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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.