There's a vast difference in how your business looks now versus how it'll look in five years.
Most business owners start running their businesses because they adore what they do. Whether it's solving a problem for a specific group of people or simply the work itself, businesses are often a labor of love!
Businesses can't survive on love alone; they need cash.
With time, your business changes and adapts to its challenges. The services you offer become more effective, your processes become more efficient, and the amount of money you're making (hopefully) increases.
These changes in your business are called pivots. Most people think of pivoting their business as changing the entire company, product, or service direction. Pivots range from massive directional changes to tiny procedural improvements - every pivot is different.
Most businesses make changes based on assumptions and data. They start with assumptions about how their product or service will help a group of people and then (often inadvertently) use data to decide whether or not their beliefs are accurate.
Essentially, every business is a science experiment.
The Science of Business
Think about it: you start with a hypothesis that defines the problem you're trying to solve and, most often, the demographic you're trying to solve it for. For example, let's say you're a graphic designer who wants to offer monthly design services for a flat fee to creators with large YouTube channels. You charge a set monthly amount and supply designs for your clients regularly. Your hypothesis is: "If I charge monthly for graphic design services, YouTube creators will hire me because they need to create unique thumbnails for their videos."
Your first few clients test your initial hypothesis. Those clients help you determine if the problem that you're trying to solve exists for other people and confirm whether or not what you're offering is a good solution. Your first clients are incredible sources of feedback that help you get the knowledge you need to understand whether or not your hypothesis holds up in the real world!
Let's say your monthly graphic design service is thriving; your customers love you, but you've noticed that not all of them are YouTube creators. Instead, most of them are small businesses trying to create content online more effectively! You decide to shift your hypothesis from focusing on creators to intentionally targeting more business owners.
This shift in your original hypothesis is a pivot.
It may seem like a minor change, switching from targeting YouTube creators to small business owners, but as a result, your sales are starting to increase. You realize that the problem you identified initially is widespread, and you're able to provide an excellent solution!
Not all Pivots Are Created Equally
This kind of shift in the hypothesis of your business, or pivot, is a change in the strategy or direction of your business. Most effective pivots come from understanding and listening to your customers' feedback.
Businesses can pivot in many small ways. You're pivoting whenever you shift your business's focus, introduce new products or services, or create new systems and processes. Pivots are borne from valuable data-driven insights. We're pivoting our strategy when we identify ways to improve or hone in on our business. We're pivoting when we create new hypotheses to test with our clients.
Every business is built on systems and processes. Those systems are tested and strained when you introduce new variables, like a sharp increase in customers or a new employee. By analyzing how your systems and processes hold up during times of stress, you can also discover ways to pivot your business's internal operations.
Business owners often make decisions based on intuition; they go with what they feel is correct at the moment rather than looking at external data sources. Because of this reactionary decision-making style, many pivots result from stress, cold feet, or simply nervousness. These pivots often cause companies to fail because real-life data do not back them up: instead of trying to understand what a customer or client wants or desires, changes are made in a vacuum.
When it comes time to make a change, whether, in your small business or massive company, it's essential to understand how your decision will impact everyone around you. Feedback is the guiding light for any great decision-making process from customers to employees.