In the modern world, innovation is more important than ever to keep up to date in an ever-changing business landscape. In business, innovation can mean a creative, an insightful new way of doing something or using technology to improve your operations – and the right change can impact your sales, profits and customer satisfaction for the better.
The recent COVID-19 outbreak and ensuing UK lockdown have provided a case study for how vital innovation can be for businesses. The measures of social distancing put in place by the government have forced many companies to utilise innovation in coming up with ways of serving their customers without regular contact, changes to their business model and using online infrastructure to allow their staff to work online. By using these creative solutions, these companies have been able to continue their operations and weather the fall in demand they may have otherwise faced. Other companies have grown exponentially.
Once you have come up with an innovative idea, you will need to fund it to make it a reality. Luckily, there are increasing incentives for businesses to implement innovation, such as grants and the broader appeal for investors.
In this blog, we will be detailing how you can utilise innovation and how you can fund it to reap the rewards.
What is innovation?
You may think that innovation means coming up with grand, never-seen-before ideas or adding state-of-the-art technology into your operations. However, innovation doesn’t have to be large scale – it can be anything you put in place to change the way your company does things for the better.
Business innovation can include a new product, service or offering you are providing your customers; a new process in place; a new piece of equipment or software, or improvements to your existing services or operations to make them more efficient.
The key to innovation is finding and using ideas that aren’t offered by your competitors – thereby filling a gap in your marketplace – or that optimise your operations to improve results. Innovation can happen in any business and across any business area – from sales and marketing to HR and back-office. This means that no matter what type of company you run, you can still find ways to utilise innovation.
Benefits of innovation
We have already touched on the benefits that innovation can bring, but the list of perks is extensive and can improve almost every aspect of your business.
One of the best reasons for business innovation is that it can help you to overcome challenges. These challenges could be internal, such as an inefficient process, or external, such as a recurring problem that customers find with one of your products. The challenge could even be a time of potential crisis for your business – as seen with the COVID-19 outbreak – and utilising new ideas and ways of doing things can enable your business to survive. No matter what the challenge, the right measures can eliminate problems and improve life for both your staff and your customers.
Other benefits you can enjoy by finding the right ideas could include increased awareness and market presence of your business, such as via creative marketing and communication ideas. Similarly, changes to your customer journey, website and customer service can improve the experience of your customers, making them more likely to return to you and become loyal ambassadors for your brand.
As innovation can act as a solution to problems in your company, this has a knock-on effect for your other KPIs. If you optimise your operations, you can enjoy perks such as increased productivity, reduced running costs and better turnaround time. If you adapt your products or services, or promotion thereof, you may experience increased sales, more satisfied customers and better reputability. These all lead to better cash flow, increased revenue and profit, allowing you to meet and exceed your goals.
Finally, in its very definition, innovation is about offering something that nobody has had before. In this sense, you can gain the edge over your competitors by utilising the right measures, allowing you to remain ahead of the pack. This means you can become a leader in your particular niche and future-proof your business.
How to fund innovation in your business
Once you have decided an idea or improvement you want to implement into your business, you will need to source the funding to make it logistically possible. Fortunately, there are many routes to take to acquire the finance you need.
Angel investment is one such solution. With this type of finance, a high net-worth individual will invest money into your business in exchange for shares. The benefit is that you can get large sums of money invested in your company, which can allow you to implement the measures you wish. However, you will need to find an investor and be able to persuade them that you are worth investing in, which means having a compelling proposal and plan in place. Luckily, due to the appeal surrounding business innovation and the potential of a higher return on investment, this should make you more attractive in the eyes of these angel investors.
There are also specific government grants in place to encourage innovation in business. For example, the Innovation Funding Service allows you to search for funding dependent on your business idea. The amount of funding available will vary, and you will have to fill specific criteria – such as being in a particular industry or meeting specific targets. There is also the Industrial Strategy Challenge Fund, which offers businesses finance in exchange for their implementation of creative solutions to overcome industrial or societal challenges. To date, this has provided over £986 million in government investment. Furthermore, there are many other local and industry-specific grants and awards that you could benefit from – so be sure to spend time researching what options are out there and whether you are eligible.
Another option is R&D tax credits. This is a government reward scheme to aid those businesses which are utilising science or technology to transform and enhance their offerings and operations. The tax relief provided is the equivalent of 33p per every £1 spent on eligible purchases (related to research and development), which will allow you to reduce your future tax bills and free up cash flow for elsewhere in your business.
Improving cash flow for your business could be the answer to finding the funds for innovation. One way to improve cash flow is through invoice finance, which allows you to release funds tied up in your unpaid invoices instead of having to wait for customers to pay. There is similarly trade finance which funds your imported supplies to fulfil existing orders without you having to make a payment upfront.
A third option to boost cash flow is supply chain finance. Your lender funds stock purchases directly for the buyer and is then repaid by the buyer at a pre-set future date; usually at the end of the trade cycle when debtor funds are received. This enables you to negotiate better terms with your suppliers while providing the option for your suppliers to get paid early, and retains working capital into your business.
With all these options, you can improve cash flow, which can then be used to invest in your creative ideas and solutions for your company
Guidance on funding innovation in your business
There are many draws to using business innovation, including higher ROI, reduced issues and helping you to stand ahead of your competitors. Furthermore, all it takes is a good idea that will improve your business and the right funding to make it possible.
If you need help in getting funding for innovation in your business, we are here to help. Our team of expert advisors can take you through the different options available, helping you to achieve success.
Please call the team today for a free consultation or email [email protected].