Is a Pivot Imminent? These 5 Signs Say 'Yes.' Remember: a pivot can be a good thing. Just ask Twitter, Groupon and Nintendo.
By Larry Alton Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
Every startup launches with great intentions, but even the most promising plans can be destroyed by uncontrollable factors and/or foolish mistakes. At this point, the startup team has the opportunity to close shop or pivot.
Do you know when circumstances call for the latter?
Related: How to Prepare for a Pivot
Pivoting can be a great choice.
Entrepreneurs, by definition, are ambitious and even a bit prideful. When we put our heart and souls into launching businesses, we want the very best for them. It's like raising a child and sending him or her out into the world. So, when feedback starts rolling in that clearly indicates that something isn't working, it can be tough to swallow the notion that failure is imminent.
"Sometimes, even the best laid plans don't work out the way we want. That doesn't mean it's time to give up; it just means it's time to change course," explains the blog Insightly, a leading CRM vendor. "Several businesses have made successful pivots to go on and become household names -- Twitter, Groupon, and even Nintendo."
Here's what you have to realize, then: Pivoting does not equal failure. In fact, pivoting can be a great choice when you suddenly notice that all of your green lights are being replaced by dead-end signs. Consider these five signs warning flags.
1. Consumer education has become your biggest time suck.
Any time a new product is introduced, there's a need for educating the market and explaining how the product works and the value it provides. However, the product should be intuitive enough to stand alone.
If consumer education is your biggest time suck, then this is a telltale sign that something isn't right. Specifically, it indicates one of two problems: 1) The product is too complicated and isn't refined enough to be released to the public; or 2) You're too early and need to wait for the market to become more established.
2. A complementary tool just makes more sense.
Many startups end up developing complementary tools to support their core product. "If you build some tool or product to enable the core product, and that makes more sense as a product, it is an indication that there is a larger audience if you pivot," entrepreneur Shivakumar Ganesan says. "We did that with Roopit. We created the cloud telephony service as an additional offering, and realized there was a bigger market for it than what we were doing."
Related: Pivot or Persevere? The Key to Startup Success
3. Your revenues and growth are declining.
There's nothing wrong with small revenues when a startup is brand new. However, what you want to see is growth. If a startup's revenues are $500 the first month, $1,000 the next month and $1,500 the month after that, then things are moving in the right direction. Even if the long-term goal is to exceed $100,000 in monthly revenue, something positive is happening.
Now, contrast that scenario with a startup that brings in $15,000 in revenue the first month, $11,000 the second month and $4,000 the third. While these numbers still greatly exceed the former startup's sales figures, there's negative growth and that's exponentially more troubling.
If revenue and growth are declining, the market is telling you it isn't interested. And while your inclination may be to close up shop and go home, it's possible that the core value offering is still relevant, while the execution is off.
In other words, a pivot may be in order.
4. You're no longer passionate.
You don't have to love going to work every morning, but you should be passionate about what you're doing. When you suddenly realize that your startup no longer excites you, take the time to dig in and analyze the issue. Has your original idea moved in a direction that no longer gives you a reason to be excited?
This doesn't always indicate that your startup is failing -- it's possible to run a successful business without being in love with it -- but, when combined with other factors, this fact could indicate that a pivot is around the corner.
5. Customer needs have changed.
Sometimes a lack of growth isn't directly tied to inadequacies in the product or a lack of proper execution. Sometimes, customers need change and your product may become obsolete amidst this marketplace evolution.
If you recognize changing customer needs, you have to think about pivoting. This is something that Whole Foods, a supermarket geared towardpremium-price, fresh foods, did during the start of the economic downturn in 2008. That type of pivot has worked for the company and for hundreds of other businesses.
6. Pivoting can be a good thing.
It's time for entrepreneurs to stop looking at pivoting as a bad thing. Ask some of the world's most successful companies about their opinions on pivoting and you'll hear nothing but positive things.
Related: 8 Ways To Pivot Your Business To Kickstart Growth
The key is to recognize when the time is right.
