When I discuss innovation with SME owners or leaders the first impression many have is that the principles only apply to large corporates, not a small or medium size business. Furthermore SME owners generally refer to innovation as investment in R&D or technology. However nothing could be further from the truth and the reality is that there is a massive profit improvement potential for any SME who applies innovation to their business.
So let’s start with a definition of innovation, “innovation generally refers to changing processes or creating more effective processes, products and ideas. For business this could mean implementing new ideas, creating dynamic products or improving your existing services."
So what does this mean to a business owner or leader and where can you use innovation to improve your profitability?
To assist in answering this question, I have developed the Simply Business secrets to profitable growth. As a starting point I assist clients develop their strategic competitive advantage. Put simply, why would a customer buy from you and not from your competitors. I believe that a business needs to apply innovation in developing and implementing its strategic competitive advantage as any efforts applied will generally result in a significant improvement in profitability.
Customers decide to buy based on a value proposition which is the cost on one hand verses the benefits on the other. Most SME businesses aren't big enough or have enough resources to play the low cost game therefore must focus on differentiation as customers will always buy on price if there is no clear differentiation.
Differentiation will provide a clear competitive advantage and this is where SME’s needs to apply their innovation efforts. Differentiation could be in the form of superior products or services or even the way you deliver your business. An often overlooked differentiation strategy is to apply innovation to “the way you deliver your business.” This strategy can produce amazing results and usually at little or no cost.
As an example, an international home services company changed the way it delivered its business to include 10 minutes at the end of each job for the client to use at their discretion to fix anything in their home. The end result was a significant increase in referrals from happy customers and in turn this new business had little to no marketing costs, resulting in significantly improved profitability.
Is your business differentiated? Do you have a strategic competitive advantage?
Do you suffer from margin squeeze? If any of these factors are impacting on your business then you need to look at applying innovative techniques to develop your strategic competitive advantage or point of differentiation.
If you don’t know where to start I recommend you conduct a strategic competitive advantage innovation workshop where you spend a dedicated half day or day to develop your strategies and a clear plan to implement, ensuring it becomes a reality and not just words on a piece of paper.
If you would like assistance in running a proven innovation workshop, please contact me to arrange a no obligation one hour meeting to discuss your needs.
Simply Business Australia
Philip Coombs “The Profit Coach”
0419 834 678