How do you turn your small business into an innovation machine?

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Innovation (Photo credit: Seth1492)

A dog day care business faced stiff competition with similar businesses starting up. The owner decided to introduce new services such as caring for older, sickly pets, offering on-site vaccinations and placing webcams in the facility so owners could check their pets anytime. This innovation helped the business expand from 11 locations to 100 franchise outlets and wholly-owned shops.

The perception exists that small businesses are not as innovative as larger companies. Yet while this may be true for common village professionals like shopkeepers, real estate agents, plumbers, lawyers and doctors, many small business owners are highly innovative.

Why is innovation so important to small businesses?

Some of the main reasons are fierce competition in over-traded markets, me-too products and services, customer dissatisfaction with products and services and running on business models that no longer serve the business or customers well. Standing still on a “burning platform” is no safe place for a small business owner. Why wait until it’s too late? Start thinking about innovation while you can afford the luxury to do so.

What does innovation really mean for small business owners?

For many small business owners innovation means generating new business ideas and turning them into products and services. But innovation can encompass many other parts of a business including their positioning, market segmentation, business and revenue models, service offering and marketing methods.

It’s true that small business owners, much like larger established businesses focus on efficiency, improving their products or customer services and reducing their costs and increasing sales targets.

Why would small business owners be interested in turning their small business, already humming along very nicely thank you, into innovation machines?

They’ve got enough to keep them busy: demanding customers, stock control, selling, attracting new customers and managing employees.

Entrepreneurs are more equipped to deal with innovation as they have a stronger appetite for breaking into new markets, identifying and serving niche markets, and tolerance for the unpredictable and uncertain.

Yet isn’t there a place for innovation in small business, particularly in markets that are ever-changing, where product obsolescence is fast, where store formats quickly become tired looking and outdated?

After years of recessionary conditions just take a look at shopping centres or drive down your main street and you will see many businesses that have closed down. In many instances a failure to anticipate change such as in customer demand has led to their demise.

How can small businesses be innovative so that they anticipate changes in demand before it’s too late?

Perhaps the main focus of innovation for the smaller businesses should be on their customers. They need to find out what customers want and why prospective customers are not buying from them but rather choosing their competitors.

Innovation in customer demand would start with simple surveys done regularly to understand what customers need, want and desire as well as to identify the hidden benefits that they crave to either avoid pain – products that are hassle-free, provide better performance and that are easy-to-use – or increase their pleasure – make them feel good, make them feel important, give them more time and save them money.

Many small business owners are innovative when it comes to their customers. Being close to customers and responding their needs with new solutions to their problems is probably the main area of innovation for the more ambitious small business owner.

Take, for example, the website developer business owner who runs a fee-for-service business model building websites for customers. He finds that customers need website hosting. The business owner buys website hosting space at wholesale rates and provides a web hosting solution to customers for a monthly fee. The business owner has innovated his business model into an annuity income.

How can small businesses innovate apart from connecting with customers to find out their problems and turn them into opportunities?

One way is to find viable niches that are overlooked by larger companies and serve them with such high levels of service that customers would be loathe giving up such personalised service.

Another is to change their business model from, say, fee-based, to a leasing or rental model.

Experiment with different sales and marketing methods to determine which work best. Marketing methods adapted from unrelated industries would also represent innovation.

How do small business owners begin to explore areas to innovate their business? It begins with asking deep, probing questions that cut through their ready-made personal, business and industry assumptions.

Asking, “Under what assumptions do we run our business?” is a good place to start. After taking time to re-assess assumptions, map out areas in your business that can be changed, improved or even removed.

Innovation requires implementation or simply put – action. Test your new business ideas with customers before making radical changes. Innovation by its very nature is risky, uncertain and unpredictable. Decide if you want to pursue incremental change or disruptive, revolutionary change. Knowledge of your business, customers and industry will prove valuable here.

An online organic skincare brand that uses fresh fruit and vegetable purees in facial cleaners, toners and moisturizers experienced show sales. Switching to clear containers that showed how colourful and natural and fresh the products were pushed sales up by 150 percent in six months.

Innovation may be synonymous with risk-taking but without constant innovation small business owners face the greater risk of being left behind. It takes courage to turn a small business into an innovation machine but well managed innovation creates rewards for customers and ultimately small business owners.

Stay inspired

Chesney Bradshaw


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