Studio Juaso | Knowing When to Pivot or Close Your Business: Key Factors for Making the Right Decision

Running a business is a journey of constant evaluation and adaptation. Sometimes, staying on course is not the right option; success may require a shift in direction or even the tough decision to close a venture. For young, creative entrepreneurs, recognizing these moments can be challenging, but by understanding critical indicators like profitability, network growth, and personal evolution, you can make decisions that align with your goals and future potential.

1. Monitor Profit Margins for Signs of Decline

Profit margins are a straightforward metric for gauging business health. When profits drop significantly—by 50% or more—it often signals a need for intervention.

• Review Revenue and Expenses Regularly: Ensure you understand where your revenue is going and keep expenses in check. Declining profits may indicate decreased customer interest, rising costs, or shifts in the market. Figuring out the cause helps you decide if there’s an opportunity to pivot or if it’s time to explore new avenues altogether.

• Sustainable Profit Growth is Key: Long-term success requires stable, consistent profitability. While temporary drops are normal, ongoing declines are a red flag. In these cases, it’s worth reassessing your product offerings, pricing strategy, or business structure to see if a pivot could revitalize growth.

2. Set and Track Milestones for Consistent Progress

Milestones help break down big goals into manageable steps and offer concrete indicators of progress. Missing milestones regularly may indicate that your strategy isn’t working.

• Establish Quarterly Goals: Set clear, measurable milestones every quarter. Missing these goals repeatedly should prompt a deeper analysis of what isn’t working. It could be an issue with product appeal, marketing, or operational efficiency.

• Identify Barriers to Achieving Milestones: If you’re falling short, identify what held you back. It might be the product, market demand, or inefficient processes. Knowing what’s causing setbacks allows you to decide whether a shift in strategy could help.

3. Assess Network Growth and Market Presence

A growing network and strong market presence are signs of business health. If your network and customer base aren’t expanding, it’s worth considering a new approach.

• Evaluate Customer and Partner Engagement: Stagnant or shrinking customer bases and partnerships can suggest that your business isn’t meeting market needs. Consider whether your offerings or brand message need adjustment.

• Analyze Market Trends and Competitor Success: Look at industry peers. If they’re thriving and you’re not, determine what they’re doing differently. Learning from successful competitors can reveal opportunities to pivot and reenter the market with fresh energy.

4. Look for Signs of Growth and Sustainability

Progress, growth, and sustainability are crucial indicators that your business is moving in the right direction. If these are lacking, it may be time to reevaluate.

• Focus on Consistent Growth: Healthy businesses typically show steady growth or stability. If you’re not seeing progress, consider how a pivot might reignite momentum.

• Ensure Long-Term Sustainability: Consider whether your business can be sustained long-term, financially and operationally. An unsustainable approach often indicates the need for a strategic pivot or a streamlined focus on core offerings.

5. Know When You’re a Big Fish in a Small Pond or a Small Fish in a Big Pond

As businesses grow, they may outgrow their initial market, or they may struggle in an overly saturated one. Knowing where you stand helps you decide whether to pivot or expand.

• Identify Market Saturation: If you’re a small fish in a big pond, differentiating your business is essential. Pivoting to focus on unique offerings or niche markets could help.

• Recognize When You’ve Outgrown the Market: If you’re excelling but the market limits your potential, consider expanding to a larger audience or introducing new products. This might involve stepping into a broader market or replicating your success in a new region.

6. Recognize Personal and Professional Growth

Many entrepreneurs continue doing what they started because it’s familiar, but as you gain new skills, your potential grows. Staying confined to your initial business scope may prevent you from reaching your full capabilities.

• Assess Your Skill Growth and New Opportunities: As you grow, so do your skills and competencies. Reflect on whether these new skills could open doors to previously unconsidered markets or business models. For example, skills in illustration can lead to opportunities in animation, comics, and even film direction. By embracing the full range of your abilities, you may discover profitable new directions that align with your growth.

• Think Outside of Your Initial Vision: Over time, you may find that your original business concept no longer fits your abilities or ambitions. Take inventory of your skills, both old and new, and explore ways they could translate into innovative products, services, or even different industries. Recognizing this can prevent you from becoming “stuck” and instead help you pivot to ventures that better reflect your current potential.

7. Evaluate the Potential for Personal Shift

Young and creative entrepreneurs often feel deeply connected to their businesses, but as time passes, personal goals and values can shift. If your business no longer aligns with your evolving interests, it might be time to consider a change.

• Assess Personal Alignment with the Business: Running a business is demanding, and if it no longer aligns with your values or brings fulfillment, it may be time to explore other options. If your business doesn’t contribute positively to your life, a pivot or closure could be the right choice.

• Leverage New Opportunities for Growth: Skills gained from running a business can open new doors. If you’ve learned marketing, finance, or production, those skills could translate to new ventures. If your current business no longer aligns with your future goals, remember that your experience still equips you to pursue new directions.

Conclusion

Deciding to pivot or close a business is challenging, but understanding key indicators like profit margins, milestones, network growth, and personal evolution can guide you. Business success is not only about perseverance; it’s about recognizing when change is necessary to make room for growth. Embrace your evolving skills and look for ways to expand beyond initial goals, and you’ll be better prepared to adapt, pivot, or even start fresh when the time is right.