Business models are always subject to change, but pivoting is an especially common occurrence within today’s environment; businesses must constantly innovate and change to find a model that helps them thrive and grow. Pivoting means changing direction or reinventing an essential part of a business to improve revenue or stand out in a competitive market. Pivots could include changing platforms, focusing on a new audience, employing new revenue models, or using new technology. Rapid shifts in a small business’s model are often what differentiate successful growth from stagnancy.
Pivoting isn’t just for emerging businesses. Even the most established businesses need to change direction when they hit plateaus in development, are swamped with competition, or receive lukewarm customer responses to their products or services. Even established businesses looking to sell may want to update their business model to increase the value of their business. Pivoting is a natural form of evolution in every type of business.
The acronym P.I.V.O.T. covers the 5 legal points every business must consider when preparing for a change.
P = Presence
Intellectual property is often a business’s most valuable asset—but who really “owns” it? Whether the business is an emerging venture or a well-established company, identifying new intellectual property assets the business has developed or may develop during a pivot is critical to protecting the company’s unique presence and brand in a competitive market.
In a pivot, businesses may develop new procedures, products, or services, create new technology, or design new logos and brand materials during the reinvention process. Securing all ownership rights and registering trademarks, service marks, patents, or copyrights protects and defends these assets from competitors.
When a business compiles, protects, and grows its portfolio of intellectual property assets while pivoting, they give themselves the ability to profit from them later. When new possibilities or potential problems arise, the business is legally prepared to partake in profitable ventures as well as defend its assets. In many cases, what initially appears to be a problem can be turned into an opportunity with the right property protection.
I = Innovation
Innovative ideas allow many businesses to surge ahead of the competition and succeed. Creating a new and better alternative to what the market already offers secures that business a distinct advantage over competitors. However, before diving into the development of a new product, service, or technology, a business must determine if their new idea is protectable.
Determining whether or not an idea will be protected as a patent, trademark, copyright, or trade secret can be complicated, especially when a business wants to confirm that no other form of protection has been previously registered. Seeking professional help to determine the best protection that both fits the company’s needs and secures the idea will provide confidence that the legal process is done correctly. The aid of a firm experienced in all facets of innovation can provide extreme value at the strategic level. Whether or not protection is warranted, the cost of protection versus the value of going straight to market are just a few strategic considerations.
V = Ventures
Negotiating and creating new deals with potential joint venture partners can open businesses to entirely new, lucrative audiences. A joint venture approach is perfect if a business has already built an audience and established authority because it can then leverage the professional relationship to expand its audience exponentially. The business’s audience naturally grows because its joint venture partner presents them as a trusted resource to its own audience. Profits will grow once a trusted relationship is established with this new audience, and the business offers them a viable solution to their problems. Joint venture partners can market together, create distinctive bundles, or even offer co-produced products or services.
There are many benefits of starting a joint venture, but it is important to start with an airtight legal agreement that clearly spells out the duties of each partner as well as terms for terminating the relationship. Joint venture agreements can be lengthy and complicated depending on the nature of the new business venture proposed. Having a trusted legal team to help clearly define the details of how profits and losses will be divided, the contributions of each party, and exit strategies sets the venture up for success and protects both businesses from potential risk.
O = Others
Joint ventures aren’t the only way to grow a business fast. Creating new customer and client relationships by building agreements with vendors, suppliers, and independent contractors creates competitive pricing, reduces overhead costs, and provides long-term quality and stability.
Vendors, suppliers, and independent contractors can be critical to the success of a business. They can drive the growth of the business and ensure the business meets its revenue goals. However, it is important to effectively manage these relationships.
Negotiating and creating clear contracts at the start of these relationships will mitigate risks in terms of operations, costs, and compliance. With a contract on hand, a business can then track and measure the performance of the vendor, supplier, or contractor against their written terms to determine if the relationship should continue.
T = Terms
Different business needs naturally require different entity formations, and if a business dramatically reinvents its foundations when pivoting, it will need to reevaluate its business entity. Entity formation is an essential way a business can protect itself from liability, save money on taxes, create structured business operations, and build a solid foundation for future success. Choosing the correct type of business entity can significantly affect a business’s success and its ability to meet future needs.
As a business owner, it is critical to know these needs in order to select the right entity for your business. How important is it for you to be protected from personal liability? How much flexibility do you want as an owner? Do you plan on having investors? How important is tax protection?
It can be risky for small business owners to operate as sole proprietorships or in general partnerships because they offer no protection from creditors. As a result, the owners are personally liable for business debts. Corporations and LLCs are popular business entities because they shield business owners from personal liability and have similar taxation codes.
However, what works for one business might not be the best fit for another. There are endless pros and cons to every business entity; and as a business pivots or changes over time, the wrong entity could restrain its growth and hinder its success. Consulting a professional to find the business entity that best suits its new needs ensures it can grow unrestrained.
By simply changing focus, a company can transform their revenue and success. Experimenting with different approaches brings new life; and a fresh perspective protects against becoming stagnant in the market. The strategic use of pivoting is essential to keep business growing and thriving.
If you’re interested in pivoting your business or discussing these topics further, set up a 15-minute meeting with Snyder Law to discuss your business’s needs and to find the best options for your business’s success. Schedule here.
If you would like to learn more about any of these topics, please call/text us at 484-801-0021 or contact us here. We proudly support small businesses.
*Janelle Peyton is the CEO and Managing Partner of Snyder Law, a leading boutique law firm designed to provide the highest quality branding, business, and legal services to companies at predictable and reasonable rates. Snyder Law offers brand building strategies through corporate and intellectual property law, including business entity formation, buy+sell, contracts, joint ventures, trademarks, patents, licensing, and other growth-related transactions.