6 Innovation Tips for Small Businesses

For any small business, gaining a competitive edge in the market is challenging. Typically, it comes down to one fundamental choice: compete on price or compete on differentiation.

While there are scenarios where competing on price can work, it's mostly a race to the bottom with no winner.

Differentiation, however, has the potential to lead to greater things. To successfully achieve differentiation, business owners must engage with the three phases of innovation.

Below are innovation tips that small businesses can use to gain a competitive edge over their rivals.

#1. Be Proactive About Feedback

Listening is one of the most sadly underrated skills. Leverage the thoughts of your staff, your customers, and your employees by asking them how they believe your business is performing. It could be in a more informal setting or a formal way like a survey.

Surveys and questionnaires are excellent ways to identify areas that can be improved and can even be a source of interesting and unique ideas. Customers are a treasure trove of information. If your product or service solves 90% of their problem, but there is just one last thing you never thought of, a survey or communication is a great way to find this out.

Indeed, by listening to your customers and trying to work their feedback into your processes, you should be able to design systems and products that customers care about.

#2. Use Data Analytics to Identify Opportunities

Companies have more data at their fingertips than ever before. CRM software and other analytics tools provide businesses with the opportunity to extract deep insights from company data.

A comprehensive picture of your organisation helps identify leaks and inefficiencies. But to power innovation, you should seek out anomalies or patterns that you didn't expect. While most of your competitors will be content to look at their data on a more fundamental level, gain a competitive edge by taking a deeper dive. Look out for unusual trends. Data analytics is excellent at finding links or hidden data that can be invisible to the human eye.

Within the numbers, you can find the answer to questions such as to why certain products sell well or others do not. Additionally, some new avenues or markets will open themselves up to you.

#3. Invest in Innovation

Innovation isn't just a concept; it's also an attitude. To keep improving, you need to invest in people, technology, equipment and development.

IT and software investments can provide a good ROI if they make your organisation more productive or capable of offering new services that increase revenue streams.

If your business makes products, investing in equipment or machinery is vital if you want to get inventive and edge out your competition.

#4. Involve Your Staff

While staff might not have the same overview of your business, they have valuable ideas to share about an industry they work in. It could be about processes they've seen elsewhere or ideas they believe will make your workflow more efficient. Whatever they are, make sure they know that their voice will be heard.

Yes, not all their ideas will be amazing. But by fostering an atmosphere where innovative ideas are prized, you can set the tone for creativity and change.

Encourage all ideas, big and small. Then sift through them and use the best ones. Often an idea that seems crazy can work with a few tweaks. Let your staff express themselves, and you might find something revolutionary.

#5. Keep an Eye out for Emerging Tech

Keep an eye on emerging tech that will give you a competitive edge. For smaller businesses, tools that help automate workflow processes can reduce overheads and enhance productivity. Additionally, they can help an organisation scale or be more responsive during busy times.

Over the last few years, tech such as the Internet of Things, AI, and cloud computing have become affordable. Keeping an eye on this tech and how it is being implemented across all sectors can help you make creative changes to your own processes.

#6. Apply for Innovation Grants

The Australian government has several grants that are designed to encourage innovation among SMEs. The Federal Government funds the bulk of these programs; however, some state governments also provide local grants.

Many of these grants help with the research and development of new products. Others are designed to assist companies looking to expand their operations.

But if you have a product or idea that is genuinely new or innovative, these government programs will at minimum match your investment.