When is diversification versus a pivot your best route forward?
Business doesn’t stand still and fortunes can change quickly. So, do you keep doing what you’re doing and risk plateauing? Or do you shake things up through diversification into new areas or consider a full strategic pivot?
Signs it might be time to pivot or diversify your business…
> Revenue and profit have been flat over the past 1-3 years.
> Your market feels saturated and commoditised.
> Customer needs have evolved and you haven’t caught up.
> New technologies are now disrupting your industry
BUT
It’s not always black and white, as to whether a pivot or diversification is the right answer.
Diversifying your offer can reignite growth and allow you to test and manage new opportunities in a lower risk way.
Whereas a pivot tends to be more radical – and in more established businesses, requires high levels of focus to pull it off. Especially when the pivot is triggered by a stalling core business.
Your cash flow and financial firepower will often determine which route you take, although there are other things to think about.
Ask yourself how each option fits with your own personal goals and timelines around a potential exit? And whether there is still room to grow your core business and niche down even further?
Taking bold action when it’s required can be difficult, particularly when you’re right at the coalface. For many business owners, the next 1-3 years represent a critical window, especially if you want to shape your legacy and maximise the value of your business before an exit…
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