As your startup grows, you may find that your original business model isn’t yielding the desired results. A business model pivot—changing the way your company creates, delivers, and captures value—can be a strategic move to achieve growth. Here’s how to recognize when it’s time to pivot and how to do it effectively.

1. Signs That Your Business Model Isn’t Working

It’s not always easy to recognize when a pivot is necessary, but these signs can indicate that it’s time for a change:

• Lack of Customer Engagement: If customers aren’t responding to your product or service as expected, your current model may not be meeting their needs.
• Declining Revenue or Profitability: If your revenue has plateaued or you’re running at a loss, it may be a signal that the business model needs to be adjusted.
• High Customer Acquisition Costs: If it costs more to acquire customers than you’re able to make back from them, this could mean that your business model isn’t sustainable.
• Market Changes: Sometimes, external factors—like new technologies or changes in consumer behavior—can make your original business model obsolete.

2. How to Pivot

Once you’ve identified the need to pivot, here’s how to do it successfully:

• Identify the Problem: Understand why the original model isn’t working. Is it the product, the pricing, the customer experience, or something else?
• Gather Customer Feedback: Talk to your customers to get insights into their needs, desires, and pain points. This can help guide your pivot in the right direction.
• Look for New Opportunities: Consider ways you can reframe your offering to meet a different market demand, such as changing your pricing model (e.g., from one-time purchase to subscription) or adding complementary services.
• Test the New Model: Before committing fully, test your new business model with a small segment of your market. This allows you to gather feedback and make adjustments before scaling.
• Be Ready to Adapt Quickly: Pivots are not always a smooth process. Be flexible and ready to make continuous adjustments as you gather more data and feedback.

3. Examples of Successful Pivots

Many successful companies have pivoted their business models to achieve greater success:

• Slack: Originally developed as a gaming platform, Slack pivoted to become a business communication tool, and now it’s one of the leading collaboration platforms.
• Netflix: Netflix started as a DVD rental service but pivoted to a subscription-based streaming platform, revolutionizing the entertainment industry.
• Instagram: Initially a check-in app called “Burbn,” Instagram pivoted to focus on photo-sharing, becoming one of the most popular social media platforms.

By recognizing the signs that your business model isn’t working and making a calculated pivot, you can set your startup on a path to growth and success.