3 big reasons to innovate in business

I often get business owners suggesting that innovation isn’t required or not important. Why would I need to change they say… I’ve done it this way and it’s always worked. Usually I ask them how much closer are they to their goals as the same time last year. You can imagine the blank stares I see looking back in return.

So Innovation… what does it really mean to business? Well innovation is really just an idea or a concept of doing things differently. Yeah sure you can argue definitions here so allow me a minute or two to explain…

1. Businesses that innovate usually have lower overheads and greater margins.

These cost advantages come about because businesses that innovate typically critically review their cost structures. This means things like looking at the supply chains and understanding where their significant costs are and then reviewing how these dollars can be more wisely spent. Innovative business models utilise the low manufacturing costs of overseas suppliers and are able to negotiate more imaginative deals. Innovative businesses will review their overheads and look for opportunity to reduce costs in creative ways.

2. Businesses that innovate have multiple income streams.

Most innovative businesses look at expanding the number of income streams available to them. If we take a look at Apple you will notice that they have their Mac sales. Apple total revenue has most recently moved into touch devices and sales on their iTunes and App stores. The iTunes store currently accounts for around 10% of their total revenue and growing 100% year-on-year compared with a 3-4% increase in Mac sales.

We are not apple but we can utilise innovation in our business in just the same way. There is a growing trend online about providing additional income streams from webinars and audio books as well as the many creative ideas you could explore to develop new services and products in a new niche.

3. Businesses that Innovate employ better people.

Lets face it. Our business is represented by the people we employ. There has been a ton of research regarding the way individuals perceive innovation. In summary people are more likely to be happy in an environment of innovation and continuous improvement. If your employees are happy, your customers are happy. Not only that but if you have an environment in your innovative business that is friendly and happy you will naturally attract a higher quality employee and this in turn enhances your business.