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How Do You Know When Your Startup Business Should Pivot?

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So much changes in a startup during the early days. How do you know when your business should stay the course, and when it should pivot? 

You have to keep up with changes and adapt as you go, or your business will fail. We all get that.

The difficult part is figuring out when you just need to tweak what you're doing, and when you need to completely change directions.

Every company has to go through this, so the good news is you're not alone. The bad news is that every business is unique, and it's difficult to give a one-size-fits-all answer.

At Text Request, we've changed a lot, and we've seen the need to pivot a couple of times. Through it, we've learned that there's a 3-step loop we can use to help guide our decision making and direction:

  • Build for your target customers
  • Try something new
  • Follow what works

I'll cover each step below, and talk about how you can test the same loop in your own business.

1. Build for your target customers.

It doesn't matter how technically great, cool, or beautiful something is if people don't want it.

This applies on a large scale (is there a market demand for your product or service?), and on a smaller scale (does this particular feature add value to anyone?).

When you think about your company in terms of what people want or need, it becomes a lot easier to head in the right direction. "Well, our target customers need [this]," you say, "so let's create that and sell it to them."

Seth Godin Product for Your Customers Quote

So how do you know what your target customers want or need?

Once you go through this loop a couple of times, you'll learn what your customers want and need. But on the front end you need to ask:

"What problems do these people have? What could we do that would make their lives or their jobs better?"

Your product or service should be the answer to those two questions. Start high and broad, and as you get more customers, get incrementally more detailed. Here's one of our own examples.

Text Request started as a customer service tool. We thought it'd be really cool if customers at restaurants or hotels could text for service.

As we got into it, we learned that hotels needed 2-way texting instead of just the inbound product we'd started with. So we built what our customers needed to actually offer better service.

Related: 8 Reasons Why Texting is Crucial to Business Communication

Over time, we tried new things and followed the path of least resistance, all the while learning what our customers wanted and needed.

This learning turned into features like BCC group messaging to reach multiple people quickly, keywords for campaigns, and even Click-to-Text for lead generation.

The reason why this process works so well for us is because it's a cycle.

See, it turns out that our best customers - the people who should have been our targets from the start - weren't hotels and restaurants. But we never would have learned that if we didn't try something new.

2. Try something new.

You need to follow the path of least resistance when trying to grow quickly. But there are so many possible options that you can't know which is best until you try a few.

Thankfully you don't have to try everything all at once, but we've found it's good to continually test new ideas, features, marketing channels, and customer segments.

Every few attempts, we find something else that works well (and a few things that don't). When we find something else that works, then we move in that direction.

Experiment Fail Learn Repeat

Usually the move isn't so big as a pivot, but it'll be something like moving into an industry that has a buying cycle half as long as another industry, and that pays just as much.

We've also found that one marketing channel (that we'd originally written off before testing it) was actually cheaper and more effective than the one we'd been focusing on.

Once we figured this out, we absolutely changed things up!

It's been surprising how often the best direction for us to take has been a counter-intuitive or illogical one. Every time we try something new, we end up having to reshape how we think about our business.

And that's been a gift.

When we try something new, we learn more about what works and what we should be doing. Then we head down that direction, re-address what our customers want and need, and start the cycle over again.

3. Follow what works.

When you find something that works, pursue it further.

For us, this doesn't necessarily mean going after the customers that pay the most. Universities, for instance, will pay a lot for what we do, but their sales cycle is abysmally long.

Instead, we now go after a few industries where the sales cycle is anywhere from a few days to a few weeks. Things move quickly, which allows us to learn more faster while also bringing on more customers faster.

Josh Whedon Give People What They Want Quote

The money takes care of itself when we follow the path of least resistance, and that gives us the opportunity to start the cycle over again.

We can go back to our customers, talk to them about what they need and want to do their jobs better (or enjoy Text Request more), and build a solution for them.

Then we can try something new again, and test out a new type of customer, a new feature, or a different marketing strategy. We follow what works, and then start over!

Coming Full Circle

There's a lot of talk in the startup world about pivoting - and there should be, because so many people need to change directions in order to survive and thrive.

But in our experience, these changes don't always need to be so drastic. At least, they don't need to feel so drastic as you're working through them.

Looking back, we've made a ton of changes, and have started doing things we never would have thought of in the early days.

Now we're doing well, and it's because we've followed a fairly consistent (and simple) cycle of building what our customers want, trying something new, and then following what works.

Related: Startup Journal: How Should You Spend Your Time?