How to Know If and When to Pivot Your Business

When what we now know as Groupon started 13 years ago, it was called “The Point.” Founder Andrew Mason’s website was designed to be a “social good” fundraising site that operated on a “tipping point” system. It worked to help worthy causes that would only receive funding once the pledged donations reached a certain threshold. The Point evolved into Groupon using the “tipping point” concept with local deals. If enough people committed to an activity, they would unlock a deal for that service. After that, Groupon made history, growing faster than Apple, Facebook, and Google. Imagine that?

This evolution is what’s known as a “strategic pivot”—a course correction or even an about face in business operations in an effort to run a company more effectively or to make it more profitable.

Given the current economic climate, lots of owners are starting to make tough decisions on moving their businesses forward post COVID-19. It is through this decision-making process that you may start to ask if a strategic business pivot is what’s needed for your company. Whether it is from shifts in consumer need or spikes in newly discovered opportunities, there are lots of reasons why a company would change the course of their business strategy. Below are 6 points that could help you know if and when to pivot your business:  

1. The needs of the market are changing. Markets evolve and with it their needs. Your product or service may have once been exactly what was called for to address a market need, but now your company must pivot to meet changing needs and to compete with other companies already meeting those needs. Monitor the needs of your customers, pay attention to the evolving market, and notice which companies are stepping into the spotlight, so you can pivot and be where your customers need you to be. Take New York City grocery stores, for example. Several years ago, everyone physically went to the store to purchase their groceries, but then Fresh Direct came along and made physically going to the grocery store an option rather than a necessity. And today, Amazon (together with its subsidiary Whole Foods) is another player in the online grocery shopping game. As a result, brick and mortar grocery stores had to start offering delivery services and online ordering. Of course there will always be people who want to shop for their groceries in person, but if these stores didn’t pivot in order to address these new market demands, they would have been left in the dust. Another great example are taxis in New York City. When Uber and Lyft came on the scene, the taxi business was being decimated. In order to survive, taxis have pivoted to using an app where riders can hail a taxi and pay electronically, very similar to other ride-sharing services. Because of these new competitors and the changing needs of the market, the New York City Taxi and Limousine Commission had to make this important pivot.   

2. You see your business is ready to scale up. You’d like to take your business to a new level of performance and profit, but this means change and adaptation. Perhaps this is going to involve bringing on employees and building a team to help meet growing demand or to free up your time to focus on expansion. Maybe there’s a new product or service you want to add to your company’s offerings in order to propel growth. Or it could also mean working on your own expert positioning and becoming a thought leader in your field in order to add a totally new dimension to your business. Whatever route you choose to take your business to the next level, you’ll need a totally new mindset that focuses on improving efficiency by working smarter, staying competitive, and getting creative about how you can level up. This will require a business pivot.

3. Your company has quit growing. Your business must continue to expand into new markets, add new services or products, get more efficient, or become more nimble—or it will wither and die. Growth is proof that what you’re doing is working. On the flip side, when you find you’re doing the same things you’ve done before that made you successful but are no longer getting the desired results, that’s a key indicator that your company needs to pivot. Instead of doubling down, try something new and different. To put an end to this stunted growth, obsess over the inner workings of your company to be certain that you understand the health of your business at all times. 

• Get to know your financials inside and out. How much money are you spending on payroll? What are your profit margins on each service package or product you sell? What are your overhead expenses and where could there be savings? How are you investing money back into your business? 

• Focus on your employees or contractors. Are they performing critical tasks that will help you run a successful business? Is there overlap or redundancy in people’s roles? Overall, are they helping or hurting?

• Take a look at your processes and systems. Where can you be more efficient? Where is time being wasted? Are any of your client-facing systems causing friction in your sales process?

• Reassess your ideal customer and target market. Maybe the people you sold to early on in your business are no longer the people who are going to sustain your business. Have your values changed? Have your offerings changed? What customer is going to help you grow?

Always remember that when productivity, efficiency, or profitability fall, it’s time to pivot. 

4. You have a change of perspective. After you’ve been operating your business for a while, it’s natural (and expected) for you to experience a change in your objectives, vision, and values. What was important to you and the future you saw for your company as a new business owner is likely completely different than what you see for your company now. If you haven’t made adjustments yet for those new values or that new vision, a pivot is an excellent way to do so. I ran a wedding publication for six years but during my seventh year in business (and after having my son), my entire perspective shifted to celebrations beyond just weddings. I decided to rebrand my publication to Perfête and focus on all types of parties, from weddings to baby showers to birthday parties to kids’ parties. There is so much joy in the world to celebrate that I didn’t want to limit myself to only weddings. This pivot allowed me to shift my business to something I was even more passionate about, and it was important for my business to reflect that. My business THRIVED after making that change. 

5. Your customers aren’t coming back. If your business is built on repeat business, once those customers stop coming back, that’s a clear signal that it’s time to make a change. If providing excellent service to your customers and continually developing those relationships is becoming more difficult, less frequent, or unsuccessful, then it’s time re-evaluate and pivot. Do the work to uncover where your company is going wrong. Has the quality of your product or service diminished? Have you failed to shift to meet the changing needs of your customer? Are you not listening to what your customers want and value? Are you having difficulty competing with similar offerings in the marketplace? Be honest with yourself about where you are coming up short, because if you continue to deny where the issues are, you won’t be able to get those customers back. Pivoting here might mean creating a brand new service or product to win back your customers. Or it could involve leveling up your customer service and customer relationship game by adding the “wow” factor back into your offerings. Whatever the correct answer is for your business, remember that prioritizing the customer will help guide you in the right direction.

6. Your Ideal Client Has Evolved. Just like your values and your vision for your company will evolve over time, so will your target customer. Maybe you’ve realized over time that your ideal customer needs to have more disposable income in order to afford the service or product your company has come to offer, which means that now they live in a different area or have a different occupation. Whoever your ideal client becomes, you need to know precisely who they are and how (and where) to get your company in front of them. Take Facebook as an example. What began as a social network for college students only eventually opened up to become a social network for everyone. And today, its advertising platform is a key component to the success of many businesses, large and small. Facebook pivoted and grew by expanding its core customer base. But other companies might pivot by niching down in their business. You’ve probably heard the phrase that if you try to be everything to everyone, you won’t be anything to anyone. Focus on one thing that you’re good at and make sure that you’ve achieved expert level status at that thing before moving on to the next idea. Trying to do it all can confuse customers and water down your marketing impact. The same idea applies to your customers, too. Instead of taking the one thing you excel at and marketing it to everyone, maybe you’re better off focusing your efforts on a smaller but more qualified and committed group. Once you’ve identified your core product or service and your core target audience, then you can consider adding something new to the mix. 

These are just a few out of the many reasons a business could choose to pivot. Whatever the reason, know this: Pivots are natural and needed to grow your company’s market share, recognize cultural shifts, and drive profits.  If you recognize any of the above signs in your business, keep calm and pivot!