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How can you encourage innovation in your SME?

22 October 2014

Innovation is a powerful force. It drives change, creates exciting new products, solves problems and overcomes obstacles. Within your SME, shaping the right conditions for innovation could help you to reach new markets, streamline your operations and ultimately reach your business objectives.

In fact, businesses that innovate tend to improve more over time than those that don't, according to data from the Australian Bureau of Statistics. A recent report on Australian businesses using figures from 2012-2013 revealed that innovation-active companies were more than twice as likely to increase in productivity and had a higher tendency to boost profits, as well.

This all sounds great, but how do you get there?

You can't exactly sit your employees down in a room, instruct them to "innovate" and expect game-changing results. First of all, innovation requires the right environment - which includes a number of factors, from attitudes to talent to resources. It also often requires investment and the capital to make that a possibility.

Fortunately, there are a number of ways you can support innovation within your small business, whether you're working on a new product or want to improve your processes by investing in additional technology or supplies. Here are a few suggestions:

1. Foster a creative culture

Innovation happens in all shapes and sizes. You don't have to be involved in coming up with the next big thing to benefit from creative thinking. A unique approach to challenges within your processes, for instance, could help your company improve its customer service or cut costs.

To this end, maximising the potential of your workforce goes a long way. Establishing an environment where ideas are welcome, colleagues collaborate with one another and creative thinking thrives can open windows of opportunity.

Small changes can have a big impact in this regard. Ideas such as the following all encourage employees to be engaged, active contributors while providing an innovative atmosphere:

  • Recognition programs that foster positive team dynamics
  • Suggestion platforms that embrace workers' ideas
  • Open lines of communication between managers and staff
  • Office designs aimed at comfort and inspiration

2. Seek financial support for innovative projects

Particularly if your company is involved in research and development, applying for grants and other forms of financial assistance can give you the resources you need to start in on ambitious projects. The Australian government even offers a tax break designed to support innovation: The Research and Development (R&D) Tax Incentive.

This program is open to enterprises of all sizes and is intended to offset the costs of eligible R&D projects. If you are involved in developing or manufacturing or new or improved offerings, you might be eligible for a tax break of up to 45 per cent of your R&D costs.

All you have to do is register your activities with AusIndustry, which you can complete online. To see if your particular initiatives qualify, check out the information on the AusIndustry website.

3. Take advantage of networks and other services

Networking shouldn't stop once you land a job or create a business. By connecting with other businesses and industry experts, you can learn a lot of valuable advice and form beneficial partnerships - which is especially helpful when branching into a new area.

In addition to using LinkedIn and other networking opportunities, you can take advantage of the government's Entrepreneurs' Infrastructure Programme, which helps Australian businesses connect with advisers. Services also help establish ties for research collaboration.

4. Protect your investments

While gaining funding, tax breaks and advice can help to mitigate some of the risks involved in innovation, it's also important to protect your assets and business investments.

With the right level of business insurance coverage, you can safeguard your company from some of the financial burdens that might result from unexpected incidents, such as storm damage or break-ins.

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