When a startup should pivot and how to do it right

Nowadays, “Differentiate or die” can be transformed into “Pivot or die” for some startups. The problem with so many small businesses failing to grow is an inability to be agile and change their strategy when the time comes. But when is the right time for a startup to pivot? What’s more, should every startup do this or not?

As statistics prove, not pivoting can become deadly for 7% of overall young businesses, while doing it wrong can cause a failure of 10%. In this article, we will consider when and how to pivot a startup correctly.

First signs that indicate you should think about pivoting

Have a look at this short checklist which will prompt you it’s time to reimagine your strategy:

1. Your idea hasn’t worked out
2. Your business isn’t growing
3. Your competitors outperform you
4. You’re running out of funds
5. Your vision has changed

Let’s study these signs in detail.

Your idea hasn’t worked out

If you don’t get new users or the existing ones don’t show they really like your product or services, consider reshaping your approach. Analyze what are the reasons: maybe, you haven’t studied your target audience before launch, or you don’t understand your niche quite well, or whatever. Be sure to give up on the initial business idea if you find out there’s no actual market demand for your software or services.

Your business isn’t growing

We mean not scaling and expansion to other cities, countries, etc. We mean your actual revenue and sales cycles. In case you are investing more in business development than getting profit, think about how your sales processes, new customers acquisition, or retention of your return customers can be enhanced. If you feel it’s a dead-end, then it’s high time to pivot your software startup.

Your competitors outperform you

Have you analyzed your direct competitors and understood you are lagging behind them? What’s worse, you can’t do anything to outperform them? You know what to do.

Of course, you can try to improve your product or services, for example, implement new features, introduce a more flexible pricing policy, readjust marketing strategy. But sometimes conquering another market with a different offer is a much better idea.

You are running out of funds

You may have perfect negotiation skills, but your potential (or even existing) investors may not share your excitement about your product. If you notice that you count every cent, maybe, the way out is to change your direction and pivot your startup?

Your vision has changed

It’s absolutely okay to understand that you don’t want to be engaged in this particular business anymore. No further explanations needed, I guess.

How to pivot your startup in a proper way

Now that we’ve identified the problems that can make you change your business model, let’s check how to go through this process smoothly.

1. Start with an MVP. Making a hypothesis about your new direction is good. Creating an MVP or a prototype is the best decision. When you step on the new path, the earlier you understand you’re going the wrong way, the better. A minimum viable product will allow you to estimate potential risks and determine whether your software is good at the early stages.
2. Measure. Adjust. Repeat. This is one of the most effective techniques, as it allows you to see the effectiveness of your strategy instantly. You can immediately adapt to the new market conditions or customer needs when you analyze your every step, listen to your users, align your business with the changing environment, and iterate if necessary.
3. Zoom-in and zoom-out. The idea of such a pivot comes from Eric Ries, the author of Lean Startup. Zooming in means finding a feature in your product that is more popular than the others, highlighting it, and focusing on its further development and fostering. Zooming out is vice versa, expanding your software functionality so that one day your former product becomes merely a part of a huge one.
4. Foster employees’ pet projects. Though it may sound weird, let your employees work on their own products. Giving them freedom, you may find out their projects can boost your own software development by adopting cutting-edge technologies or innovative ideas they use.
5. Spread the word. Some startups forget about marketing. But how will your customers find out your awesome product if you don’t talk about it? Create a strong go-to-market strategy and let your users know your software is right what they need.

Best startup pivoting examples to inspire your own change

• YouTube was launched as a dating service. Thanks to the timely strategy shift, it became the #1 video-sharing service in the world.
• Twitter is one of the brightest lean startup pivot examples. It started as a podcast service, named Odeo.
• Instagram was previously Burbn, an app for check-ins, like Foursquare.
• Slack initially aimed at being an in-game chat and after the failure of the game turned into an independent product, popular among hundreds of enterprises worldwide.
• Xerox used to be Haloid and sold the paper for photography until they created a breakthrough copying machine.

This list can be extended, but its main point is that even some of the most famous profitable brands started as something different. Take them as an example and don’t be afraid to pivot your startup when you see the new opportunities for its development.