- Entrepreneurs often decide after launch that they need to update their business model to change what their company offers
- A pivot may be necessary if a business idea is failing to gain traction, if you face too much competition, or if you come up with a better idea
- While pivots can be risky, they are common enough that they usually don’t alarm investors or customers
When YouTube was first launched, it was intended as a dating site where singles could upload videos of themselves. After the idea failed to gain traction, the company decided to broaden its scope and become a general video sharing site. The decision quickly changed the faltering company into a profitable enterprise; within a couple of years of it founding, Google purchased it for $1.65 billion.
Several companies have taken similar steps to pivot their business after their initial launch, often updating the products or services they offer. Instead of a wholesale overhaul, a business may just need to change a few components such as the marketing strategy or the target customer base.
Pivots are typically done out of necessity. An entrepreneur may find that their original idea is not working, or that there are too many competitors in the market. However, a company may also pivot if its owners come up with a better idea or if some company offerings are significantly outperforming others.
Businesses may fail if they don’t seize an opportunity to pivot, though they can also be undermined by a bad pivot. Some companies undergo multiple pivots, but these can spook investors, confuse customers, and may not settle on a successful idea. A change in how the company does business can also come at a significant cost, such as the need to hire qualified employees or purchase new equipment.
Despite these risks, it’s always useful for entrepreneurs to consider a pivot if their existing idea isn’t working as well as they’d like. Pivots should be done quickly to save time and money, and build on the work that has already been completed to start the company. Any pivot should also create the potential for growth by tapping into a larger, more diverse, or less competitive customer base.
