{"id":22013,"date":"2023-04-22T10:52:34","date_gmt":"2023-04-22T17:52:34","guid":{"rendered":"https:\/\/foundersnetwork.com\/?p=22013"},"modified":"2023-04-22T11:52:30","modified_gmt":"2023-04-22T18:52:30","slug":"pivot-startup","status":"publish","type":"post","link":"https:\/\/foundersnetwork.com\/pivot-startup\/","title":{"rendered":"Startup Pivoting 101: A Complete Guide for Founders"},"content":{"rendered":"

Starting a new venture is a thrilling experience. However, it’s not uncommon for entrepreneurs to face challenges that require them to pivot their business model. Whether it’s a shift in the market, unforeseen obstacles, or a need to explore new opportunities, pivoting can be a daunting task that requires careful planning and execution.\u00a0<\/span><\/p>\n

As an entrepreneur, it’s crucial to understand when and how to pivot your startup to ensure its long-term success. In this comprehensive guide, we’ll explore the pain points that come with pivoting, offer practical tips on how to identify the right time to pivot, and provide valuable insights on how to pivot your business in the most effective way possible. So whether you’re a seasoned entrepreneur looking to take your startup to the next level or a first-time founder looking to make the right moves, this guide is for you.<\/span><\/p>\n

What is a Startup Pivot?<\/span><\/h2>\n

A startup pivot happens when a company shifts focus to address a market, industry, or demand-based evolution. It is essential that all founders take time to assess their model as they grow to understand if and when a pivot may be needed to keep their business on track.\u00a0<\/span><\/p>\n

Recognizing, planning for, and implementing a pivot takes time and dedication. Due to this, many founders often have a misconception that they will be better off without investing time into a pivot. This is not the case.<\/span><\/p>\n

Less than half of founders enter into a pivot optimistic about the process. When all is said and done, around <\/span>75 percent of founders report success<\/span><\/a> on the other side of their pivot.\u00a0<\/span><\/p>\n

A startup pivot, or business pivot, can help a business shift its strategy to adjust to changes in customer needs, industry disruption, or any other factor that could set a business off track.\u00a0<\/span><\/p>\n

Startups undergoing a pivot don’t need to completely reinvent themselves. It\u2019s common that a pivot will take form when addressing and reimagining a single facet or product under a company\u2019s umbrella.\u00a0 <\/span>
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\n<\/span>A powerful way to approach a company pivot is by looking at the shift as feedback from the market or consumers. By responding to the shifts, you are simply adjusting to solving a need \u2013 as all good companies do. <\/span>
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\n<\/span>And remember, if you are here for advice on pivoting, it\u2019s likely that the reason is one outside of your control, and not an indication that you are failing at your business.<\/span><\/p>\n

Types of Startup Pivots<\/span><\/h2>\n

Pivots come in all shapes and sizes from changing a product all the way to changing an entire business model. To best understand what type of shift you may want to implement, let\u2019s break down the different pivot categories:<\/span><\/p>\n

Product pivot<\/span><\/h3>\n

Instagram is a classic example of a product pivot. The company started as an app called <\/span>Burbn<\/span><\/a> that was focused on allowing users to check in at certain locations and share photos. After a short time on the market, leadership noticed that the photo-sharing aspect was extraordinarily popular. This led the app to implement a product pivot to re-shape the app from a location-based social media platform to a photo-sharing app.<\/span><\/p>\n

A pivot in a product like this example usually means shifting a single business unit to sharpen a product in response to customer feedback. Typically, when a product management team implements a product shift it is in response to competitors, the market, or a mismatch in the product-market fit.<\/span><\/p>\n

Business model pivot<\/span><\/h3>\n

One of the most impressive business model pivots of the modern day is that of Amazon. Starting as an online bookstore, Amazon has shifted\u00a0 to become the largest global online retailer. While this shift came over decades of growth, Amazon\u2019s responsiveness to its customers has allowed the company to disrupt and shape the global markets of today.<\/span><\/p>\n

When a company shifts its business model it is undergoing a major pivot. Pivots of this scale can mean changing strategy, target customers, distribution networks, or revenue models. Making a pivot to your business model should be a strategic move that allows a company to best meet the demands of its customers and market.<\/span><\/p>\n

Target market pivot<\/span><\/h3>\n

Target market pivots occur as markets shift. Pivoting to meet the needs of a new market can be done to expand a customer segment, respond to low customer demand, or simply tap into a new market that is showing ready for your product.\u00a0<\/span><\/p>\n

Mountain Dew is a great example of a company that has successfully pivoted its target market.\u00a0<\/span>The drink was originally marketed as an alternative to moonshine. Over the years, Mountain Dew has shifted markets from backcountry to extreme sports \u2013 now focusing on gamers with <\/span>40% of its annual marketing spend<\/span><\/a>.<\/span><\/p>\n

The main purpose of pivoting your target market is to help your business prevail in the market or to grow your business revenue. Great companies don\u2019t let their markets grow stale. When the time is right, pivoting your target market is a smart move for startups who are looking to position themselves for long-term success.<\/span><\/p>\n

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To learn more about how to pivot your startup, <\/b>see if you qualify for membership to join Founders Network<\/b><\/a>.<\/b><\/p>\n<\/blockquote>\n

When to Pivot a Startup<\/span><\/h2>\n

One of the most crucial jobs of a startup founder is to have a plan to continuously evaluate the performance and direction of the startup idea \u2013\u00a0while remaining open to the possibility of pivoting, if necessary. A few signs help founders identify that it\u2019s time for a pivot. For example, it may be time\u00a0 if one product is outpacing all others, sales are not meeting their targets, or when product development has fallen behind competitors’ advances.<\/span><\/p>\n

The success of a single product feature<\/span><\/h3>\n

When a single product has garnered significant attention and success, it may be a good time for a startup to consider pivoting to double down on a particular feature. A great example of this responsiveness is Nike\u2019s ability to outpace its competitors or break into a new niche.<\/span>
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\n<\/span>Nike saw the success of a single product feature when reviewing their golf market sales. Instead of trying to outpace the leaders and founders of the golf club market, they saw their excellence in the apparel and footwear side of the sport. With this knowledge in hand, the company made a <\/span>pivot away from golf clubs<\/span><\/a> and back into their sweet spot: apparel and shoes.\u00a0<\/span><\/p>\n

This is not an uncommon trend for growing and multifaceted businesses. It may be that a single feature of your service, product, or business model outpaces those around it. If that’s the case for your startup, explore the possibility of pivoting to support your success as a single stream of business.<\/span><\/p>\n

To be successful as a business owner it\u2019s best to focus on what works and do it well. This will ensure you can focus on what makes your customers keep coming back for more, and help you build around your own success.<\/span><\/p>\n

The company’s financial performance is not meeting expectations<\/span><\/h3>\n

Another critical moment that may trigger a business to pivot is recognizing where performance is not being met. At this point, it\u2019s time to assess the financial health of the startup and determine the best course of action.<\/span><\/p>\n

Startup founders have a personal connection to their business. Despite this, all founders are bound by the capital they have to invest in their startup. Making a pivot when a startup enters into financial turmoil can be a way to get back on track.<\/span><\/p>\n

To start, enlist a team to work with you to take an objective lens over your business model to understand what is working and what is not. Look at what you can reshape, where your cash flow is being taxed the most, and how you may be able to operate in a more lean structure. Then, <\/span>define a new image of what the future could look like. From here, implement changes that support a path to regain financial traction.\u00a0<\/p>\n

The target market has not embraced the product or service as expected<\/span><\/h3>\n

When a startup launches a product or offering that does not get the response expected, it can be tough. It is also an opportunity to quickly assess your business model and convey the value to your target audience.<\/span><\/p>\n

Taking a product to market is an exciting feat. It also helps you determine whether your marketing has hit the mark, your product offers the features consumers want, or if your pricing model needs to be reassessed.<\/span><\/p>\n

In this scenario, work with your team and your loyal customers to understand what you do well. Also, use this opportunity to get clear and actionable feedback. At the end of the process, you may need to develop a new feature, change your target market, or refresh the strategy for how to reach your target market.<\/span><\/p>\n

Other businesses in the industry are consistently outpacing your startup in terms of growth and success<\/span><\/h3>\n

Competition makes us better. Operating in markets that are ripe for growth helps us to develop and launch products that make an impact. But no one likes being consistently outperformed by our competitors. <\/span>
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\n<\/span>To understand the landscape, it\u2019s important to keep stock of your competition and analyze your position in relation to your competitors. Do you have a niche where you can grow more quickly? Are you constantly charging to the same finish line? Or, alternatively, are you not sure where you land in the market landscape?<\/span><\/p>\n

Studying the competition and determining the best course of action for your startup will help you to stay one step ahead.<\/span><\/p>\n

You may find that a pivot is in order if the market is over-saturated, the competition is outpacing you at your same game, or you consistently find yourself searching for your winning niche.<\/span><\/p>\n

In many scenarios, outpacing your competitors may mean the need to drastically reimagine your company and how it operates. This may look like developing a new product or service, catering your messaging to a new audience, or switching up your sales strategy.<\/span><\/p>\n

You are seeking a change in direction to pursue a new passion or opportunity<\/span><\/h3>\n

Possibly the most redeeming pivot is one that will allow a founder to change direction to pursue a new passion or opportunity. While pursuing a passion is rewarding, it\u2019s critical to do it with a calculated approach.<\/span>
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\n<\/span>A great time for a founder to pivot to pursue a passion is when the market offers an opening. Let\u2019s say you\u2019re looking for a social impact edge to shift to \u2013 first, be sure it\u2019s one that aligns with your company\u2019s mission and vision. If it does not, you may be stepping into a major re-envisioning of your business. <\/span>
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\n<\/span>Alternatively, if you are several years into your startup and find that your business is not taking the shape you imagined, goals have shifted, or ideas have become stagnant \u2013 the infusion of new energy may be the winning answer to your woes.<\/span>
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\n<\/span>When approaching a personal shift, consult advisors and like-minded founders who can help you to seek clarity and congruence with your initiative. If done correctly, you will develop a plan that will allow you to reach new highs in growth, revenue, and personal fulfillment without risking the health of your company.\u00a0\u00a0<\/span><\/p>\n

5 Steps for Executing a Successful Pivot<\/span><\/h2>\n

It\u2019s important to develop a plan before you begin a pivot of any size. To guarantee success, be sure to formulate a plan for prioritization, communicate upcoming changes, and hire experts where you need extra support. Below is a framework to follow in order to set yourself up for success.<\/span><\/p>\n

Identify and prioritize key focus areas<\/span><\/h3>\n

It can be easy to experience scope creep when beginning a pivot. To stay on track, develop a clear and concrete plan and timeline for your pivot. A common strategy to implement is starting with a <\/span>SWOT<\/span><\/a> to clearly analyze what\u2019s going well, where you have room to improve, and where you are already doing well. Companies may also choose to implement market or customer research to get a deep understanding of the full market profile. <\/span>
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\n<\/span>Once landed, synthesize your findings and develop a plan to implement your shift.\u00a0<\/span><\/p>\n

Communicate and collaborate with stakeholders<\/span><\/h3>\n

Communicating effectively and collaborating with your key stakeholders is an essential piece of executing a pivot. Create a plan for informaing stakeholders of upcoming changes and provide a forum for questions and feedback. <\/span>
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\n<\/span>For most organizations, core stakeholders for communications include investors, leadership and board members, staff, customers, and sometimes even important partner companies. <\/span>
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\n<\/span>Your goal with communicating your pivot is to explain the why, generate buy-in for your shift, and create momentum to get your company through the journey.<\/span><\/p>\n

Take swift and decisive action<\/span><\/h3>\n

Once your plan is set and communicated, execute it. Don\u2019t wait to lose the momentum and buy-in that you\u2019ve spent time to secure. Start by activating department leaders as accountability partners for different facets of the pivot to help move forward.<\/span>
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\n<\/span>Sharing the workload and vision will also help teams feel valued and included as part of the pivot. This will help to quell fears of teams becoming obsolete and help them see how they fit into the future strategy.<\/span><\/p>\n

Bring in the necessary skills and resources<\/span><\/h3>\n

As you begin your pivot, or even during the planning phase, you may have discovered that your team is lacking expertise or capacity for a shift. In order to not strain high-performing teams, it may be necessary to hire a consultant or expert to help you pivot.\u00a0<\/span><\/p>\n

Here are some questions to ask yourself if you are unclear about whether or not you may benefit from an external resource:<\/span><\/p>\n