25 May 2017
Many of today’s well-known companies began life as something else entirely. Twitter started out of a podcast subscription company, Nokia began life as a paper mill. Starbucks originally sold just espresso makers and coffee beans, not the hot beverages and Frappuccinos it’s known for today.
What do these companies have in common? They all pivoted. They saw that their original business idea wasn’t likely to continue to succeed due to increased competition or they fell in love with a new idea and decided to move in that direction. Pivoting can save a business from going under but it can also open the doors to growth for a business that is currently doing rather well. If you’re considering a pivot for your business, here’s what to ask and how to do it.
Questions to Ask Before a Pivot
The big question to ask before you pivot is “why?” Why should you pivot and what will your business gain from doing so? One answer to the question “why” might be to keep customers interested in your product or to stay one step ahead of the competition. Twitter, for example, decided to pivot away from being a podcast subscription company when it became clear that iTunes was going to be a leader in that category. Pocket Gems, a mobile game developer, decided to pivot once it learned that gamers were moving to more technologically advanced games and losing interest in the games offered by Pocket Gems.
Another question to ask is “what does your business do that sets it apart from others?” What value does your company bring to the table that no other companies bring? If you can’t come up with an answer to the “what” question, it might be time to change course so that you can answer the question.
Finally, you want to ask yourself “how?” How can your company begin to better meet customer needs or fill in a gap in the marketplace?
Ways to Pivot Your Business
Once you’ve decided that pivoting your business can help it move to the next phase of growth, the tricky thing can be figuring out how to actually change direction. There are several paths your company can take, depending on what the ultimate goal of the pivot is.
For example, if you hope to attract new customers or want to work with a new demographic to increase revenue, take a close look at your current offering. If your primary customer is currently single, young adults, look at ways you can tweak the product or add a new product to make it appeal to older adults who might be married or have families. If you think that a product that originally appealed to young people can’t appeal to all, think again. Just take a look at Facebook. It was originally only for college students. Now people of all ages use the site and use it regularly.
Surveys or actually going out and talking to people on the street can help you see what you can do to reach a new demographic or alter your product to make it more appealing. You might think that you’re offering something that solves a problem. But it could be that the people that use your product or would use your product think otherwise.
Changing your business model is another way to pivot. For example, if you are a direct to consumer company, you might find more opportunities for growth if you start working with distributors. You’ll be able to get your products in stores, rather than selling them directly. That can reduce costs on your end and increase the size of your customer base.
You might also consider pivoting your business by changing your pricing structure. While offering your products at a high price point might make sense at first, you might find that you can easily broaden your customer based by introducing a lower priced option. You can still offer the higher priced item, but as a “premium” or “luxe” option. The lower priced option will bring more people in. Who knows, after some time, many of them might decide that they like your products so much that it is worth switching to the premium option.
The road to growth might be long and full of twists and turns. If you’re not sure what direction to take your business in or if a pivot is right for you, the team at New Direction Capital can help. We offer virtual CFO services to help your company achieve profitable growth. Contact us today to learn more.
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07 Jul 2016
You know that your company needs to grow if it wants to continue to thrive. But, how to grow your business or what things you need to do for it to grow might not be so clear. Alternatively, you might be unsure if the step you plan to take is really the best step. Whether your business is just moving past the startup phase or has been operating for years, there are several things it needs to do to grow.
Understand the Competition
Knowing what similar companies out there are doing can help you see what your company is doing better, or where it has room for improvement. Understanding your competition can help your company grow in two ways. First, it lets you see what works for others and what you can put into practice to give your business a leg up. Second, it helps you identify what makes your business different from the rest. Finding out what your company offers to customers that no one else does can help as the business expands.
There are a few ways you can get to know the competition a bit better. One option is to check out the competition’s web presence, including its website and social media accounts. See what products they offer, what specials they offer, and how they engage with customers or potential customers online. If you prefer an in-person approach, you can visit trade shows or conferences and check out the tables or booths your competitors have set up.
Decide How to Expand
Growth and expansion can mean different things to different companies. For example, some companies find it best to grow by opening in new territories or regions while others find that targeting a new customer group (without abandoning the old one) is the road to take. Yet another option is to offer a new product or a new service, which can not only appeal to your current customers but also help your company reach new ones.
Finally, some companies decide to grow by acquiring or merging with another business. If there is a competitor in your area, it might be in both of your interests to merge. Alternatively, another business might offer a product or service that complements your own, and acquiring that business might be the most logical step when it comes to growth.
Look at What Could Be Improved
Growing your business doesn’t only mean expanding it. It also means looking at areas that would benefit from improvement. One of your business’ goals should be to be the best at what it does or in terms of what it offers. If it isn’t the best, customers are going to seek a better product or service elsewhere.
You can find out what areas can use improvement in several ways. Having an outside eye, such as virtual chief financial officer, review your company’s strategy and finances can provide you with useful information about what you are doing right and where there is room for change. Conducting customer surveys can also help you see where there is room for improvement. It could be that your customers are dissatisfied with the speed of your service, with the price of your products, or with a number of other things, but you won’t know unless you ask them.
Maintain Your Reputation
It can be easy to focus so much on growth that the quality of your company’s product or service actually starts to suffer. But, your company simply won’t do as well as if its reputation starts to slip in the eyes of customers. You don’t want to start offering a lower quality product in an attempt to move into a new market or reach a new demographic, only to have your current customers stop working with you because they feel their needs are no longer being met.
There can be many obstacles on the road to growth, even if your company seems to have what it needs to expand. The team at New Direction Capital can help you put a plan into place and map a course for growth that doesn’t sacrifice quality or end up alienating your current customer base.
Image courtesy of lekkyjustdoit at FreeDigitalPhotos.net