Here are six ways that changes to various areas of your business can drive your bottom line.
Fancy unlocking opportunities to boost revenues, cut costs, access new markets, and work smarter instead of harder? It’s all possible with a bit of innovation. And anyone can do it.
You may not consider yourself to be a risk-taker or innovative thinker. Yet as a business owner, you have already taken a big risk. And you know what does and doesn’t work within your business – and for your customers – better than anyone.
Tap into that knowledge and you’ll discover there are many ways to innovate, often with substantial rewards attached. Here are some of the most common types of innovations and some thoughts on how to achieve them.
1. New products and services
Most people think of innovation as new products or services: an entirely new concept, a unique solution to a problem, or an improved take on existing goods or processes.
Bringing such innovations to market requires a good idea, technical know-how and impartial testing, but it is often funding that is the real obstacle. Yet there are numerous options available. A combination may be necessary to meet the required cash injection:
- Grants: governments, some corporates, accelerator programs and industry bodies offer innovation grants.
- Incentives: offset costs in other ways, such as tax breaks, discounts, access to specialised technical advice.
- Awards: Prizes for industry awards can be lucrative, while simultaneously showcasing your innovation to prospective customers.
- Partnerships: Shared equity in your innovation with sale proceeds split once you go to market.
- Capital raising: includes traditional loans, seed funding, outside investment, and director loans using your home equity or savings. Proceed with caution though. This is an investment; don’t take on more than you can afford to lose should your innovation not succeed.
2. New revenue streams
New offerings aren’t the only means of creating new sources of revenue. Sometimes, delivering existing offerings in new ways provides opportunities to reach new customers or sell more to existing ones. Consider:
New pricing models: for instance, introducing a subscription service – you derive more regular (and typically higher) revenue; customers benefit from improved cash flow and ongoing support.
Updated pricing structures: if you deliver more value than competitors, with greater experience, superior quality or another USP, charge more to reflect it.
Package deals: Bundle complementary products or services into a new package deal, which may better cater to new markets, such as larger businesses or more price-sensitive customers.
A great example is vegetable growers turning waste produce into saleable product, by using odd-shaped or sized produce sliced and in ready-to-use packages.
“Employees are often the largest single cost of doing business. Are you getting your full money’s worth from them?”
Alternatively, leverage your own specialised skills and knowledge, such as through professional speaker fees, publishing a book or hosting tailored training workshops.
3. Operational efficiencies
Innovation isn’t necessarily restricted to customer-facing or income-generating activities, back-of-house operations are ripe for change.
For example, do you really need centralised operations with all staff working from expensive premises? Some or all of your workforce could work from home, allowing your business to downsize rents and sell/sublet unused space, while also potentially improving productivity.
While the concept itself isn’t new, it may involve the rollout of new processes and systems to make it happen, or simply be an innovative step for an established business.
You could also develop a new manufacturing process that cuts waste or increases output, trial new marketing methods uncommon within your industry, or unlock the power of artificial intelligence for mundane tasks.
4. Tax and financial management
Implementing innovations into this aspect of a business can stem cash leakage and unclaimed deductions, bring in revenues faster, improve cash flow visibility, and streamline compliance processes.
Say your accounts person (which may be one of your many hats as business owner) spends considerable time chasing overdue invoices and expenses. Update your invoicing process to make it easier for clients to pay promptly – such as by adding a ‘pay now’ button or QR code to invoices. And slash forgotten claims, lost records and the dreaded end-of-month influx by embracing apps that allow on-the-spot photographing and lodgement of expense receipts. The time saved can then be reinvested into more income-generating activities.
Think creatively about how your cash reserves are used – are they languishing in a bank account or wisely invested to accrue interest and hence extra revenue? Are your loans, term deposits, etc, optimised for current rates and market movements? Do you have stop losses in place for foreign exchange movements?
Also look for ways to improve security and detect fraud. Scammers and cybercriminals are innovating with their methods of attack, meaning your defences must innovate, too.
5. Staff empowerment
Employees are often the largest single cost of doing business. Are you getting your full money’s worth from them?
Business leaders who don’t regularly connect with their teams, or develop a culture where ideas aren’t encouraged and considered, risk losing considerable opportunities to innovate.
Customer-facing staff are the best tool you have for tapping into customer problems and needs. Technical staff have the skills and know-how to improve existing offerings and develop new ones.
Furthermore, employees given the freedom to be creative and bring their ideas to fruition learn new skills, can be more engaged, and are more likely to stay with you. Don’t underestimate this powerful tool for improving staff retention and aiding recruitment in a competitive labour market.
6. Revised business model
If the COVID-19 pandemic has taught us anything, it is that change is inevitable. With that in mind, perhaps your business would be more profitable and/or more sustainable longer term with a more innovative business model.
For instance, look at the media industry. Its previous business model focused solely on generating content for its chosen channels – print, broadcast, digital – paid for through advertising revenue. Now, many media companies are also events companies – offsetting ad revenue losses in the digital age through ticket sales, while adding greater value for their audiences and generating new exclusive content for their existing channels.
You may even already have an innovative product, system or service without realising it could be monetised.
Many businesses develop their own platforms, software, apps, tools, employee training programs and so on for internal use. Could they be repackaged and sold to other businesses? Depending on scalability, uniqueness, and potential market size, this could ultimately be more lucrative than your existing products or services.
The meaning of innovation
Innovation isn’t necessarily about revolution. You don’t need to reinvent the wheel or create the next Google. Even minor changes that deliver a positive alternative to the same old approach are innovative.
In fact, starting small allows you to build confidence in trying new things before moving onto bigger, costlier and risker innovations.
So, what are you waiting for? Get innovating and see how you can drive your business’ bottom line to a more desirable destination.
This article first appeared in issue 43 of the Inside Small Business quarterly magazine
