Small Business Owners Have More Access to Innovation Than They Think
Why is innovation important? The term “innovation” is ubiquitous in the business vocabulary and it is thrown around so frequently that we are made to believe in its importance without really understanding what it means. What we do know is that innovation is a vital concept to engrain in your workplace. It can give you a competitive edge in penetrating a new market, or increase market share in your operating market. Simply, an innovative culture will grow your business with ease. Tried and true business practises are reliable and safe, but investing in innovation doesn’t mean de-bunking the pillars of your business and heading to the drawing board. Innovation in business requires the owner to have an open mind, curiosity and a desire to do both big and little things better. If you can involve innovation as part of your approach as an owner and leader, you will experience tremendous efficiencies across all areas of your business, realize new and durable competitive advantages and drive profitability.
Whether you are working to get your small business sale-ready, or preparing for your next small business venture, investing in innovation is an essential component of building wealth. A 2018 survey commissioned by BMO Wealth Management aims to shine light on how Canadian small business owners define innovation and how innovation can help your current or next business grow. Below, I explore several key takeaways from the survey’s findings.
- Demystifying what we think of when we hear the word “innovation”: In the digital age, we hear the word “innovation” and our minds immediately jump to “technological disruption”. We think smart phones, apps, artificial intelligence and social media. These avenues can be intimidating and disheartening if they are not already built into your business strategy. However, BMO Wealth Management group states, “innovation that helps to create wealth for Canadian business owners only requires business leadership and motivation, a supportive circle of family, associates and employees, and a desire to improve”. This can mean employing low-tech innovations to better understand your client’s needs, improve your customer relationship management and streamline product and service development. Remember that innovation is not always about saying yes, but saying no to anything that does not add value.
- Younger owners are changing the small business landscape: One of the primary reasons that 50% of small businesses fail within their first five years is a lack of innovative practise. However, owners aged 18-35 have found success in gearing innovation efforts towards developing better products and services. As opposed to owners aged 55 and over, who divulged that when it comes to innovation they are typically client centric and more focused on customer demands.
- Innovation analysis extends beyond your ROI: There is a tendency to be rooted in measuring only financial ratios like your profitability and profit growth. There is question that profit is the backbone that keeps your small business alive but in the 21st century, behavioural metrics are increasingly important. Management performance indicators such as leadership capabilities, employee empowerment and customer engagement are valuable in measuring your company’s innovation. Take note from any dominant Canadian enterprise. In essence, innovation should be an overarching strategy in all areas of your business, from human resources to new product development.
- Majority of owners shy away from funding opportunities: The largest obstacle to innovation that small business owners perceive is a lack of capital. Shockingly, the survey revealed that over 60% of small business owners in Canada have never applied for funding to support innovation. Further, over 30% were not even aware of the availability of government grants to support innovation. Next to limited money supply, the survey found that respondents did not pursue business loans or government grants because they were afraid of debt, found the process overly complicated and/or struggled with fear of rejection. These are stifling numbers considering of those who did apply, the majority were approved. This inaction has far-reaching consequences for lost opportunity in Canadian business innovation.
- Diversify your support network: Within the technology sector there is a strong network of accelerators, incubators and hubs that allow entrepreneurs to be paired with experienced mentors. These support networks are also available to companies outside the realm of technology and are able to supply technological expertise and assist in attracting funding. Access to networking and access to funding were cited as the two primary keys to delivering on innovation by Canadian small business owners. Yet, the majority of Canadian entrepreneurs were not aware that this type of support was available to help them innovate. As a small business owner you should be think beyond accelerators, incubators and hubs – aim to surround yourself with unique individuals who can offer different opinions and backgrounds to your own. Join a business group, find a mentor and surround yourself with business owners in various industries.
As an entrepreneur you chose this path, and the challenges and stresses that accompany small business ownership are not small. You are likely a visionary and challenge-seeker, act on these impulses and get involved in your community. Collaboration and partnerships with staff, suppliers and customers are vital to fostering an innovative environment. A diversified network of business individuals will not only enable you to learn from others but offer your own advice. It is always better to be challenged – surrounding yourself with like-minded or industry specific individuals can limit your access to innovation