As we wave a not-so-fond farewell to 2016, get ready for the annual storm of predictions of the business trends set to dominate the next twelve months. From new technology to leadership philosophies, these trends often come complete with dreadful buzzwords (did anyone enjoy drinking their own Kool-Aid?)
Yet years aren’t divided up into neat packages and most small business owners already know the macro trends in tech and innovation – from robotics and virtual reality to 3D printing, they’ve been on the agenda for a while now. The real question is how technology can be best used to create competitive advantage.
Small businesses are agile enough to embrace new technologies and build proof of concepts faster than their bigger counterparts. With the potential to disrupt entire markets, SMEs can keep even the largest of corporates on their toes. Yet lack of funds and time present major barriers when it comes to bringing new innovations to market.
With so much to gain from innovation, how can entrepreneurs turn ideas into great new products and business models?
Get time on your side
Cashflow pressures and tight margins can leave small businesses little time to innovate. But the disruptive forces of tomorrow begin with new market insights and smart questions today.
In 2004, Google founders Larry Page and Sergey Brin founded the now-famous 20% time policy. The company’s IPO letter encouraged engineers “to spend twenty percent of their time working on what they think will most benefit Google” - a policy that has survived, in one form or another, to the present day. Indeed, some of the most famous Google services - such as Adsense, Google News and Gmail were developed in time ring-fenced for innovation. By dedicating one day a week ‘creativity time’ for their engineers, Google both built a lasting innovative culture, and also simplified resource planning.
Twenty percent of staff time may be a tall order for an enterprise with limited resources, but the principle remains. Setting aside breathing space in the forecast for creativity can encourage employees to develop incremental improvements to products and services, especially when accompanied with a clear remit and recognition for pursuing organic growth opportunities.
Find out what works
Financial management tools can be extremely helpful in assessing what works in innovation. Just be sure to do so in a way that matches your business’ culture and the realities of your market, rather than being over-eager for quick returns or reducing all value to visible pound signs. Some innovations take an awful long time to deliver, so take a leaf out of Silicon Valley’s book to win the bigger game.
Assessing investments made against KPIs can keep projects on track, and guide decisions while indicating what team time is needed to get to the next milestone.
Innovation doesn’t happen if a business can’t afford it, so supporting dedicated time for pursuing creative ideas with solid financial planning can help make innovation a practical reality in small firms.
Planning internal resource is only one part of the financing puzzle. Many new projects need cash investments too, to buy anything from raw materials to consultancy and marketing, so external investment is often needed.
2016 brought some good news in the shape of for government grants in innovation. The Budget saw George Osborne back projects such as Birmingham’s creative innovation centre, STEAMhouse, as well as regional innovation audits. The theme continued in the Autumn Statement, despite coming from a different Chancellor, with Philip Hammond’s significant investment in R&D. It’s encouraging to see innovation high on the public policy agenda; although we’ll wait and see the percentage of this sum that will be allocated to small businesses.
Grants are also available through bodies such as Innovate UK, the national innovation agency. This helps small businesses – in sectors ranging from emerging technologies to manufacturing – fund tests for early stage ideas that can be seen as too risky for private sector investment. It’s also worth investigating the European Commission’s Horizon 2020 programme, a pan-European innovation fund offering €80bn over seven years.
Another funding route is the Local Enterprise Partnership Network - a collection of thirty nine regional partnerships set up to strengthen relationships between local authorities and business. While the network as a whole doesn’t offer funding opportunities, individual partnerships do, so check your local organisation.
Outside grants, ambitious small business owners can turn to alternative finance. Innovative concepts can be a real attraction for business angels and VC funds, not to mention a great story for crowdfunding. Either way, alternative finance can be a practical way of ensuring a firm can continue developing new products and processes without having to sign up to a cashflow-draining loan repayment scheme.
UK small businesses are already a powerful disruptive force, weathering last year better than many economists expected. With the right management tools and funding in place, there’s a great chance more new ideas could be translated into profitable growth in 2017.