Key Points

• Pivoting is one of the most necessary moves for a startup that isn’t seeing success. 
• There are plenty of examples where startup pivots have resulted in huge revenue boosts. 
• Communicate your pivot move to all key stakeholders, including your employees, so there are no surprises. 

When you think about all of the startups you are familiar with today, even giant brands like Facebook, YouTube, and Uber, they all made pivots at one point in their business. For better or worse, sometimes your business needs to change directions to ensure you can keep the lights on and look to change the world as you hope to do with your technology or business. 

If there is one certainty, it’s that changing directions or pivoting isn’t something to shy away from or that a business should try to hide. Startup life is unpredictable, and no matter how confident you are that your technology, idea, or brand will be the next big unicorn, someone else is thinking the same thing. 

What Is A Pivot? 

Simply put, a business pivot is a strategic shift in the business model or product that may determine whether a business dies or survives. Generally speaking, when you pivot, it could be something about your product changing, or you are potentially looking to change your revenue model. 

In other words, a pivot isn’t necessarily one defined move, but it could involve many things about a business that might shift direction. Many people like to think of a pivot as simply changing the direction of a moving ship based on the changing winds of a market or the demands of investors.

The big thing to remember is that any pivot can be risky and could result in a worse situation. 

When To Pivot? 

Knowing when to pivot can be one of the most challenging things you do as a founder or a startup member. It’s not an easy decision, and it’s one that you can’t make lightly. Unfortunately, it’s a decision that might be made for you as you want to try everything possible to make your startup successful. However, pivoting will happen, and the signs should be identified. 

1. Slowing Sales

One of the most important reasons you might want to consider pivoting your business is that your sales are starting to slow or have already slowed. While there could be external factors causing your sales to decline, a common reason is that things aren’t right in the business and that you need to make a trajectory shift to boost the business.

Another potential reason might be a new competitor on the market with a more attractive product feature. If you run a software-as-a-service startup, a new competitor could have created a similar product but is charging less. This is only one of several reasons why sales might be declining, but it is the most critical reason to consider making a business pivot. 

2. Changing Market

Let’s say for a moment that you came up with an idea and created a business that provided content writing services. However, with the release of AI products like ChatGPT, Claude, and others, you might find that your content writing business is losing customers to these artificial intelligence models. 

As a result, you might need to look at how to adapt your business to provide a more meaningful or human touch that AI can’t offer. Of course, AI is just one example of something that has changed the way entire markets do business as of late, which is a sign of a pivot. 

3. Increased Competition

We just touched on this one above, but to add a little more color, the competition in your market space will be another hugely important indicator of when you might want to pivot. Whether this competitor is cheaper, has better customer service, or has a better-looking website, any competition concerns could mean it’s time to pivot your business and do it quickly. 

4. Spending Too Much

If there is one thing we have learned from watching the startup industry from afar, having a burn rate that is spending too much, too fast, will be unsustainable. Plenty of third-party studies support the belief that as many as 40-50% of startups fail simply because they run out of money. 

Unfortunately, this means that many good products, potentially great products or services, can never make it because founders are spending too much. If you notice your burn rate is moving too quickly, you must step back and see where you can cut costs, even if this means making some hard decisions with your brand or your employees. 

5. Not Enough Passion

As the founder of a startup, one of the most important things is that you feel very passionate about your work. Whether you want to change the world or just one small part of a market, you should feel very emotional about what you are doing and how you are doing it. 

If this passion ever begins to fade, it might be a key indicator that it’s time to make changes in your business to regain that dedication and fire. If you do lose passion, everyone around you, from co-founders on down, might think you are not as dedicated as you might have been, which could cause a domino effect of losing passion. 

6. Constant Business Issues

If you constantly find yourself putting out fires in your business, whether internal or external, this could be an important indicator that it’s time to make a pivot. Whether this is a strong sign of an issue with your business model or that you are not marketing yourself properly and customers have different expectations, putting out regular fires means it’s time to make a big pivot and fast. 

Preparing The Pivot

Regardless of which reason above is causing you to pivot, knowing how to execute a pivot successfully will make or break whether or not your business survives. Of course, any successful pivot will depend on ensuring you have the right resources to execute a pivot. 

This will include capital and ensuring a market for your new direction. If you have all of your financial ducks in a row, let’s explain how a pivot will work. 

Plenty Of Data

You will not pivot until you have the right data to ensure it’s the right move. This will include what, if any, internal and external factors you need to consider. Do you understand the market trends around your pivot, and have you analyzed what your sales could look like post-pivot? You can move on to the next step assuming all these bases are covered. 

The SWOT Analysis

Yes, the SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis is old-school business 101, but it works and has been around for a while. Knowing what your startup does best and identifying your weaknesses will help you pivot. The same goes for opportunities and potential threats, like losing customers. All this will help you know exactly how to navigate this process. 

Know The Right Pivot

In the world of business and startup pivots, there are two kinds to consider. The first is the ideation pivot, which generally happens early on when the startup is still coming together, and you can make a move before anyone is the wiser. YouTube is a prime example of this as it changed from a dating site to a video platform in under a week after it launched. 

Separately, you might be looking to make a hard pivot when you have a live product and customers. This is the real “pivot” most startups endure, as you must ensure you don’t lose customers right now. Instagram is a great example, as it removed every feature from the original app idea and left itself as just a photo-sharing app. 

Making The Pivot

Okay, now that you are ready for your pivot, there are just a few steps to actually making it. Pivots themselves are surprisingly the least complicated part of this entire process. 

1. Timelines

Setting the correct timeline for a pivot is going to be super important. You don’t want to make any pivot moves during a big sprint or a busy time of the year, like the holidays, when some of your key employees might be out of the office. 

2. Allocate Resources

Knowing that you need to make this pivot, however big or small it might be, you must ensure the right resources are allocated. This means that you need to divide your remaining capital to ensure that the team involved in making a pivot has the right amount of money to make any purchases like servers to make a pivot successful. 

3. Measure Success

When a pivot is complete, you should know exactly what success will look like. This means you should have identified Key Performance Indicators already in place so you know if your pivot was the right move in 3, 6, and 12 months down the road.

If you don’t know what success looks like, there is a better-than-good chance that you will make a pivot and then make another pivot shortly after, which could result in customers fleeing for competitors. 

4. Communication 

Communication might be the last step here, but it could fit anywhere in this process. It probably should go first on this list, but for the sake of argument, we’ll focus on including it so you know it’s an important step. 

You absolutely, positively have to communicate the pivot moves you are making to all key stakeholders inside and outside your business. This includes your investors, who will want to know what pivot moves are taking place, why, and when. 

Your employees, especially those not directly involved in the pivot, will also want to be in constant communication as any pivot involves their livelihood, so be open about this process. 

Other Useful Tools and Concepts

When you think about all of the different pivots made in business, it’s clear that they can work. PayPal, Uber, Twitter, Slack, and Twitch are just a few of the corporate giants that were once startups focused on entirely different businesses before they successfully made their own pivots. As all of these companies succeeded, the writing is on the wall that, when done correctly, any other startup could also succeed. 

Of course, success isn’t just based on your ability to pivot but also on the business model itself. Knowing all of the reasons identified above for why a pivot may take place, it’s super important to make sure this is the right move and will lead to increased revenue and customer satisfaction. Anytime a pivot can be made for the right reasons, there is a great chance it’ll be a win for everyone involved. 

Conclusion 

At the end of the day, making any pivot for a startup is a tough decision, and it could lead to unintended consequences. Most importantly, please don’t make this decision lightly and do it for all the wrong reasons. Of course, you also need to ensure that all of your key stakeholders are involved, as they might have another point of view to consider that could affect how successful the pivot can be in the long run.