How to change your business strategy

What is a Pivot?

A term often used among startups and small businesses, pivoting means to change direction sharply without losing your current advantage. When a company pivots, it could mean they change something about their core product or service. Or it could mean changing their branding strategy or their approach to recruiting and hiring. A pivot is usually when a company makes a fundamental change to a key function of their operations and can be done for a variety of reasons.

When is it time to pivot in your business?

You may need to pivot to better meet customer demands, change your target demographic to boost sales, or respond to major changes in your industry.

During the COVID-19 pandemic, many businesses have been forced to rethink their operations to survive, resulting in many positive examples of pivoting. For example, the food and hospitality industry pivoted to prioritize curbside pickup and outdoor dining while keeping dining rooms closed. Similarly, the events industry switched to virtual parties and meetings to maintain revenue while in-person gatherings were not possible.

We all know there are startup challenges when launching and growing a small business. But when challenges threaten the long-term financial viability of your business, that's when you should consider changing course. The market may not react as expected. Having the flexibility to evolve with the times is a major key to the success of any business. The most profitable and longest-lasting businesses have ensured their success by evolving as their target audience and products change.

As CEO of apparel resale website thredUP, Reinhart knows business transformation all too well. Since co-founding the company in 2009, Reinhart has seen thredUP go through two major strategic shifts to become the fashion e-commerce site it is today, with 1 million members. The only way Reinhart was able to guide his startup through this change was by continually evaluating and remaining flexible enough to adapt to the internal and external factors impacting the business.

“To build a lasting business that delivers value to customers, you have to be confident and skeptical in equal measure,” he said. “Most good ideas aren't obvious, so be confident and push the boundaries of the experience you offer. But your business must always be prepared to disrupt itself to stay relevant. Don't be skeptical and ignore the world around you.”

9 Tips to Transform Your Business

Is it time for your business to pivot? Reinhart offered nine tips to help you make the decision and execute it smoothly.

1. Understand your business' strengths and weaknesses: There's nothing wrong with making a list of what your company is doing well, what's not going well, and what's keeping you up at night. Without this level of awareness and self-reflection, you'll never have a chance to evolve.
2. Stimulate a broader internal dialogue: Innovation comes from all levels. Encourage everyone in your company to look for external threats and opportunities by starting an ongoing dialogue within your company. Introducing a problem-solving culture in your organization early will help foster a habitual spirit of change for success. Consider conducting an employee survey to gather feedback on what employees see from their perspective and scheduling a company leadership meeting to plan new directions together.
3. Identify key threats and opportunities. Take the time to dig deep into your user data, explore your conversion funnels, talk directly to your customers, and track and analyze your competitors' every move. Don't sweat the small stuff, and identify threats and opportunities that are actually worth acting on.
4. Evaluate pivot options. Once you've identified a significant threat or opportunity that requires you to change direction, you need to start thinking about your strategy. There will likely be more than one strategy for addressing the threat or opportunity you've identified, so make a list of your options and consider each scenario.
5. Map the influences: Before implementing a pivot in your startup, don't make the decision without thoroughly planning its impact. A core pivot will affect every aspect of your business. Plan what the redefinition will look like: processes, profits, costs, brand, team structure, culture, etc. A best practice when making company-wide changes is to personally sit down with each department head and find out what they want to know before executing on your final vision.
6. Selling your team on the pivot: To pivot successfully, you need the full support of your team and investors. If you work with an incubator or accelerator, make sure they understand why you are making that decision. Show them data to highlight the decision and show how it will help improve their return on investment. It's important to explain “why” instead of “what.” Get everyone on board and share your vision.
7. Sell ​​to customers: Entrepreneurs often feel connected and grateful to their early adopters. It can be really, really hard to tell a supportive community that you plan to make drastic changes to something they love. Tread carefully, but remember that you're building for the next million customers, and you can't please everyone. Be sure to communicate openly with early adopters and power users and offer feedback opportunities, such as customer surveys. These are people who use your product or service regularly. They may have suggestions that you and your team haven't thought of.
8. Make a plan and execute it: Create a comprehensive plan with tasks, stakeholders, deadlines, clear customer communication, and short- and long-term goals. Make sure everyone knows how the pivot will affect them and their role in the transition.
9. Stay Agile: Remember, the need to evaluate threats and opportunities is ongoing. You must always be ready to disrupt from within when the external environment changes. If you stay on top of your competitors and the market situation, you won't have a problem pivoting again when necessary.

If your business is slowing, consider pivoting

Sometimes pivoting is crucial to getting your business off the ground, and not pivoting at the right time is a common startup mistake. But pivoting for the sake of pivoting doesn't mean your startup will be financially viable, so knowing the timing and the situation is key. When considering a pivot, make sure you put a plan in place, execute it, and get feedback from all stakeholders to track its success as the new plan progresses.