{"id":6288,"date":"2023-07-23T14:18:22","date_gmt":"2023-07-23T14:18:22","guid":{"rendered":"https:\/\/mysourcefunding.com\/startups\/3-questions-to-consider-before-pivoting-your-business-model\/"},"modified":"2023-07-23T14:18:23","modified_gmt":"2023-07-23T14:18:23","slug":"3-questions-to-consider-before-pivoting-your-business-model","status":"publish","type":"post","link":"https:\/\/mysourcefunding.com\/?p=6288","title":{"rendered":"3 Questions To Consider Before Pivoting Your Business Model"},"content":{"rendered":"
\n

A little pivot here. A little pivot there. There\u2019s no better way to successfully navigate today\u2019s changing marketplace. Yet, all that pivoting could lead you down some disastrous paths if you\u2019re not careful. It\u2019s fine to be creative, but you don\u2019t want to make big moves without conducting due diligence.<\/p>\n

The problem, of course, is that it can be hard to resist making major pivots. When your industry gets shaken up by a competitor, you may be tempted to follow suit. Or you may be worried that you\u2019ll miss out on an opportunity if you don\u2019t embrace the latest trend. While both cases might be true, they aren\u2019t always. Sometimes taking time to consider your options makes the most sense. You don\u2019t want to pivot too rashly, quickly, or dramatically.<\/p>\n

This doesn\u2019t mean you should rest on your laurels and let the world rush by. Obviously, pivoting can be a good decision. YouTube was originally a dating site, after all. Without a pivot, you might be swiping left on videos rather than binge-watching TED Talks. The point is that you need to pivot, but you need to do it in a way that protects your company rather than exposes it.<\/p>\n

To determine whether you should pivot, ask yourself the following three questions. They\u2019re designed to help you evaluate the situation and refocus on your core business.<\/p>\n

1. Is it worth productizing your service?<\/strong><\/p>\n

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Many pivots involve businesses productizing their services. For example, let\u2019s say you have a service that you want to scale. Your first instinct? Turn it into a product. That way, you can sell the product en masse, especially if you can set up subscriptions or another recurring income stream. There\u2019s little doubt that productizing can be your ticket to more money. However, you don\u2019t always have to productize, as noted by Greg Alexander.<\/p>\n

As the founder of the mastermind networking group Collective 54, Alexander works with many other founders. He admits that one thing they often say is that they want to be software companies. Why? \u201cSome founders believe that service firms are more work-intensive and that somehow building a SaaS company means a better work-life balance,\u201d he explains. But according to research, the five-year survival rate of professional service firms is 47.6%. In contrast, the five-year survival rate of product companies is 23.%. \u201cIt is wiser to play the odds and start a service firm instead of a product company,\u201d Alexander says.<\/p>\n

This doesn\u2019t mean you can\u2019t productize. Just be certain that you\u2019ve exhausted all service opportunities in your business niche. You may have overlooked some possibilities by assuming that productization was the only way to achieve your goals. If you\u2019re still set on productizing, then thoroughly test your product on a small audience before scaling.<\/p>\n

2. Can your intended market absorb another player?<\/strong><\/p>\n

You\u2019re seeing your competitors engage in similar pivots that involve a market you\u2019ve never tried. Is it your turn at bat? Maybe, or maybe not.<\/p>\n

Did your parents ever ask, \u201cIf everyone were jumping off a bridge, would you jump off it, too?\u201d They were worried about you giving in to peer pressure. When your peers seem to be appealing to a specific target market, you will notice it. What you might not think about, however, is the fact that the market may be a mirage. As noted by CB Insights research, one of the major reasons that 35% of startups go under is a poor market fit.<\/p>\n

The way to avoid this is to be certain that you (1) identify a real market with a real need and (2) the identified market can support you and all your competitors. This is where you must get your hands dirty and do some serious focus group and market research. Your job is to figure out the total addressable market because you can\u2019t use it to sustain your organization if it’s too small. Joseph DeWoody, CEO and cofounder of Valor, says, \u201cThis knowledge helps you craft a unique value proposition, develop a clear business strategy, and identify potential challenges and opportunities.\u201d<\/p>\n

Once you\u2019ve completed a comprehensive assessment, you\u2019ll know whether you should plan to enter a new market. If you\u2019re still not convinced, you can always make a minimally viable product and test the waters.<\/p>\n

3. Should you add or take away something?<\/strong><\/p>\n

Companies often get rid of major services or products as a pivoting move. BuzzFeed is a great example\u2014and a cautionary tale. It officially shuttered its news division in 2023. The problem wasn\u2019t the journalism. Rather, the division was no longer sustainable. Many wonder if the company waited too long.<\/p>\n

Whether you\u2019re thinking of closing a department or offering or adding a new one to your lineup, you have to be strategic. It\u2019s not enough to just be comfortable with your choice. One wrong move could affect your profits, reputation, etc.<\/p>\n

Even if you think removing or adding something is obvious, guess again. In 2022, franchisor McDonald\u2019s and its American franchisees couldn\u2019t see eye to eye on whether to keep or ditch $1 drinks. The conundrum was that the ramifications went beyond economics. Was it more profitable on paper to get rid of the menu option? Yes. Did it make sense from a marketing standpoint? Not always.<\/p>\n

Data can help you make decisions, but you need to look beyond your profit margins. Jettisoning a beloved product or service\u2014even if you\u2019re replacing it with something you think is better\u2014can be a liability.<\/p>\n

Pivoting isn\u2019t for the faint of heart. It\u2019s not something to necessarily avoid, either. Just be sure to always look before you leap.<\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

A little pivot here. A little pivot there. There\u2019s no better way to successfully navigate today\u2019s changing marketplace. Yet, all that pivoting could lead you down some disastrous paths if you\u2019re not careful. It\u2019s fine to be creative, but you don\u2019t want to make big moves without conducting due diligence. The problem, of course, is […]<\/p>\n","protected":false},"author":1,"featured_media":6289,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[77],"tags":[],"class_list":{"0":"post-6288","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-startups"},"yoast_head":"\n3 Questions To Consider Before Pivoting Your Business Model | Brandiary<\/title>\n<meta name=\"description\" content=\"A little pivot here. A little pivot there. There\u2019s no better way to successfully navigate today\u2019s changing marketplace. 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