To pivot or not to pivot. It’s a question heard often across boardrooms and small businesses as global competition and technological advances allow (or force) organizations of all sizes to change quick and often dramatically in response to shifting markets and emerging opportunities.
A familiar word in the world of start-ups, pivot refers most simply to those moments when a leader or management team realize that their current business model is not working. This realization, if accepted fully, triggers a (quick) reshaping of the business to a new plan or model in order to remain relevant and invigorated. More realistically, as Alan Spoon describes, a pivot allows a business to “grow beyond their initial dreams by re-imagining their assets and talents, thinking more broadly about the customer problems they solve, and accessing growth capital to seize the new high ground.”
For small-business owners looking to pivot, paying particular attention to some basic steps in the planning stages not only mitigates the risk associated with the investment of time and money in moving from Plan A to Plan B, but can clarify the operational elements needed to accomplish a pivot as elegantly and cost-effectively as possible.
Most obviously (and a too-often overlooked step) is to understand that a pivot is change, and as such means that your business is starting out in one place and ending in a different one.
This simple moment is crucial: to imagine B (your new state of the business) as clearly and completely as possible. Setting B firmly in your mind, in your business plan, and as the fixed end point of the pivot is critical, for once the pivot begins it requires an anchor point. Without this anchor point firmly in place, it is far too easy to lose focus on your endpoint as well as on what non-negotiable points are (and we all have them), or what your cost projections really say. Without this anchor point, pivots take on an energy all their own, and you struggle to keep all the moving parts from spinning out of control as the usual (and unavoidable) contingencies appear.
Once B is firmly in place, write a list of what are known as transform goals. These are the key differences between your business in Plan A and your business in Plan B. For instance, your current Plan has your business fully imagined as a traditional brick-and-mortar sales model, while your transformational Plan pivots it to a hybrid of traditional and online sales. Or perhaps you see your business pivoting from a suburban strip mall to an upscale urban shopping centre. Or from a position of brand inclusivity to a more focused, brand exclusive model, which might allow for some price renegotiations with your suppliers. The important thing here: know what will be different about your business when you complete your pivot.
With transformational goals set, the next step is to think through what are called reduction goals. In other words, make a list of what has to be reduced or eliminated from Plan A in order for your business to pivot successfully to Plan B. This list might include a reduction of inventory, a simplification of your supply chain, or a move to a new, more appropriate space. Planning on what barriers need to be removed, and how to remove them, before the pivot begins allows for a full and thorough cost and risk analysis as well as the opportunity to gather input and ideas from key stakeholders. The more eyes on the plan at this point, the better.
With reduction goals established, move to setting your application goals, also known as those pieces that need to be added to your business in order to Plan B. You might have to renegotiate financing in order to underwrite the pivot, for instance, or plan a strategic “relaunch” so that both current and potential customers can see the new iteration of your company in action. If your pivot is focused on optimizing online sales, you might have to expand your infrastructure or invest in technology that allows you to meet the next generation of customers “where they are” (a common phrase informing many pivots) or that will improve delivery of online orders.
A successful pivot demands foresight, resilience, and resolve. It means moving beyond the simple numbers of a business in order to imagine a future that is brighter and more profitable. When successful, a pivot not only revitalizes your business (and your excitement about doing business) but amplifies its value to your customers. Careful planning goes a long way to ensuring that your aspirations for your business can be realized.
About the Author
John Packham: Having grown up in a family owned business, and now working as the Content Director for Karrass – a company specializing in negotiation training for businesses – John is grateful for the many opportunities he’s had to share his passion for business and writing.