Not every business can be immediately successful. It's an unfortunate reality, but one that very few founders are willing to accept. Almost every business needs to pivot at some point in its journey. This can be a small pivot, like a change in pricing or product features, or a large pivot, like changing from B2B to B2C or changing your sales strategy from direct sales to channel partners. Let's take a look at the best time to pivot and what some of the most common things to address are.
Getting the When and How Right
The first question that needs to be addressed is "When" to pivot. Fortunately, the answer on when to pivot is pretty straightforward. Ask yourself the following two questions:
Am I hitting the traction numbers I projected in my financial model?
How many months of cash do I have left?
Earlier this year, I wrote a blog post about developing a financial model. At the end of that post I mentioned that at the end of each month you should compare what you projected to what actually happened. If you thought you would be closing 5 sales a month are you actually do that? Or are you only doing 1-2 sales a month? If you aren't meeting your traction targets then it might be time pivot. The second question looks at how much runway you have left. If you aren't meeting your numbers but you have 12 months of cash left then maybe you can stick to your original plan if you still believe in it. However, if you only have 4 months of cash left and you aren't hitting your targets then you seriously need to consider changing it up.
Once you have determined its time to pivot, the next question is "How" which determines what your pivot will actually look like. The number one reason startups fail is that they don't address a problem that is important enough for their end customers. This is why I believe startups should be pivoting around the problem first. If you aren't getting the traction you thought and you're running out of cash, then maybe you aren't addressing a problem your customers really care about. Look at your target customers and ask if the problem you are solving is their TOP problem. If not is it the in the top 3? If you are outside of that it might be time to consider solving a more burning problem. Pivoting around the problem is almost always a big change. The best founders can recognize this early on and be proactive about it.
The next thing you can look to pivot on is your solution. Once you have identified the problem you are trying to solve is important, ask yourself if your solution is actually addressing it. Maybe your solution only addresses part of the problem and needs to cover everything. Maybe your solution is good but just well outside the price point your customers are willing to pay. Pivoting around your solution often requires some of the smaller tweaks mentioned above but these can make or break your business.
Summary
Most founders have a hard time admitting that things aren't going as planned. This is OK. Startups make pivots all the time, both large and small. The most important thing is to be proactive about it and know when and how to pivot. If you aren't getting the traction you thought and you are running out of cash, it's time to switch course. Look to pivot around your problem first and then your solution as these are the two biggest and most important areas. If you are struggling in your business and need help on deciding if you should pivot, reach out to us at InfleXion Point. We are happy to help!
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