Written by Barb Consiglio.
Entrepreneurs work hard to develop the most successful business plan and product, but even the most strategic plans often need to pivot in order for the business to survive. YouTube, for example, started in 2005 as a video dating site called “Tune In Hook Up.” When the site failed to take off, the founders changed direction to successfully focus on sharing videos online.
In the beginning stages, a company needs to be flexible and consider all options, even unexpected ones. Perhaps there’s a customer base you haven’t considered or your product isn’t solving your customers’ real issues. Being adaptable is crucial because it’s a near certainty that you’ll need to make adjustments once you enter the marketplace.
Doug Groh, director at CincyTech, a southwest partner of Ohio Third Frontier, has helped startups like DataRole and FamilyTech pivot to new markets where they found greater success. He offers tips on when and how companies can use the art of the pivot to grow in a new direction.
- Listen to your Customers – Many variables are unknown until you start selling. Once
the product is in customers’ hands, pay attention to their feedback. Are they requesting features you don’t offer? What trends are suggesting a shift in the industry? Which competitors are targeting the same market and how does your product stack up? The key is to test your product as quickly and inexpensively as possible to know whether minor tweaks or a major overhaul is in order.
“You don’t want to keep running down a path where you’re not getting traction. If you listen to the market, it will tell you what to do,” said Groh. “The startups that do well are the ones with the closest connection to its customers. The ones that struggle continue down a road that doesn’t fit the market.”
- Don’t Jump the Gun – Your business may not be an instant success, and that’s okay. It
doesn’t mean that you have to immediately go back to the drawing board. Be patient and give the product time to catch on with customers. Your concept may be spot on, but it can take a couple of years to iron out the details and get a company’s product and marketing to a place where a business can gain momentum. During that time, your first customers can double as market research to let you know if you’re on the right track so you can confidently move forward.
- The Right Time to Pivot – There are some key messages companies often
receive from customers that signal it is time to pivot. Perhaps they like the idea, but your product would have to function differently to be useful. Or maybe what you’re selling offers value, but not to the customers you’re reaching. For example, Cincinnati startup HireWheel’s business model focused on gathering business permits so homeowners could see which contractors were doing work in their neighborhood. The company then sold those customer leads to contractors. HireWheel struggled to build a customer base with contractors, but then realized that insurance companies and realtors found more value in the information they provided. This led them to change their target customer base and make a successful pivot to their current company, DataRole.
- Take the Time to Revamp– Your company’s product is going to function very differently for one set of customers versus another, so when you make the decision to pivot, take time to redevelop and rework thoroughly before going back out to the marketplace.
“You might have to go dormant for a while in terms of revenue to rebuild your product,” said Groh. “Otherwise your customers are seeing all the steps along the way instead of the finished product that is customized to their needs.”
The reality of business is that companies constantly evolve and shift, and when the time comes to pivot, having a well-executed plan can lead to new paths for growth. The key is creating the right product that serves the right customers to be better positioned for success.