Business 3 questions to consider before changing your business model

3 questions to consider before changing your business model

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A little pivot here. A little pivot there. There is no better way to successfully navigate today’s changing marketplace. Still, all that spinning can lead you down some disastrous paths if you’re not careful. It’s fine to be creative, but you don’t want to take any big steps without being careful.

The problem, of course, is that it can be hard to resist making big twists and turns. When your industry is shaken up by a competitor, you may be tempted to follow suit. Or maybe you’re afraid you’re missing out on an opportunity if you don’t embrace the latest trend. While both cases can be true, they are not always. Sometimes it’s wise to take the time to consider your options. You don’t want to run too rushed, fast or dramatic.

This doesn’t mean you should rest on your laurels and let the world pass you by. It is clear that running can be a good decision. youtube laundry originally a dating site, finally. Without a pivot, you might be swiping left on videos instead of binge-watching TED Talks. The point is you have to pivot, but you have to do it in a way that protects rather than exposes your business.

Ask yourself the following three questions to determine whether you should pivot. They are designed to help you evaluate the situation and refocus on your core business.

1. Is it worth productizing your service?

Many pivots involve businesses in producing their services. Let’s say you have a service that you want to scale up. Your first instinct? Make it a product. That way you can sell the product en masse, especially if you can set up subscriptions or another recurring revenue stream. There’s little doubt that producing products can be your ticket to more money. You don’t always have to produce though, as noted by Greg Alexander.

As the founder of the mastermind networking group Collective 54, Alexander collaborates with many other founders. He admits that they often say they want to be software companies. Why? “Some founders believe that service businesses are more labor intensive and that building a SaaS business somehow means a better work-life balance,” he explains. But according to research, the five-year survival rate of professional service companies is 47.6%. In contrast, the five-year survival rate of product companies is 23.%. “It makes more sense to take the chance and start a service company rather than a product company,” says Alexander.

This doesn’t mean you can’t produce. Just make sure you have exhausted all service options in your business niche. You may have overlooked some possibilities by assuming that productization was the only way to achieve your goals. If you’re still determined to produce, test your product thoroughly on a small audience before scaling.

2. Can your target market absorb another player?

You see your competitors engaged in similar pivots involving a market that you have never tried. Are you working? Maybe or maybe not.

Did your parents ever ask, “If everyone jumped off a bridge, would you jump off it too?” They were afraid you would give in to peer pressure. When your colleagues seem to be attractive to a specific target group, you will notice. What you may not think about is the fact that the market can be a mirage. If noticed by CB Insights researchone of the main reasons that 35% of startups fail is poor market adaptation.

The way to avoid this is to make sure you (1) identify a real market with a real need and (2) the identified market can support you and all of your competitors. This is where you need to get your hands dirty and do some serious focus group and market research. It’s your job to figure out the total addressable market because you can’t use it to support your organization if it’s too small. Joseph DeWoody, CEO and co-founder of Valor, say“This knowledge helps you build a unique value proposition, develop a clear business strategy and identify potential challenges and opportunities.”

Once you’ve made a comprehensive assessment, you’ll know if you’re planning to enter a new market. If you’re still not convinced, you can always create a minimum viable product and test the waters.

3. Should you add or leave something out?

Companies often discard large services or products as a pivot. BuzzFeed is a good example – and a cautionary tale. It official closes its news section in 2023. The problem was not journalism. On the contrary, the division was no longer tenable. Many wonder if the company waited too long.

Whether you’re thinking about closing a department or offering or adding a new one to your lineup, you need to be strategic. It’s not enough to just be comfortable with your choice. One wrong move can affect your profit, reputation, etc.

Even if you think removing or adding something is obvious, guess again. In 2022 franchisor McDonald’s and its US franchisees couldn’t agree about whether or not to keep or throw out $1 drinks. The conundrum was that the consequences went beyond economics. Was it cheaper on paper to get rid of the menu option? Yes. Did it make sense from a marketing point of view? Not always.

Data can help you make decisions, but you need to look beyond your profit margins. Throwing a beloved product or service overboard, even if you replace it with something you think is better, can be a liability.

Spinning is not for the faint of heart. Nor is it something to necessarily avoid. Be sure to always look before jumping.

Shreya Christinahttp://ukbusinessupdates.com
Shreya has been with ukbusinessupdates.com for 3 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider ukbusinessupdates.com team, Shreya seeks to understand an audience before creating memorable, persuasive copy.

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