By using this site, you agree to the Privacy Policy and Terms of Use.
Accept

Your #1 guide to start a business and grow it the right way…

InSmartBudget

  • Home
  • Startups
  • Start A Business
    • Business Plans
    • Branding
    • Business Ideas
    • Business Models
    • Fundraising
  • Growing a Business
  • Funding
  • More
    • Tax Preparation
    • Leadership
    • Marketing
Subscribe
Aa
InSmartBudgetInSmartBudget
  • Startups
  • Start A Business
  • Growing a Business
  • Funding
  • Leadership
  • Marketing
  • Tax Preparation
Search
  • Home
  • Startups
  • Start A Business
    • Business Plans
    • Branding
    • Business Ideas
    • Business Models
    • Fundraising
  • Growing a Business
  • Funding
  • More
    • Tax Preparation
    • Leadership
    • Marketing
Made by ThemeRuby using the Foxiz theme Powered by WordPress
InSmartBudget > Startups > 3 Questions To Consider Before Pivoting Your Business Model

3 Questions To Consider Before Pivoting Your Business Model

News Room By News Room July 23, 2023 7 Min Read
Share

A little pivot here. A little pivot there. There’s no better way to successfully navigate today’s changing marketplace. Yet, all that pivoting could lead you down some disastrous paths if you’re not careful. It’s fine to be creative, but you don’t want to make big moves without conducting due diligence.

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’ll miss out on an opportunity if you don’t embrace the latest trend. While both cases might be true, they aren’t always. Sometimes taking time to consider your options makes the most sense. You don’t want to pivot too rashly, quickly, or dramatically.

This doesn’t 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.

To determine whether you should pivot, ask yourself the following three questions. They’re designed to help you evaluate the situation and refocus on your core business.

1. Is it worth productizing your service?

Many pivots involve businesses productizing their services. For example, let’s 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’s little doubt that productizing can be your ticket to more money. However, you don’t always have to productize, as noted by Greg Alexander.

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? “Some founders believe that service firms are more work-intensive and that somehow building a SaaS company means a better work-life balance,” 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.%. “It is wiser to play the odds and start a service firm instead of a product company,” Alexander says.

This doesn’t mean you can’t productize. Just be certain that you’ve 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’re still set on productizing, then thoroughly test your product on a small audience before scaling.

2. Can your intended market absorb another player?

You’re seeing your competitors engage in similar pivots that involve a market you’ve never tried. Is it your turn at bat? Maybe, or maybe not.

Did your parents ever ask, “If everyone were jumping off a bridge, would you jump off it, too?” 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.

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’t use it to sustain your organization if it’s too small. Joseph DeWoody, CEO and cofounder of Valor, says, “This knowledge helps you craft a unique value proposition, develop a clear business strategy, and identify potential challenges and opportunities.”

Once you’ve completed a comprehensive assessment, you’ll know whether you should plan to enter a new market. If you’re still not convinced, you can always make a minimally viable product and test the waters.

3. Should you add or take away something?

Companies often get rid of major services or products as a pivoting move. BuzzFeed is a great example—and a cautionary tale. It officially shuttered its news division in 2023. The problem wasn’t the journalism. Rather, the division was no longer sustainable. Many wonder if the company waited too long.

Whether you’re thinking of closing a department or offering or adding a new one to your lineup, you have to be strategic. It’s not enough to just be comfortable with your choice. One wrong move could affect your profits, reputation, etc.

Even if you think removing or adding something is obvious, guess again. In 2022, franchisor McDonald’s and its American franchisees couldn’t 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.

Data can help you make decisions, but you need to look beyond your profit margins. Jettisoning a beloved product or service—even if you’re replacing it with something you think is better—can be a liability.

Pivoting isn’t for the faint of heart. It’s not something to necessarily avoid, either. Just be sure to always look before you leap.

Read the full article here

News Room July 23, 2023 July 23, 2023
Share This Article
Facebook Twitter Copy Link Print
Previous Article Create The Energy That Draws Customers (And Everyone Else) To You
Next Article Small Business Tech Roundup Don’t Buy A MacBook Right Now
Leave a comment Leave a comment

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Wake up with our popular morning roundup of the day's top startup and business stories

Stay Updated

Get the latest headlines, discounts for the military community, and guides to maximizing your benefits
Subscribe

Top Picks

I Had Customers, Revenue and Momentum — And Still No Cash. This Is the Fix I Wish I’d Known Sooner
July 14, 2025
Tornado Cash Made Crypto Anonymous. Now One of Its Creators Faces Trial
July 14, 2025
I Learned These 5 Lessons the Hard Way So You Don’t Have To
July 14, 2025
Podcasts created a new media category. Where do they go from here?
July 14, 2025
World Series Champion Dexter Fowler, Michael Tanha Share Their Playbook for Success
July 13, 2025

You Might Also Like

Tornado Cash Made Crypto Anonymous. Now One of Its Creators Faces Trial

Startups

Linda Yaccarino Tried to Tame X. Now She’s Out as CEO

Startups

The Teens Are Taking Waymos Now

Startups

Trump’s Defiance of TikTok Ban Prompted Immunity Promises to 10 Tech Companies

Startups

© 2023 InSmartBudget. All Rights Reserved.

Helpful Links

  • Privacy Policy
  • Terms of use
  • Press Release
  • Advertise
  • Contact

Resources

  • Start A Business
  • Funding
  • Growing a Business
  • Leadership
  • Marketing

Popuplar

Linda Yaccarino Tried to Tame X. Now She’s Out as CEO
‘Obvious’ Side Hustle: From $300k Monthly to $20M+ in 2025
Welcome to the brand newsletter era

We provide daily business and startup news, benefits information, and how to grow your small business, follow us now to get the news that matters to you.

Welcome Back!

Sign in to your account

Lost your password?