Many small-business owners realize that success is hardly ever a straight line. A company rarely goes from point A to point B to achieve its dreams and goals. Typically, there can be many more letters involved before arriving at a destination that probably wasn't even on the radar screen during the planning stages.
Successful businesses tend to be those that learn when and how to pivot.
What Is Pivoting?
To me, pivoting in business means the zigs and zags you take to reach a specific goal. If you think of business as a game of football, you don't usually see a player run from one end to another without having to zig and zag to avoid defenders. The same is often true in business. You may have obstacles placed in front of you that prevent you from getting to your destination. These obstacles may include financing, finding new customers, dealing with increasing competition, and coping with changes in an industry and to the overall economy. Your job is often to figure out where the obstacles are on the field and how you can either go through them or get around them.
—Brian Moran, founder & CEO, Brian Moran & Associates
Here are the three situations in which small businesses may consider pivoting, and tips for making your pivot as smooth as possible.
1. Dead Ends
If your business isn’t scalable but you want to get to the next level, you may need to pivot. This might require launching a new product or service, or acquiring another company. A dead end can also mean selling your existing business and buying or launching a new company.
Solution: The key to successfully pivoting in this situation is to do so before you come to the dead end. Set up a meeting with all advisors to your company to look at the big picture—what’s happening in your industry, with your competitors and your customers. Key advisors can include a business coach, your attorney, accountant and anyone who helps run your company.
2. Survival Mode
This is probably one of the most common reasons for pivoting among small-business owners. If an adverse situation derails your small business (e.g., natural disaster, client bad debt, loss of a large client), you usually have two options. The first is to shut down the company, which is the route chosen by many business owners. The second option is to reinvent your business or scale back dramatically in order to survive.
Solution: Similar to the “dead-end” scenario above, the more detailed your plans for any type of crisis, the better your chances may be of not having to pivot in order to survive. Create a list of “what if” scenarios for your business. For example, what will you do if a natural disaster strikes your business? Are you backing up your data? Do you have the right insurance? You may consider input from advisors, key employees, vendors and customers on the different obstacles they have seen that derailed other companies in your space.
3. Growth Opportunities
Entrepreneurs are often risk takers. In the football game scenario, you're either the quarterback or coach calling the plays. You assess the situation on the field, and, if you see an opportunity, change the play (also known as calling an audible). In essence, you're pivoting because of an opportunity that will help you get closer to your ultimate goal. You might also pivot to avoid a bad situation (as in, throwing good money after bad).
Solution: This type of change is viewed largely as "positive pivoting," because the business is moving forward as it changes direction. As an entrepreneur, it may help to have one eye on the immediate or day-to-day issues, and another eye on longer-term issues (such as trends in the marketplace or economy). You may need to gauge whether or not making an investment in your company today will still be worthwhile six months to a year from now.
Knowing when and how to change directions in business can be a fine art. A smart business owner will often learn from his or her mistakes and hopefully become better at pivoting. A wise business owner will learn how to pivot from the mistakes of others. Keep your eyes and ears open, and stay ready to pivot.
For more tips on how to keep customers engaged, access 4 Growth Hacks for More Engaged Customers, with insights from CEO of Growth Hackers, Sean Ellis.
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This article was originally published on March 25, 2015.