Five tips for changing your company’s business model and direction.
For entrepreneurs, tinkering with a company's business model can be a tough and emotionally charged process. Here are five tips for making a successful pivot:
Spend as little as possible. Until a business model has proved effective, the company should be prudent with its spending. Refrain from, say, hiring employees or investing in new product features in case a new strategy or business model is needed.
Talk to customers. Customer feedback, especially the kind gleaned through in-person conversations, is essential to figuring out when and how a company should pivot. Instead of relying on assumptions, entrepreneurs need to ask customers what's working and what's not.
Study the numbers. Tracking and analyzing company metrics, such as repeat purchases and conversion rates, are another good way to determine if and how a company should pivot. Web analytics software, such as Google Analytics, can reveal how customers navigate a company's website.
Run tests on the side. If possible, entrepreneurs should test a new business strategy while preserving the current business—just in case the new model turns out to be a dud.
Be flexible. To make a successful pivot, entrepreneurs must often set aside their personal beliefs about the company or its products. "There's a myth that stubbornness and raw determination are good traits for entrepreneurs," says Eric Ries, who coined the term pivot. "The truth is that they're good for getting started, but then they can sometimes get in the way."