Launching a new business often comes with pre-established plans and goals in place. Over time, you may be forced to re-evaluate your initial plans. Market fluctuations, changing consumer demands, emerging technology and various other factors could require you to update and upgrade your business.
There are various examples littered throughout history about businesses that adapted, and that failed to adapt to change. Take the case of smartphones for example. Companies that didn’t adapt to the growing demand for smartphones and stuck to older models eventually lost their position in the market. Nokia is a good example of this.
Alternatively, there have been businesses that successfully understood what the consumer wanted and adapted spectacularly. Ever heard of Wrigleys? They’re known for their gum. But originally, Wrigleys used to sell soap. They sent out a piece of gum with every soap they sold, and eventually realized that the customers loved the gum more than their soap. And today, Wrigleys gum is a popular brand worldwide.
As you’re pivoting your business, you may face business disruptions while you’re re-strategizing your business model. You can consider investing in business insurance ahead of time as a financial strategy to protect your business economically. Make sure to do research on competitive packages of business insurance.
The term ‘pivot’ originally appeared in Eric Reis’s book The Lean Startup. In his book, Reis talks about his experience and how businesses should learn to react to changing marketplace conditions.
The world is changing at a rapid pace. It always has, and as a business owner, you’ll come across the need for change again and again. Think about it this way – businesses that were dominating the marketplace in the early 80s and 90s didn’t have to consider the rise of smartphones. Constant connectivity and the rise of digital media were inconceivable back then. But today, you can’t run your business without it.
Business pivoting involves recognizing the need for change and adapting your business model.
No business owner wants to experience success for a few years and then fade away. Business longevity and continued success is the dream, but how do you make it happen? Business pivoting is the answer, and here’s what you should know about it:
1. Conduct Regular Market Analysis
Market analysis lets you make informed decisions about the direction you want to take your business towards. This is crucial if you want to ensure longevity and continued success.
Understanding the factors influencing the market, who your competition is, and how you fare against them is necessary. That way, you can make decisions about what kind of products you offer, your pricing strategies and how you interact with your customers.
More importantly, you’ll also be informed about the emerging technologies affecting your industry. Successful businesses not only invest in, but adopt innovation as soon as they can. The marketplace and industry trends are constantly changing, and regular market analysis lets you know where your business is positioned.
2. Products and Services That Work, And Those That Don’t
A business that offers multiple products or services may realize that not everything sells equally well. If you offer five products for example, and three are performing better than the others, what should you do? Eliminating the products and services that are no longer working for you is the best strategy.
Here, you’re pivoting what you sell by focusing only on what makes you money. Instead of wasting resources and investments on what isn’t making you money, you redirect your efforts towards bringing in profit for your business.
3. Listen to Your Customers
Your customers are a key source of information when it comes to business success. Aside from being the core factor that provides profit for your business, they can tell you where you’re going wrong. Understanding customer pain points is an easy and economical way to address issues within your business model.
Say customers mention an aspect of your business they feel isn’t working for them, for example, your prices. Valuing their opinion helps you in two ways. It both lets your customers know that you care about their opinions, and it opens doors to greater business success when you give your customers what they want.
4. High Employee Turnover
It isn’t only your customers that can tell you where you can improve your business model. If your business is constantly losing employees, if investors and stakeholders are backing out, or if there are positions that are difficult to fill and work isn’t getting done on time, it’s time to pivot.
Your business is only as good as the people that work to make it grow. Listening to your employees and improving your workplace conditions can be the recipe for success. If your employee management strategies aren’t working, and if there are legitimate concerns and complaints that need to be addressed, it’s time to rework your business model.
5. Failing to Meet Financial Goals
Businesses need to at least break even to ensure business continuity. Say your business is retail-only and hasn’t made use of the rise of online shopping. This is fine as long as you’re still making profit. But if your business is suffering from being focused on retail-only sales, it’s time to pivot.
Similarly, if a competitor has appeared who offers better prices or products, it may be time to explore your options. At the end of the day, a business exists to bring in financial profit. If you’re not getting your returns on investment, you have to stop and reconsider your existing financial strategies.
Business pivoting is a part of building an enduring business legacy. Businesses that successfully recognize and adapt to changing conditions are the most successful at the end of the day. The key to understanding what you should change and when you should change it reflects in deficits and a failure to meet milestones.