In a recent report from CB Insights they aggregated data from myriad startups over the years to determine why they fail. Boiling it down to the top 20 reasons startups fail, 2 are the result of pivoting. Either failure to pivot or a pivot gone awry.
A pivot entails altering the direction of your business after realizing that the products and services you’re offering are not satisfying the market needs accordingly. Therefore, if you’re able to pivot effectively, your company will experience boosted revenue or could survive the tough market tides. From there, your business will begin to grow and narrow its focus to follow over time in the future. The following are how a pivot can save your business:
Exploit the Digital Space
If you are operating a street-side venture, and the store runs out of stock without giving back sufficient revenue, you should go for the digital version of the same. If you can run this electronic business, you can generate more income. For example, restaurants may have been running smoothly in the past, but with the global novel coronavirus, they were hard-hit and had to turn to online deliveries to survive the turbulence. Therefore, owning an e-commerce platform would have seemed an expensive experience, but now it is necessary since you can offer products or services without necessarily meeting the clients thanks to the virtual presence. Again, many people are at home, and so they need online content more than ever.
Leverage the Existing Resources and Assets
Even with the challenges that every business is experiencing now, or during other tough times, they still have clients whose demands must be met. This is constant for all investments irrespective of the magnitude. Therefore, a practical pivot like leveraging the assets of resources can be done as long as it sorts out the problems at hand. Some manufacturers opt to introduce new product lines because they have higher sales in the market, thereby leveraging their production capacities as well as their professionals. If the abandoned idea deems profitable and beneficial in the future it will be revisited. As an investor, you think about leveraging if you notice that there is an exploited profitable niche that can arrest the pressing customer needs.
Again, in the CB Insights article, they use the Titanic as an apt visual metaphor. Especially in the time of Coronavirus, if your customer demands are changing, you should pivot to them, not wait. 2020 resulted in the loss of millions of jobs and thousands of small businesses; even seemingly profitable businesses had to make huge cuts (such as AirBnB). Not pivoting fast enough can hurt your business, so it’s important to plan for the long term. So, while that iceberg may be off in the distance now, better to steer clear early on.
Deepen your Loyalty with the Clients
When dealing with your customers, try to be honest, transparent, and authentic. You should be at their service always, but have a perfect relationship such that they can help you also in a time of need. Your loyal clients are your brand ambassadors because they always champion your business. Try to maintain the relationship on whatever platform you like be it directly, on social media, newsletters. They will draw other customers to give you higher sales in the end.