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For most entrepreneurs, the first time is usually not the charm. Nor are the second and third times. Instead, success is often reached after countless failures, rewarding only the most persistent and determined entrepreneurs.

So it's no surprise that a lot is made of 'pivoting' in the startup community. A 'pivot', as the name implies, occurs when a startup that isn't on the right path tries to move onto a different path.

When done successfully, a company on the brink of failure might find itself achieving great success.

Or not. The truth of the matter is that, like new businesses, not all pivots are successful, and at some startups, continued pivoting looks a lot like flailing.

So how can entrepreneurs determine when their pivots are less like to be fruitful, and most likely to delay failure? Here are five signs.

You're moving into different markets

Not all pivots are alike. Some entail a business model adjustment (or overhaul), while others entail a move to an entirely different market. The latter, while not necessarily guaranteed to fail, should be considered carefully.

Yes, it may be possible pivot your company from a enterprise SaaS startup targeting the manufacturing industry to a consumer-oriented fashion startup, but such shifts are fraught with peril.

After all, domain expertise is typically important to a startup, and if you're jumping from domain to domain, chances are at some point you'll find yourself in a market that you don't know so well.

You're pivoting to survive, not to thrive

When pivoting, a company should still be 'in it to win it.' If you're pivoting only because you don't want your company to die, or simply want to exhaust your cash on hand to see what can be done with it, you should think long and hard whether you're headed down a path that can lead to success or down a path that simply delays your arrival at the venture's final destination.

You aren't thinking about opportunity cost

When you're an entrepreneur, success is often dependent on how well you manage opportunity cost. Sticking with a company that isn't going anywhere, hoping for a turnaround against all odds, for instance, may come at a huge opportunity cost.

While good entrepreneurs are typically determined and dedicated, pivots should not be made without considering their associated opportunity costs as the costs can sometimes be extraordinary and hard to justify.

You're giving in to pressure

If you've started a company with someone else, you may face pressure to pivot if things don't go as planned. After all, it's not easy throwing in the towel, and your co-founder(s) may not want to, even if you otherwise would.

This can create a huge dilemma: quit and disappoint, or pivot to 'keep the dream alive' for your partner(s)? The heart may want the latter, but in these cases, the mind usually knows better.

You stop liking what you're doing

It may not always be possible to do what you love, but as an entrepreneur, you should always like what you're doing. Pivots are not an exception.

Patricio Robles

Published 20 September, 2011 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

2379 more posts from this author

Comments (2)

Peter Schlegel

Peter Schlegel, CEO & Founder at Admaze.ly

As an entrepreneur it seems there is a thin line between pivoting and simply iterating.

Allow me to illustrate: when kicking off our venture (unIQad), we kinda knew what we wanted to do but also knew that we would only really know once we began engaging with real customers. So we weren't dead-set on our business model and probably felt we would need to narrow the scope of the proposition. And we did. We had a few ideas for business models, were biased towards one but ended up deciding on another Is that pivoting - or simply iterating?

almost 5 years ago

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Kevin Ready

I recommend "The 20 Degree Test".

It usually becomes clear to teams when pivots cease to be relevant to existing skills/assets/investments and begin to look like panic-moves or lack or direction.

The pivot is key to success for many companies, but should not be more than 15-20 degrees off of original course. I was an advisor to a startup that was committed to the idea of pivoting from online media sales to becoming a tech employment conference company. My advice: Get Real! That is a panic move.

I was able to talk them out of it, but the fact that the CEO wanted to pivot more than 20 Degrees (in that case 270 degrees!) was a really bad sign. As it is, that company folded within 6 months because of lack of focus, and (more importantly) lack of revenue.

Kevin Ready

over 4 years ago

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