improve revenue and survive in the market.
Every entrepreneur starts their business with a strong conviction that their products or services are a perfect match for the market needs. Many make the mistake of persisting with their business ideas, even when the market has proved their initial assumptions wrong. Successful entrepreneurs understand the need to pivot to meet market needs.
Like in the case of Twitter, many of today’s successful businesses had pivots – some which rarely get mentioned. For instance, you might find it hard to believe that both Facebook and YouTube started out fully intending to be dating sites. When their founders realised that dating had become an over-crowded market, they didn’t waste time pivoting to something more unique.
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However, pivoting isn’t as simple as slapping on a different brand name and introducing new products. To have a successful pivot, there are numerous factors that an entrepreneur should consider.
Decide if it’s the right move
Naïve entrepreneurs might think that pivoting is a magic pill that will resolve all their business problems. Nothing could be further from the truth. Pivoting is something that should only be considered when absolutely necessary and other options have been exhausted. There are several valid scenarios that necessitate a business pivot that include limited response from the market, facing stiff competition, or having very slow progress and business growth.
Another common reason for pivoting is when you realise that one aspect of your business is succeeding, while others are failing. For example, if you have a clothing store and realise that your shoe sales are profitable while clothing is slower, it might make sense to focus on shoes only.
Do it early
The best time in a business life-cycle to pivot is right at the beginning. Most successful pivots, from Twitter, Facebook, PayPal, Airbnb, to Netflix came early in the companies’ history. When you realise your business idea isn’t working out in the market as you thought it would, the earlier you pivot the better for your company. Pivoting a mature business should also be done as soon as you identify the problem. Waiting too long means losing more money.
Offer something to existing customers
Pivoting doesn’t have to mean losing your customers. One of the best ways to pivot is by finding products or services that you can offer to your existing customer base. This way, you can leverage your existing relationships while focusing on more lucrative possibilities. For instance, if you have a fitness centre, you might opt to pivot to nutrition coaching or selling fitness equipment or apparel. You will retain many of your old customers with related products or services.
But you don’t have to provide related products or services to retain your old customer base. You might start out as a staffing company and realize that your clients need training and project management more. This might spur you to pivot to develop online training courses to help your clients train their staff. You will have the same customers although you will be solving a different need.
The pandemic brought a shift to working from home and restrictions to social contact. This has seen an increase in take-up of online products and services. If your business has been struggling this is the best time to think about how you can expand to digital spaces.
For example, you can sell your products on eCommerce sites such as Jumia and Kilimall. If you have a restaurant business, think about incentivizing your customers to opt for home deliveries. Pay attention to your social media presence – if possible, hire an expert. Additionally, spruce up your website to make it more user-friendly and search engine optimized.
When making fundamental changes to your business, it is important to inform your employees. Even if you have a small team, a pivot can be confusing and disruptive. Your team will execute the pivot more effectively when they have been involved from the early stages. Additionally, your employees might offer great feedback regarding the idea to pivot.
Great business leaders use pivots as an opportunity to create more open dialogue with team members and boost overall trust and employee work satisfaction.
Test before pivoting
Pivoting a business is often a time and resource-intensive venture. To make sure that you’re on the right path, it is advisable to test your new model and see if it has potential for growth. For instance, it you have a restaurant business and are thinking of changing into a bakery, you can start selling patisseries to your customers and ask for feedback. This way, you get to dip your toes in the water before plunging into a new business model.