Why innovation in business?
It is often said that if you are standing still or stagnating growth, that you are actually going backwards. Why? Because as you stand there doing nothing, everyone around you (namely your competitors), are moving forward. Creating new products, ideas and services that will shuffle you down that pecking order in no time. And that’s why innovation is so important.
Taken in this light it, innovation is imperative in any business to stay at the forefront of your industry. And to stay relevant in this ever changing business landscape we find ourselves in.
How innovation can occur in your business?
The Australian Government talks about the key steps to innovation. The quick versions of these are:
- Conduct analysis
- Consultation (with customers & employees)
- Seek advice
- Be open & adaptive to new ideas
- Develop plans
- Train & empower employees
Now that’s a nice stepped out approach but how do you start the innovation process when you are thinking, “I’m not innovative, I’m not a creative person, how on earth do I drive innovation in my business?”
In short, you can force innovation on yourself.
Every person is inherently innovative, it’s just you may not realise that you have created any number of innovative solutions throughout your life. And in most cases it is a result of being in an unplanned situation with little money or resources with the need to make something happen.
In his book The Toilet Paper Entrepreneur, Mike Michalowicz uses the example of that moment when you are in the bathroom and realise a little too late there not enough paper on the old toilet roll. Uh, oh. Then in his Profit First book, it’s the toothpaste. Early days you’re incredibly liberal with your toothpaste dollops. By the end of the tube, you’re trying every which way to get every last drop out of the tube.
What has been the impact since I started forcing innovation in my business?
The Profit First approach to managing your business finances is the perfect approach to force innovation in your business. By setting aside allocations of the revenue generated to profit, taxes and my own wage, I have to run my business on whatever money I have remaining.
“Do I really need to spend this money today?” is a question that is on repeat in my mind. And for non-profit making activities the answer is most often “no”. This question has directly resulted in me not buying a new computer and an associated IT setup all the way down to realising I really don’t need those extra folders I initially thought I “really needed”.
“What is my return on investment (ROI) likely to be? And is it measurable?” is the other question that consistently comes to mind when deciding whether to undertake marketing activities. I’ve only got x amount of dollars left in my operating expense account and I’m still a week away from getting the next injection. This has resulted in me identifying the need to build great referral networks and have them being my marketing team. In essence it’s a contra deal where I help promote their businesses, and they promote mine. No cash changes hands. Bam, no direct impact on my operating expenses (I do pay for mentoring around the methods to build the team and how best to leverage this, which I can measure very clearly the ROI it has – I’ll share more on this in later posts).
So what does it mean in dollar terms?
Over the past 18 months I have my score sheet showing savings of around $30,000. These come from:
- Delaying the purchase long enough to realise I didn’t need to purchase the goods at all
- Being creative in ways to access training and other professional services I require in both my personal life and in business
- Identifying and implementing different marketing ideas that either have no cash expense or lower expenses than the initial ideas I had planned.
- Negotiating better costs or terms on different products and services
What you can do?
Force innovation on yourself. The easiest way to do this? Open a new bank account, call it ‘Profit’, and start transferring 1% of every cash amount you receive into your business into this account. By default you now need to run your business with the 99% of income you now have in your general bank account. You’ve now just forced yourself to become more innovative.
Want to learn more about the Profit First book and methodology? Check out last weeks blog Paying Profit First – The Path to Permanent Profitability, or get 2 free chapters from the Profit First book here.
And finally, connect with Mints CD Consulting on our social media channels to follow the latest on making your business more profitable than it ever has been.