Small businesses are the backbone of the US economy. According to the Small Business Administration (SBA) estimates, 99% of all US businesses are small businesses.
These humble-sized businesses provide livelihood and employment to tons of people but struggle to stay afloat amid stiff competition and technological disruption.
Why, you ask?
Because most small business owners are so busy making ends meet that they forget to focus on innovation. With technology and business processes evolving at lightning pace, deprioritizing innovation can be a death knell for any business. Since most business owners lack that kind of foresight, 50% of small businesses fail to make it past their first year.
If you want to avoid this pitfall, you need to innovate and sharpen your small business strategies. After mentoring many startups and SMBs through my two-decade-long career, I’ve assimilated tips that successful small business owners follow. And, I’m excited to share them with you in this post.
4 Ways for small businesses to promote innovation
Whether you’re starting a new small business or thinking of ways to scale up, you need to keep innovation on your radar. But it’s easier said than done. Losing your focus in the daily rigamarole is only too easy. That’s why you need to be proactive about building a culture that breeds innovation.
Just implement these four tips:
1. Encourage your staff to be innovative
Fostering innovation is easy when your entire team makes it their personal goal. Give your colleagues a reason to be innovative. Reward innovative thinking so that your staff feels motivated to spread their creative wings.
When your workers feel like a part of the bigger vision, they are more likely to take a personal interest in the company’s future. So, be transparent with your team about your plans for the company. Share the roles and opportunities you have in mind for each employee.
Explain how growth is impossible if you all don’t innovate and adapt to evolving market needs and consumer demands. This way, you can tie company goals to employees’ personal goals and charge your team’s morale.
2. Seek feedback from customers
Understand how you need to innovate by asking your customers where you lack. Modern consumers are smart buyers who vet and compare multiple brands before engaging with one. They can honestly tell where you stand in comparison with your peers.
After each interaction with your customers, seek their feedback and implement their improvement suggestions proactively. This will not only fuel your innovation efforts but also improve customer satisfaction and reduce customer churn.
While seeking feedback, try to be as non-invasive as possible. Instead of disrupting the user experience by showing feedback pop-ups, ask for feedback through surveys and forms. Since new customers are less likely to spend time filling forms, focus your attention on customers who have interacted with you over the past.
3. Invest in tools and technology
Brands that are not tech-savvy are often left behind in the race for the top spot. They waste time and effort in non-cognitive tasks that can easily be automated using tools.
Tools and technology allow small businesses to be more flexible and agile while reducing their labor overheads. Moreover, tools can do tasks that are not humanly possible, at least not as efficiently.
For instance, if you own a B2B that relies on marketing tools, you can spy on your competitors’ strategies and stay one step ahead of them. They can also predict future trends and market conditions, giving you room to prepare for them. This can be a game-changer for small businesses in a cut-throat ecosystem.
Similarly, technologies like artificial intelligence, chatbots, and AR/VR help you provide a surreal, immersive experience to consumers that fosters loyalty and repeat sales. That’s why it pays to invest in technology and appoint a technology officer who has a long-term vision for the company.
4. Focus on Research and Development (R&D)
R&D should be integral to your small business. It provides you with a competitive advantage and helps you come up with a unique value proposition. If you’re able to create something saleable after R&D, your revenue multiplies. You create intellectual property and build equity.
You can also attract potential investors, partners, and quality talent by projecting yourself as a flagbearer of innovation.
Discerning consumers love businesses that are always looking for ways to make their products/services better. Better products mean better value in the same spend.
Granted, setting up an R&D lab can be costly for a cash-strapped small business. But you can take advantage of public sector funding and R&D grants available in your location. You can take tax relief or credit available for certain R&D activities. You can cement your brand reputation and collaborate with complementary brands to open up wider business opportunities.
Now that you know how R&D benefits small businesses, think of ways to solve the challenges that your target audience faces. Look for solutions that are effective as well as commercially viable. Don’t be afraid to hire external talent to spearhead your R&D teams. The investment will be well worth it.
Small business owners need to adapt their mindsets to rise above the mundane and focus on innovation. Only then can they stay competitive, efficient, and future-ready.
Do you implement any of these tactics in your small business? What are the challenges you face? Please share your answers in the comments below.