How Innovation Drives Positive Growth for Startups and Small Businesses
Innovation is doing something better with the same materials as everyone else. Photo by Matt Ridley on Unsplash
It is hard for new small businesses and startups to get a positive start in almost every industry. There is a huge competition among the vendors in the local, national, and international marketplaces due to wider access to new technologies. The success of a new startup is highly dependent on its ability to bring innovation into its business cycle. Innovation is defined as introducing something new in a preexisting environment. It helps a small business to stand alone in the competition and get attraction from the customers. Ultimately, a small business becomes a mega-brand if it keeps on innovating its products and services.
Importance of Innovation for a Small Business All small businesses need to pursue new business opportunities and innovation. Innovation brings prosperity, productivity, and technological prowess in economic structures. There are different types of innovation having different impacts on the positive growth of a business or a startup. The external innovation is one of the most important driving force for the growth of a small business. However, as a small business grows larger, it becomes hard for it to maintain external innovation. Most of the companies perform two types of innovations including internal or exploitation innovation and external or exploration innovation. It is evident that if a company produces high-quality products, then it will generate more profit as compared to producing low-quality products. In terms of internal innovation, a small business must have to invest some money on Research and Development (R&D). A company will get more profit if it improves the quality of its products through innovative R&D results. If a company wants to capture a product line owned by another company, then it needs to invest in external or exploration R&D. A successful exploration R&D project will enable a company to add a new product to its product line. Small businesses and startups pursue both types of
innovations. It helps them to improve the quality of their products and capture the products owned by other companies. So, the profitability of a small business or a startup is highly dependent on the innovative practices maintained by it.
How a Small Business or Startup should pursue innovation? A new entrant or entrepreneur into an industry does not have even a single product in its product line. So, it cannot pursue internal innovation. They should allocate their entire budget on external innovation. A very small business with a single or two products in its product line should not spend much money on internal innovation. However, it always has a vast opportunity to spend money on the external R&D to bring new and innovative products into its product line. The larger organizations/businesses having thousands of products in their product line can afford to focus on internal R&D. Theoretically, they must have to bring innovation into their existing products to generate more profit. External innovation has better impacts on employment growth as well, as compared to internal innovation. So, small businesses and startups should focus on external innovation to compete successfully in the industry. It will drive positive growth for a small business or startup.
Positive Growth Indicators – Innovation vs These Indicators A business is said to be growing positively if it will show improvement in the following dimensions: •
Innovation vs Profit The economic growth of a company is dependent on innovation, according to the European Central Bank. By maintaining innovation in your small business or startup, you can get higher output from a smaller input. It leads to better productivity and ultimately, better business growth. A small business adds more products and services into its business cycle through innovation. As a small business grows, it generates more profit. So, a small business can improve its profitability by using innovation and investing in R&D.
Innovation vs Demand The recent research data has proven that innovation improves the quality of the products in a product line of a new business or startup. There is always a huge demand for quality products in almost every industry in the world. So, a small business can get more and more customers if it will improve the quality of its products through innovation. It is clear that the demand for an innovative product is always higher than the demand for an ordinary product. So, the demand improves with innovation and it makes a business enable to sell more products. It is an indicator of positive business growth.
Innovation vs Revenue It is the main aim of every business to stay relevant and it is possible if it maintains innovation. It is not an easy process to innovate but it is necessary to compete in an industry. You must have to set the right innovation goals to get success. You have to use accurate metrics to drive your efforts. Innovation improves the outcomes and the customers demand true outcomes. There are four key factors that drive innovation in a small business or startup including the whole team should focus on innovation, the business must set innovation goals, the team members should have a voice, and they should understand their metrics. A company can generate more revenue by practicing innovative strategies and developing more products and services.
Innovation vs Sales Innovation has a huge impact on sales. A company can improve its sales by working on innovation and R&D. If a company invests its money and time in innovation, the customers will appreciate its efforts. It will bring more sales. Innovation is an important edge for entrepreneurs to survive in a highly competitive marketplace. It boosts their productivity, profitability, and growth. There are several ways that lead a small business to innovation including simple public surveys and customer feedback. However, innovation improves sales and there is no doubt about it.
Innovation vs Market Share Innovation is not the only way through which a company can improve its market share. However, it is one of the important ways to do so. A company has to struggle a lot in order to increase market share. Here are some of the ways to achieve their important goal: •
Improve Customer Relations
Adopt smart hiring practices
Innovation is the leader of the above-mentioned practices. It has a significant impact on the ability of a company to increase its market share. Market share is one of the most important indicators of the positive growth of a company. Innovation can help a company a lot to grow efficiently in any marketplace.
Categories of Innovation Small businesses and startups must have to focus on certain areas of their business where they can drive innovation. These areas include: •
Product or Service A startup can focus on developing a new product or service in a specific industry. A small business can work on improving its products or services. It can also work on developing new products or services. The introduction of new technology is another option for both startups and small businesses.
Singh, Jasdeep Small businesses and startups have to follow some processes to carry out their business. These processes can be a financial system, human resources, communication systems, information systems, and many more. They can work on bringing innovation in these business processing systems. â&#x20AC;˘
Marketing All small businesses and startups have to market their products or services. They can use different techniques and tools for developing innovative marketing strategies.
Business Model The business model plays a crucial role in the success of a small business or startup. Small businesses should invest in R&D to enhance their business model. It will surely help them to grow positively over time.
Conclusion Innovation is a force that drives positive growth for a small business or startup. It boosts up sales, profit, demand, revenue, and market shares of small businesses and startups. Small businesses and startups should invest in external R&D to develop new and innovative products. They should also work on introducing new technologies in the current marketplaces. Innovation is a crucial edge that helps entrepreneurs to survive in a competitive market.
By: Jasdeep Singh https://www.jasdeepsingh.net