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PKF Australia

Accountants and Business Advisers

Five tips to overcome barriers to small business innovation

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Jeremy Pooley

Director

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Five tips to overcome barriers to small business innovation

Posted 19 Jan 16 by Jeremy Pooley

Recent research figures have highlighted a trend of common concerns among small business owners looking to boost innovation in their organisations.

The Australian Innovation System Report 2015 identified access to funding, access to skilled people, uncertain demand for new products and services and the cost of commercialisation as the top barriers to innovation in small business.

MYOB’s January 2016 Business Monitor Survey recorded markedly similar findings. The table below summarises the findings of these two reports.

Barrier

Innovation System Report

MYOB Business Monitor Survey

Access to R&D & Investment Funding

23

26

Skilled People (incl marketing)

18

14

Commercialisation cost

14

28

Uncertain product demand

15

-

Government regulation/red tape

-

23

Reported barriers to SME Innovation (% of reported responses)

The same findings have been recorded year after year.

Starting a business and seeing it succeed can be like walking through a desert where the horizon is always over the next rise. It is easy to say those who make it are lucky, or that you ‘have had no luck’. The reality is that ‘luck’ is 1% inspiration and 99% perspiration. In other words, knowing what you want to achieve and having a dogged desire to achieve it.

Here are five tips to help you overcome the most common barriers to small business innovation:

1. Understand your business

The path through the desert is much easier if you have a clear strategy. Your strategy should have three parts:

  • Know why you want to be in business;
  • Know where you want to get to; and
  • Create a plan (the what, how and who) to get you there at the right time.

The strategy helps you to understand the detail behind your business, what needs to be done to succeed and the challenges. It creates the confidence to succeed.

2. Access to funding

 

While access to funding always seems a challenge, the real challenge is:

  • To direct available funds to key priorities; and
  • To find ways to economise on priority spending.

Identifying what is really important is only possible if you have done the right amount of planning. You need to identify what is on the critical path to success and how much it may cost while constantly challenging yourself to find less expensive ways to achieve your outcome.

Access to funding only becomes a challenge when critical funding priorities truly exceed available resources. At this stage, funding often becomes easier to attract because that need is clear, targeted, and able to be clearly communicated – a way of saying that you understand your business and what is needed to succeed.   

3. Uncertain product demand

The idea of ‘build it and they will come’ rarely succeeds. The better saying is ‘check that they want it before you build it’. The first step in developing your product needs to confirm these points:

  • Does your product solve an annoying problem for customers better than existing solutions? (Who is the market?); and
  • Are there enough consumers who might want to buy it? (How big is the market?)

Find a way to answer these questions by building cheap prototypes and finding out how customers would use your product, what problem it helps them solve, how they feel about it and what they might pay for it. Test cheaply and test fast. There is no reason for being uncertain about product demand.

4. Commercialisation cost

The cost of commercialising ideas through detailed planning is always less than the cost of commercialising poorly planned ideas. Above all, commercialisation is a disciplined process.

How can you accelerate commercialisation and ensure it is cost effective?

  • Ensure your strategy is clear;
  • Prioritise and economise your funding;
  • Know your marketplace and how and where your product can be tested; and
  • Be realistic about the timeframes to make your first sales.

5. Finding the Right people

The key to finding the right people is to be clear about what type of people you need and what you want them to do. Most important of all, you need to first know yourself so you can identify how others can fit in. 

How can PKF help you?

At PKF, we partner with you to help commercialise your products. Our goal is to help you set your business up to succeed and then to achieve sustainable profit as fast as you can in your first 12 months of operation. We help form your strategy, access funding, find the right people for your business, and establish the connections with customers you need along the way. The desert is an unforgiving place; it is better to cross it in a car or better still fly over it!

Contact us today to discuss how we can help you kick some goals in 2016.


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