Running A Business

Is It Time for Your Small Business to Pivot?

Nov 26, 2021 • 5 min read
business pivot
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      When a boulder falls into a river, typically 1 of 2 things occurs. If the river is extraordinarily strong, it will push the boulder out of the way and deposit it somewhere on the bank. But if the boulder is extremely heavy, it will stay put and the river will have to change its course and flow around it.

      Now imagine your business is the river, and the boulder is a challenge you’re facing. Declining revenue, staffing issues, global pandemic — these are all challenges that can get in your way and force you to decide: can I stay the course or is it time to adapt and pivot?

      When a company fundamentally changes the nature of its business because it realizes that it isn’t currently meeting the needs of the market, that’s a business pivot.

      There are benefits and risks to both approaches, and you should fully contemplate all your options. Here are some points to consider.

      What Is a Business Pivot?

      When a company fundamentally changes the nature of its business because it realizes that it isn’t currently meeting the needs of the market, that’s a business pivot. Pivots, as the name suggests, are often drastic—while the team may stay the same, almost everything else changes. Often, a company finds a way to leverage its existing strong points into an entirely new business model, like an auto mechanic using its facilities to pivot to a parking garage. Here are a few examples (full disclosure: Lendio, too, benefited from a pivot; listen to the story here.):


      You’re probably familiar with Netflix, which started as a business that rented DVDs through the mail as a library-style subscription service. As internet technology improved, however, Netflix was forward-looking and launched a streaming service. Several years after starting the streaming boom, Netflix grabbed another opportunity and began producing original content to keep viewers on its platform—a rousing success story. You can still rent DVDs from Netflix, too.


      A pivot example you might not know about is Play-Doh, which was originally launched in the 1930s as Kutol, a product aimed at cleaning coal soot from walls. As Americans adopted gas heating, Kutol sales dropped and the company actively sought out alternative uses. They discovered that a schoolteacher was using Kutol for arts and crafts and pivoted toward this use, changed the name of the product to Play-Doh, and began releasing it in various colors.


      One business pivot that failed spectacularly was Fab, which started as an LGBTQ+ social media platform called Fabulous. Then came the pivot. Fabulous became Fab: an e-commerce site. After growing its user base to more than 10 million and being valued at over $1 billion by 2013, Fab began losing customers to Amazon’s lower prices and 2-day delivery. Rather than pivot again, Fab stayed the course and ultimately hemorrhaged money and staff until being sold for a fraction of its peak valuation. 

      Pivotal Considerations

      If you are considering whether to pivot or stay in place, here are some of the biggest points to consider.

      1. Articulate How to Move from Point A to Point B

      How can you use your business’s current offerings to reach its post-pivot future? Articulate an answer and discuss it with friends, family, staff, investors, and strangers. Think about your overall goals. For example, if you just want to improve revenue, maybe you can just expand thoughtfully instead of fully pivoting—keep your core business and branch out.

      2. Check Out the Competition

      Look at what your current competitors are doing, as well as any competitors you might find yourself battling after your pivot. How are their fundamentals? Is the market big enough for another entrant, or are you creating a whole new market with your idea? How are your current rivals doing compared to your business?  

      3. Remove Emotion from the Equation

      It’s easy to fall in love with a business idea—in fact, passion is necessary fuel for all entrepreneurs. But when making big business decisions like a pivot, you need to look at everything as objectively as possible. Research the market and let your decisions be influenced by facts and figures. Talk out ideas with other people. You don’t want to throw away a good business just because you get enthralled with an awesome idea.  

      But Is Now the Time? 

      While successful pivots make for great stories, for all businesses, there are inherent risks to pivoting, and all the market research in the world can’t guarantee success. Before switching directions and potentially losing all or most of the progress you already made, consider the ways you could improve your current company. Would an influx of financing help you expand instead of pivot? Are you facing a changing market or a temporary slowdown? 

      Businesses pivot because of push or pull conditions: you might be pushed toward a change due to stagnating sales, a shrinking customer base, or increased competition, or you might be pulled into a pivot with a brilliant, new idea or a revelation of how you could dominate a market. Or you could find yourself in a situation where both forces might be at play. However, you don’t want to change your entire business model—and possibly sacrifice everything you’ve built—without being certain that pivoting is the right move for you. So, as with any business move, before you pivot, do your research.

      Disclaimer: The information provided in this post does not, and is not intended to, constitute business, legal, tax, or accounting advice and is provided for general informational purposes only. Readers should contact their attorney, business advisor, or tax advisor to obtain advice on any particular matter.
      About the author

      Lendio's team of experts is here to help you with every nook and cranny of your business. We'll make sure you have the best advice for financing, operations, management, hiring, and much more.

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