If you’re following the lean start-up methodology, you’ve made sure that you’ve got an MVP (minimum viable product) in the market. This means you haven’t waited until your solution is perfect. You’ve got something good enough for customers to test and that’s exactly what they’re doing.
Based on their feedback you can tweak your offering, fix any problems and scrap any features that don’t work or aren’t liked.
Customers are your best source of feedback, so this is a great way to build a business based on what your target market wants, needs and – most importantly – will pay for.
But there’s a downside too. Lean start-up methodology is all about listening to market feedback and making the necessary adjustments to your product, service or business model.
This has made the ‘pivot’ popular. It’s become a well-known and recognised factor in business, from start-ups to more mature businesses: when something isn’t working, don’t keep doing it. Pivot instead. But what happens if you pivot too soon or too often? The result is that you lose focus, don’t ride out challenges and give up too quickly. In short, you need to be able to determine when you should pivot – and when you should iterate instead.
Pivots versus iterations
First, let’s address what a pivot is. A pivot is a shift in business strategy after receiving feedback that something isn’t working. It can be as drastic as changing target markets, product lines or industries, or as small as adjusting the business’s distribution strategy.
An iteration is a small, fast change to the existing product or model to make it better.
Pivoting is a central theme in lean start-up methodology, and it certainly has a place in start-up success. Some of the most successful businesses are the result of a pivot. Not every idea or product works. When this is the case, a pivot can save the business.
But there’s a flipside too. In some cases, the industry is right, the target audience is right, but the product isn’t perfect, or the pricing model needs work, or the business strategy needs some adjustments to make the revenue model work.
In these cases, a pivot will just abandon something that has the potential to work. An iteration, on the other hand, gives the entrepreneur the opportunity to refine the business until they have a product or service that works, can scale and can make a profit.
The dangers of pivoting
We’ve discussed that pivots have a string role to play in start-ups, but consider what happens when you pivot too quickly, or too often.
- A business hits a challenge. The target audience is responding as hoped and there’s a problem with the price point (no one will pay it).
- The entrepreneur now has two options. One, they get back into the market, do some market research and speak to their customers. They work on the revenue model and cost structure – when can costs be trimmed back to make the product viable at a price point the market will accept? Option two? Pivot. Change direction completely and try something new.
- Option two might be the only practical choice for the business. Perhaps there’s no way to bring the price point down. Perhaps the market just doesn’t need what’s on offer. The secret is that there’s no way of knowing this unless step one has been conducted before the entrepreneur decides to pivot.
- Pivoting first has two clear results. First, the entrepreneur does not learn to fight through a challenge, but tries to find an easier path instead. Here’s the truth about entrepreneurship and start-ups. It’s tough, Incredibly tough. Learning to push through and survive challenges, failures and disappointments is one of the hallmarks of a successful entrepreneur. Second, once you start pivoting at the drop of a hat, that’s what you’ll continue to do. The result soon becomes a business that doesn’t know who it is, what it stands for, who its target market is or what it’s offering. In short, its pivots kill it, instead of leading it down the path to success.
So, how do you determine when it’s right to pivot, and when you should be iterating instead?
Key questions to consider:
- What is not working in your business? Is it a pricing problem, a marketing problem or something much more fundamentally problematic?
- Are you considering pivoting because your business isn’t working, or because you see a better opportunity if you shift your strategy into a new market?
- Have you conducted exhaustive market research and determined what iterations you could try before you pivot?
- If you’re honest, are you giving up too soon (or the opposite, have you held on too long?)
Mistakes to avoid
Without generalising too much, there are two types of start-up entrepreneurs: very confident entrepreneurs who will continue plugging away at an idea, even when it’s not working; and entrepreneurs who questions themselves constantly and will quickly give up an idea when it presents challenges.
These are of course extremes. Most business owners are on a spectrum between these two points – and the same entrepreneur can even bounce between the two, depending on whether its been a great day, or a terrible day.
So, when your business is throwing up challenges daily and things get tough, how do you keep focused enough to know whether you should be making changes, or staying patient?
Here are three mistakes to avoid.
- Don’t be too hasty. Most start-ups take two years before they breakeven. The problem is that we tend to be impatient. We want instant gratification. And so, when something isn’t immediately successful, we think it’s a failure. The reality is that almost every overnight success was actually ten years in the making.
- Don’t forget to speak to your customers. They are your greatest source of information. They’ll tell you what they will pay for something, they’ll tell you what’s wrong with it. Armed with that information you can make an informed decision whether to iterate or pivot.
- Don’t give up too quickly. While we don’t advocate holding onto an idea that isn’t going to work, don’t give up too quickly. The best things in life take time to build. Give your start-up a chance.
6 Ways to land your first clients
Of course, all of this advice requires you to have at least a few customers who are using your product or service. It’s very difficult to get market feedback if no one in your market is using your solution.
So, how do you land your first clients?
- Give yourself a runway. Don’t expect to start making sales immediately. This can take anywhere from six months to 18 months, depending on your market and your sales cycle. The more cash you have in the bank, the more you can test your market without actively needing to make a cash sale.
- Reach out to your network. Everyone has a network – the question is whether you’re comfortable tapping into yours. Most people want to support start-ups and local businesses; you just need to reach out and let people know what you’re doing.
- Get involved in your community and your business community. Once you step up and start helping out, you’re effectively letting people know who you are and what you do. The more you network, the more you can find out who has challenges that you can solve. The next step? Offer your service, even if it’s just to test the market and its response to your product.
- Collaborate with your partners or build joint ventures with other entrepreneurs. Often, when businesses work together, they increase their offering and ability to solve client problems. Who can benefit from joining forces with you?
- Pay it forward. Utilise the services of local entrepreneurs, tap into your network when you need a solution – people do business with people they know and trust, and be a good client and you might find you get recommended to someone else in the network when they need your solution.
- Ask for a referral. Ask a satisfied client to recommend you to someone they think could benefit from your service, or to write a review on Facebook, LinkedIn or for your website.