Innovation is a crucial part of every successful business. To stay competitive in a cutthroat industry, companies need to constantly develop new ideas to improve the products and services they offer. Unfortunately, many small business owners believe that innovation is only reserved for big-ticket companies, but this misconception is far from the truth.

Small businesses are better suited to innovate as opposed to larger and more established companies. They can boldly execute new ideas and can easily pivot if the situation calls for it because they don’t have to go through several departments before pushing through with an idea. If working capital is an issue, they can easily apply for loans for additional working capital.

2 Primary Types of Innovation

Innovation doesn’t mean that you have to come up with entirely new, never-before-seen concepts or ideas. In most cases, it pertains to modifying business models and adapting to certain changes to improve products and services.

The Oslo Manual (2018 edition) says that there are two main types of innovation:

  • Product Innovation: New and improved products/services that greatly differ from your previous products/services. It can be a change in quality, usability, user-friendliness, or other technical specifications.
  • Business Process Innovation: New and improved business processes for one or more business functions. It should be different from the business processes used in the past. This can be a change in production, distribution, or logistics.

Why Innovation is Crucial to Success

When done right, innovation can take your business to the next level. In support of this, here are five reasons why innovation is crucial to small business success:

1.     Significantly Grow Your Business

According to the GE Global Innovation Barometer 2018, business executives around the world say that 40% of innovations in the past five years have had a positive effect on their bottom line. Be sure to pay close attention to maximizing your ROI. Create a clear structure and a detailed approach to understand the impact of certain innovations on your bottom line.

2.     Effectively React to Unforeseen Events

Business owners need to think fast when unforeseen events catch them by surprise. Through innovation, you can train your mind to see things from a unique perspective. This allows you to respond to unprecedented events in different ways and provide solutions that are beneficial to your company.

3.     Stand Out from a Sea of Competitors

Regardless of the type of business you own, you’re most likely operating in a highly competitive industry. If you run a restaurant, you’re competing against one million others in the United States. You need to find a way to stand out; otherwise, the competition will eat you alive.

Innovation allows you to create something unique for your customers, like incorporating interactive tables in your restaurant or creating dish sanitizing techniques. These innovations make your brand stand out in the market, which makes it easier for you to increase business revenue.

4.     Address Customer Expectations

According to PwC’s Innovation Benchmark 2017, 54% of companies say that customer engagement strategy helps define innovation, and 35% say that customers play a huge role in innovations. This makes sense since the needs of customers are constantly changing.

Successful innovators predict the changes in customer expectations and provide effective solutions before consumers even realize they need them. If you don’t innovate, there’s no way you can meet your customers’ needs on a long-term basis. Remaining stagnant and offering the same set of products and services year after year will cause your business to flounder.

Communicate with your customers on a regular basis and find out what their needs are, and use those insights to come up with new ideas that will excite them.

5.     Increase Business Productivity

If you’re like most business owners, you’re probably struggling to tick everything off your to-do list. Working overtime is not always necessary in order for you to keep up with your tasks; you simply have to work smarter.

Innovation allows you to increase business productivity by creating a new process that will allow you to complete tasks faster and smarter. Focus on the tasks you want to streamline as well as the ones you need to cut. For instance, you can, if you so desire, devise a project tracker system to assign, monitor, and organize your tasks.

How Fast Loans Can Help with Small Business Innovation

Innovation is crucial to the success of small businesses. It gives you a competitive advantage when penetrating both established and developing markets.

Innovation can be difficult and costly at times. But refusing to innovate will do more harm than good.

If you need additional working capital to fund your innovations, you can apply for fast loans from reputable lenders. For more information, don’t hesitate to talk to a financial expert so you can determine the best type of funding that meets your needs.