Ever considered pivoting your business or completely altering it to pursue something new? If you’re worried that your small business isn’t working, pivoting could be an option.  

Starting again may feel like a mountain to climb. Still, it may not take as much work as it seems. But when should you do it? And how might you begin?

This guide will cover how to pivot a business, including:

  • What is pivoting?
  • Planning a pivot
  • Things to consider
  • Creating a new business plan 
  • Considering the finances 

What is pivoting? 

Pivoting is when you entirely shift your business’s purpose, including the products and services you sell. You might pivot a business if your current operations aren’t succeeding or fulfilling the needs of the market. 

When is the right time to pivot a small business?

Though it may be the thing that saves you, pivoting a small business is no small feat. So, before deciding on it, consider if it’s the right choice. 

You might pivot when your current products and services are not performing well. If demand is declining in the long term, your business may no longer be profitable or marketable enough. Shifting can help you reach a broader market. 

There are different threats that can make you need to pivot your business:

  • Market decline– The popularity of your business is declining because it’s no longer necessary or public opinion turned to different things (i.e. likely face masks sales after the pandemic)
  • Industry advancements– New technology or fresh ideas could make your current products or service less desirable. (i.e. Typewriters died out because of computers)
  • Big competition– A larger company with lower pricing and mass production could steal your clients and hurt your business. (i.e. Apple with smartphones) 
  • An overcrowded market– there could be too much competition within your current market to win over enough customers (i.e. video streaming services)

Alternatively, you may have had a fresh new idea that you want to adopt for your business. If this is the case, compile research to ensure the idea is practical.  

Signs that you might want to pivot 

There are a few red flags that your current business model isn’t working. Here’s a few signs that you might want to pivot: 

  • Your profits are shrinking or nonexistent 
  • You regularly lose customers to competitors
  • Your business isn’t growing as you predicted 

Examples

Did you know some hugely successful companies started off doing very different things than they are now? 

In 2005, Twitter started as a podcast sharing platform called Odeo until iTunes threatened them. So, in 2006, they pivoted to microblogging social media, and look where they are today!

Starbucks started by selling espresso machines and coffee beans in 1971. But in 1987, they pivoted to running fresh-brewed coffee shops. This shift allowed them to become one of the world’s most widely loved coffee chains. 

Planning a pivot

If you decide pivoting is the right choice, the next step is to develop a plan. The right strategy can help you pivot smoothly without substantial risk. 

What will your new focus be? 

First, decide what you’ll pivot your business towards. Your idea will need to be specific and viable. Plus, it’s important to know the new products or services well to succeed.

For example, if you sell paper and find that the market is shrinking, you might transition to selling printers or tablets. 

How can you maintain your existing audience?

The best thing about pivoting a business is that you already have an existing audience and client base. So, try to ensure that your new focus is relevant to your existing audience. 

With a similar audience, you won’t have to find customers from scratch. You’ll just have to convince your current audience that your pivot is worth sticking with. 

For example, transitioning from paper to printers is still relevant to your paper clients. 

How will you transition? 

The key to pivoting your business is creating a well-thought-out plan to defend you from floundering. Create a timeline for your transition and split it into distinct phases. 

You won’t go from your old to new in a day. Instead, you might take on new products and services to supplement the current ones before shifting entirely. 

Breaking up the tasks will make them more manageable. It’ll help determine when you hope to complete your pivot and become fully profitable again. 

For example, you might need to: 

  • Decide on your new products or services 
  • Create new pricing 
  • Rebrand your business 
  • Redesign your website 
  • Announce the coming transition 
  • Market your new products or services 

Creating a new business plan

Now that you’ve got a plan, you’ll need to rewrite or update your business plan to help guide you through the pivot. 

Market research 

First, outline some market research. This information gives you a strong idea of the new market, products, or services. 

Your research should cover the following:

  • Market size and demand
  • Market news and trends  
  • Competitors 
  • Target audience 

To get this information, start by looking at government reports, online articles, and trade publications. You may also want to send out surveys or conduct focus groups. 

Target audience 

Your market research can also help you develop and better understand your target audience. So, outline who you’ll try to reach with your new business focus– which will hopefully overlap your existing audience. 

To get a better idea of reaching your audience, you may want to create some customer profiles

Values 

Next, list your key company values. These may be similar to your existing ones. Alternatively, your pivot could expose new values to guide your business. 

For example, you may pivot your business to make it more eco-friendly. In this case, you can list sustainability in your new values. 

Goals and objectives 

As you pivot your business, you’ll likely have new goals and objectives. These could directly relate to your transition, or your new focus. 

For example, you might have a goal to convert your business fully within a year. If so, you can create specific, measurable, achievable, realistic, and time-based objectives (SMART) to do this. 

See also: How to achieve your business goals

Marketing and branding strategy 

Then, consider how you’ll market this new business. You may want to develop a new brand strategy that reflects the focus, such as designing a new logo and updating the website. 

Plus, list the best marketing channels. If your new target audience is younger, you could try using TikTok to market it, for example. 

Considering the finances 

Considering your finances is another essential step to pivoting your business. It may take some investment to get this new idea off the ground. 

Budgeting for the transition 

First, calculate what it’ll cost, including: 

  • Production costs 
  • Necessary equipment 
  • Marketing and branding 

This information will help you create a new budget for your pivot. 

You can then start setting money aside for your transition. If you need outside funding, look into investment options like crowdfunding, loans, or angel investors

Accounting software

Accounting software will help you organise the finances of your pivot and plan a realistic budget. Modern accounting software will save you time as you budget and plan for your new business. 

It’ll also help you better understand and track your pivot’s performance after the fact. Accounting software can automate and streamline time-consuming bookkeeping tasks to simplify the process. 

It’ll help you find proof of expenses and follow the money coming in and out of your business. Plus, the best accounting software simplifies your tax reporting process and lets you easily and quickly send invoices to earn what you work for. 

Countingup, the business current account and accounting app, is a great option to look into. It’ll let you do all of these things, simplifying the finances of your pivot.  

Start your three-month Countingup trial today. 

Financial forecasting 

You may also want to put together a financial forecast that helps you predict the future profitability of this business idea. 

Pivoting towards your business’s future

As you pivot your business, you can start to benefit from the new vision and more desirable offerings. With the right plan, your pivot can lead to new customers and greater earnings. 

From there, your new business will be ready to grow. 

See also: Small business growth plan.

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