One of the most traumatic moments in the life of every entrepreneur is making the decision to pivot the business model of their startup. Every entrepreneur will understand me when I say that your startup is like your baby— we are in love with it and we wouldn’t want to change the way it is, never ever.
This unconditional love can lead us to head up, even when we have clear signs that something is wrong. It can’t never be our business model’s fault— our business model is the best. It is always a problem of the market, of the target we have focused on, of not having enough budget for a good marketing campaign, etc. It is important to analyze the situation calmly to be able to determine if it is necessary to pivot or die (or even pivot and die), but at least you will know you have tried.
How can we know when to pivot? In this article, I try to break down the signs that show it is the moment to pivot and the reasons to do so.
1. You’re losing clients, employees or suppliers
The first sure sign that you need a change is when you see that you are losing customers. If your churn rate grows, it doesn't matter how good you are at attracting new customers— they will leave as quickly as they have come.
But let's not forget that the most important asset you have is always people. If you are losing workers faster and faster, you must be aware of the reasons that make them leave for another company. If you detect that it is due to a lack of motivation, you have a clear signal that you must pivot. If the workers are not motivated by the direction of the company, it is likely that this direction leads you to a business death.
2. You stopped growing
Growth indicates that what you are doing is working, but if at some point you stop growing, it means that you may need a change. Let's not look for excuses or enemies, let's analyze the situation, your product, the market, the distribution channel, the way you sell it and make changes in the search to return to a positive growth trend.
In order to do this, it is key to become obsessed with your KPIs. As an entrepreneur, you need to be able to detect negative trends in turnover growth, efficiency and profitability.
3. You don’t foresee a path for exponential growth
Perhaps your business keeps growing month after month, but it may not be enough to achieve your profitability or positioning objectives in a specific market. You must always strive to grow, even if you are already growing, since nonconformity is an essential quality in any successful entrepreneur.
4. You spend too much time putting out fires
If your day-to-day routine consists of solving problems rather than working on product improvements, talking with customers and workers, or analyzing KPIs, this is a sign that you need to change. If you are solving problems all the time you are not looking forward, so sooner or later you will stumble.
5. You are no longer covering a need of your target users
Every day new competitors appear in the market offering better services, better products, with more attractive marketing and at a lower price, so it is possible that what had given you success until now is no longer aligned with the tastes or needs of the client. Pivoting the market or target is sometimes enough to continue to be successful with the same business model.
6. You are bored
It may seem irrelevant, since it does not directly affect your income statement in the short term, but it is an unequivocal signal that you need to pivot. If you are bored, you are not motivated. Therefore, there is something that used to motivate you and now it doesn’t anymore. That lack of motivation is transferred to the team and to the ambition of the entire organization, so sooner or later you will see it reflected in your income statement.
Corporate Lab is a venture studio specialized in creating new tech startups for large corporations. We're experts in launching fast MVPs and creating new tech startups for large corporations. This gives us the expertise of knowing when it's time to pivot and iterate. If you think your company needs to be ahead of the business curve and build new businesses, contact our team. Let's chat!