When it comes to innovation, bigger isn’t always better. In fact, small businesses are more agile and less likely to be bound by rules and processes than their larger counterparts – putting them in a strong position when it comes to developing new products or services and inventions.
Investing in innovation
Innovation is the lifeblood of new business. Yet, according to statistics from ABS, only 45% of businesses were innovation-active during 2014-15, a drop of 3 percentage points from the previous year.
As a country with a high proportion of small enterprises (the 2014 Small Business Data Card report revealed that small businesses make up 97% of all businesses in Australia), it’s clear that many smaller Australian businesses aren’t taking the plunge when it comes to investing in innovation.
However, they should be because small businesses can outperform their larger competitors on a variety of levels.
Streamlined for success
The nimble and streamlined nature of many small businesses tends to provide a fertile ground for invention and implementation of new ideas.
Very large companies can become unwieldy, making it difficult to identify and take advantage of new opportunities. For example, larger businesses often have a complex process to follow every time they hope to introduce a new product or line.
This means it can take a very long time to move an idea from the page to the real world.
Small businesses, on the other hand, often have far fewer barriers. Rather than fighting against established hierarchies and processes, smaller companies can hash out agreements quickly and efficiently, ensuring a shorter and straighter route from concept to product.
Strong shareholder connections
Smaller businesses also tend to have a stronger connection with their shareholders. In fact, in many new ventures, there is a good chance that several senior members of the management team will have been involved with the founding of the business – and may even be shareholders themselves.
A team made up of people who are have a serious professional or financial investment in the business are most likely to seek out like-minded shareholders, resulting in a better accord and more closely aligned set of principles and ambitions for the business.
What’s more, management members who are personally as well as professionally invested in the wellbeing of the business are more likely to be on the hunt for innovative ways to improve and expand all aspects of the enterprise.
Some small businesses labour under the mistaken belief that only large operations with huge research and development teams are able to innovate. But that simply isn’t the case.
While the resources available to larger organisations may come in handy, smaller businesses are often better placed to take advantage of opportunities as and when they arise.
It’s much easier for a small, tightly knit company to temporarily reallocate personnel to push a new project through. And if extra research and development assets are needed, short-term contracts with suitable vendors can be even more efficient than an in-house R&D team.
Smaller businesses are also far more able to take risks when it comes to allocating resources and experimenting with new innovations.
The bigger the business, the more it has to lose – both in reputation and finance. With fewer eyes on them and smaller overheads, new small businesses have the freedom to fail as they trial innovations.
Open to inspiration
Another significant advantage to smaller businesses is the fact that they tend to foster a strong team environment.
An open atmosphere makes it possible for all staff members to contribute ideas and projects. Taking advantage of a whole mix of skill sets and perspectives significantly improves the chances of hitting on the kind of innovation that will drive the business forward.
What’s more, when individuals and small teams feel they have ownership of a new venture, they’re much more likely to dedicate themselves to making sure it becomes a success.
In larger businesses, it can often be hard for staff to feel like they have ownership of projects or innovations. Which, in turn, makes it much harder to keep motivation levels high.
With all this in mind, take advantage of the benefits your small size offers and allow your small business to think big when it comes to innovation.
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