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2016-02-02 00:00:00Small Business FinanceEnglishInnovation is a great way to help your small business keep up with competitors, retain talent and become a market leader. Test to 70:20:10...https://quickbooks.intuit.com/au/resources/au_qrc/uploads/2017/01/Adding-innovation-into-your-business-budget.jpghttps://quickbooks.intuit.com/au/resources/small-business-finance/adding-innovation-into-your-business-budget/Adding Innovation into Your Business Budget

Adding Innovation into Your Business Budget

2 min read

The 70:20:10 rule helps businesses include innovative ideas in their plans. Innovation is a great way to help your small business keep up with competitors, retain talent and become a market leader. Take a look at how you can bring this model into your operation.

How It Works

The 70:20:10 model works by allocating 70% of your budget to core business tasks, 20% to projects not related to core business and 10% to new projects. It’s based on the idea that a budget should be split into portions to allow for new priorities and objectives to be born out of testing and taking risk.

The model assigns 70% of the budget towards activities that are tried and tested, and can be implemented now, while 20% of the budget should go towards innovations that have been tested but need refinement. Finally, 10% of the budget should be put into a completely new activity – something high risk that has the potential to revolutionise your business.

Google implemented its 70:20:10 model for business innovation in 2005, and as a result new products such as Google News, Gmail and AdSense were created from employee-initiated projects.

Incorporating the Model

While it might sound easy for a large corporation like Google to implement the 70:20:10 model, small businesses can also use it with success. Start by including it in your overall business plan and by allocating funds to each percentage.

Under the model, 70% of your budget and time should be dedicated to immediate business and admin tasks or costs, such as customer service, stock, marketing, accounting and invoicing. The 20% of funds allocated to projects that expand on previously tested innovations could include creating new customer service processes or revamping a marketing campaign.

For 10% of funds, consider spending money developing new ideas, testing product lines, experimenting with a new brand campaign or offering expanded services to customers. At the end of the financial year, review your 70:20:10 budget and how effective the funds were in each category. If certain areas didn’t make an impact or generate ROI, switch it up for the following year.

Ways to Innovate

Your small business doesn’t have to come up with an entirely new product or service for customers to be innovative. In fact, innovation can be about improving efficiency in existing processes and practices or finding new customer demographics.

Develop a unique selling point that sets you apart by finding customer pain points in your market segment, studying competitors and leading a brainstorming session with your team.

Other ways your small business can foster innovation in its 10% time and budget include collaborating with partners, merging with a startup and encouraging staff to pitch their own innovative ideas.

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Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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