Thanks to the digital age, the business world is now more fast-paced than ever – and with SMEs coming under increasing pressure to practice agility in order to stay successful, the term ‘pivot’ has become a familiar term in the start-up world.
‘Pivoting’ refers to switching to Plan B when the original business model isn’t working. And though you’d be forgiven for aligning such decisions with desperation, more often than not, it can actually be a positive move to drive success.
However, it’s not a decision to be taken lightly and SMEs must determine whether the move is necessary before taking any action.
How to make the change
Adaptability is an important quality for any company, even when business may seem to be going well. Business owners that restrict their activity with plans made previously can put the business at risk of becoming outdated – particularly if the plans are based on old data or a market that has since changed.
However, pivoting is not without its risks and companies should consider the following before making any drastic or irreversible alterations to their current situation:
In an ideal situation, employees will have the transferrable skills to help make the change, but in reality this may not be the case. And while introducing new team members could be an effective way of widening the company’s offering, the recruitment process can be expensive and time consuming.
Whether or not the personnel is in place to deal with a shifting strategy is a major consideration for many businesses looking to change tack.
Make customers a priority
Customers should be the primary focus of any pivot and at the forefront of any new business plan. Whether the company is adapting so that it can keep existing customers or attract new ones, it’s crucial that the target market’s needs are met.
Preparation is key
Whether a business wants to recruit new staff, invest in new equipment, or completely revise its offering, strong finances are a necessity to fund business growth. Business owners must ensure they’re pivoting from an adequate financial standpoint.
Small changes for big results
Although a major pivot may seem like the answer in light of market changes, it’s not always necessary to redesign a company’s offering. In fact, smaller adjustments such as the introduction of new equipment or an additional product range may suffice and could even garner greater results than a totally new strategy.
The pivot in action
Although not always conventional, it should come as no great surprise that many great businesses were born from a pivoted strategy. Multi-national cosmetics company, Avon, was originally founded by travelling book salesman, David H. McConnell. When McConnell noticed that his female customers were more interested in the free perfume samples he offered than his books, he decided to change his business to provide his customers with the products they wanted.
And with technology evolving at a rapid rate, the need to pivot is arguably becoming more prevalent. One such example of this in action is micro-blogging platform, Twitter. The social network originally started off as a podcasting website called Odeo. When the company found itself struggling to stay relevant after the launch of Apple’s ‘iTunes’, its employees started to build Twitter as a side project. Gradually the new concept was progressed to become one of the world’s most popular social networks.
After successfully mastering the art of pivoting, founder Evan Williams shared his agile business lessons for start-ups. Believing that Odeo’s demise was partly down to an inability to adjust fast enough, Evan says: “It turns out long term is not soon enough for a start-up.”
With so many digital companies changing their strategies to defeat competition and assist users, it may seem as though pivoting is a new trend brought on by the digital age. However, although agility is more important than ever, the need for flexibility is certainly not an entirely modern phenomenon.
To learn more about how companies can strengthen their finances to fund growth and progression, please don’t hesitate to get in touch with Aldermore Bank. With a selection of business savings accounts available, Aldermore can help SMEs to save the money they need to achieve their ambitions.
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