Starting a new business can be an exciting and rewarding endeavor, but it’s also a risky one. According to Forbes, about 90% of startups fail within their first year of operation. However, entrepreneurs can use strategies to mitigate risks and increase the chances of success. One such strategy is the pivot technique.
New businesses pivot when they face extreme challenges or unexpected events impacting their operations. It’s a business tactic that can keep organizations operational and give them flexibility during challenges. Understanding this concept can empower an organization and its leaders by giving them alternative options when challenges come in the way of progression.
What is the pivot technique?
The pivot technique involves making a significant change to a company’s business model or strategy. It is based on feedback from customers, the market, or other sources. This technique can help startups adapt to changing market conditions, meet evolving customer needs, and improve their chances of success.
How to pivot your business?
Pulling off the pivot technique seems to be easy but requires a lot of work. So, here are a few tips to follow to ensure your startup pivot process is successful.
Gather feedback
Collecting feedback from customers, stakeholders, and other relevant sources is a crucial step before deciding to pivot your startup. It can help you evaluate the effectiveness of your current strategy, identify areas for improvement, and uncover potential new opportunities.
Evaluate your options
After obtaining feedback, it’s essential to assess your options. This involves exploring various business models, target markets, and strategies that align with your company’s strengths and objectives. By doing so, you can determine the most suitable direction to pivot your startup.
Develop a plan
After pinpointing your new strategy, the next step is to create a plan. This plan should outline the resources required, the implementation timeline, and the metrics used to evaluate success. By doing so, you can ensure that you have a clear roadmap for executing your pivot effectively.
Communicate with stakeholders
Given that pivoting can be a significant change, it’s crucial to keep stakeholders informed. It’s necessary to communicate to them the reason for the pivot, the new strategy, and how it will be advantageous to them. This ensures that everyone is on board and supports the new direction.
Pick new goals
Entrepreneurship is hard, and it requires you to be as brutally honest with yourself as possible. If the path you’re on now doesn’t feel right to you, step back and evaluate your mission in life. However, put in extra time to ensure that your new vision is the right one for you.
In conclusion, the pivot technique is an effective strategy for reducing risk in startups. Allowing experimentation, identifying new opportunities, minimizing sunk costs, and increasing agility. Hence, entrepreneurs can increase their chances of success in a rapidly changing business landscape. So, if you’re starting a new business, don’t be afraid to pivot if necessary – it could be the key to your success.