Following on from earlier blogs on SMEs,family business , exporting and entrepreneurship which can be viewed at the following attached link this latest blog is around innovation .
Thanks to the contributors to this blog namely Gail McEvoy CPA of McEvoy Accountants and recently appointed board member of IFAC.
IFAC is the worldwide organisation for the accountancy profession and comprises 173 members and associates across 129 countries.
Also thanks to John Mackey of Bibby Financial Services Ireland Ltd.
99% of all enterprises in Ireland are Irish owned SMEs which employ 70% of all people working in the state. Latest reports show that more than half of the people working in Ireland – some 56% work for indigenous companies which do not export anything at all .
More than 90% of people in Ireland work for a company that employs fewer than 10 people.
A lot of SME owners are already innovative and are constantly brainstorming to improve their business and processes and doing SWOT analysis regularly. From working with SME owners in the business advisory piece sometimes it is trying to implement the ideas that becomes the challenging part .
How do you create an innovative environment in your SME?
While I can’t prescribe how to make your SME innovative, these tips can help you breed a culture that contains innovation in its DNA:
1. Innovation only comes by invitation. Invite people to bring forth their new ideas. True innovation takes place when people are free to raise ideas, take ownership of them, and then implement them. If people are required to ask permission for every step they take, they will stop asking permission.
2. Innovation is not a solo sport, it requires a group of players with skills specific to the effort. While an idea may come from one individual, it’s the cross-functional creativity, trust, and collaboration that bring innovation to life.
3. Encourage everyone to put their ideas to test fast, fail fast, and then reiterate. If people wait for perfection before they put the idea to work, the effort will lose steam before it ever gets off the ground. Implementation of ideas is as important as the idea itself .
4. Value the lessons taken from failure as much as your successes, and apply those lessons toward each new attempt. This makes it safe for everyone to innovate. The idea is not to encourage failure but to foster innovation that leads to winning success as rapidly as possible. A lot of SME owners have taken their knocks in the ups and downs of business which makes entrepreneurs more resilient .
5. Ensure this behaviour gets modelled at every level, from the very top down to individual contributor. That means the senior management must be actively involved, not just mandating the change.
6. Consult with your CPA and build innovation into your business plans for 2014/15 and look at doing things differently so you have a USP in your business. Do a review with your CPA and discuss your goals for your business and build them into your business plan and cashflows .
Cormac Fitzgerald FCPA
Entrepreneurship Report Published
The Report of the Entrepreneurship Forum was published January 23rd. The Forum was established as part of the Government’s Action Plan for Jobs 2013. Two thirds of all new jobs come from start-up businesses in the first five years of their existence. 69 recommendations have been put forward by the Forum. It is chaired by Kinsale based entrepreneur Sean O Sullivan of SOS Ventures.
These recommendations occur across four dimensions:culture, community,competency and capacity.
Included in the Report’s recommendations are:
• Changes to law to support employee stock option programmes
• A national education strategy for entrepreneurship at all levels of the education system
• A mentoring network driven by entrepreneurs and tax incentives for investment in enterprise
How to unlock creative confidence:
Is your workplace divided into “creatives” versus practical people? If so, some inspiration from David Kelley, founder of IDEO. What matters to him is unlocking the creative potential of people and organizations to innovate routinely and let ideas fly. David Kelley suggests, creativity is not the domain of only a chosen few.
Telling stories from his legendary design career and his own life, he offers ways to build the confidence to create, to innovate (From The Design Studio session at TED2012.)
Thinking outside the box – Innovation for SMEs
Innovation is the application of better solutions that meet new or existing requirements. This is accomplished through more effective products, processes, services, technologies, or ideas that are readily available. An excellent example of innovation would be the “sliced pan”, slicing bread was innovative as it was doing something different, adding a process that had a significant impact.
How do we as SME owners and Entrepreneurs become more innovative?
Innovation has to be the Ethos of the business, the ideal. It forms part of the values culture of the business, how the business operates and its conduct in relationships. Innovation must form part of your overall strategy. Examine your current strategic plan and see if innovation is at the cornerstone.
This culture cannot be switched on and off it must be encouraged and nurtured amongst all team members. As with all things in business this comes from the top down, as leader you must encourage your team to share observations and ideas and not to be afraid. Everyone needs to be on board with this, they need to have a “why not” attitude to ideas and new processes, to be constantly looking to improve and innovate. Some ideas to get that innovative attitude started;
• SWOT testing on a regular basis to include breaking down the existing processes taking a microscope to them looking for weaknesses and potential add-ons.
• Look at an “ideal scenario” – asking if money were not an issue what would we do?
• Include an “innovation” item on the agenda to every team meeting, encouraging all participation. This brainstorming with your team will help develop and encourage an open door approach to new ideas and new processes.
• Encourage everyone to be more observant of the competition, this will form the basis for new ideas. Also watch what businesses aligned to your own are doing, asking can we do something similar?
• Make it interesting, offer a prize to the individual whose ideas are implemented and also a special prize to whoever submits “the ridiculous” suggestion, this will encourage an open door approach to every idea.
• Look at what your customers would like, what would make their lives simpler? Asking clients/customers for ideas and suggestions. It might pay to reward these too.
• Market research can be very useful, asking the general public will give an unbiased perspective.
To stand out and to survive we need to innovate and we cannot do this alone. We need everyone on board and keeping an open mind is the key. Being fearless, not afraid of change is the attitude that will nurture and encourage an innovative attitude.
10 Dublin Road, Drogheda, Co. Louth
Tel: +353 (41) 98 10 160
Tips to give you the best start to the year that will help nurture an innovative culture in your business this year.
John Mackey, Bibby Financial Services Ireland
• Conduct a review of 2013 and the cost of credit. Review what worked well over the past year for the business and what did not – did extending credit terms to customers or taking advantage of economies of scale reap the benefits it hoped to? What were the financial implications and were they worthwhile? Learn from mistakes -by looking at the successes and failures over the past year you will be in a far better position to plan effectively for 2014.
• Encourage strategy – Many SMEs fail to see the importance of strategising and planning for the year ahead, including contingency planning, crucial in the current environment. The business will need to start by reviewing their objectives, or in many cases, construct for the first time. You need to prioritise everything you want to achieve in the coming year and work out the financial requirements involved in doing so; the business may be over or indeed under estimating what they can afford to do.
• Seek new ways of financing – Be open to considering new and alternative ways to finance the business as traditional methods may not always suit the current circumstances.
• New Technology – Explore and embrace new forms of technology in your everyday business systems that will bring efficiencies to the business and in some cases cut costs.
• Consider new opportunities – Take the time to research new business opportunities. With clear minds after the business break, a brainstorming session with your internal teams may inspire ideas that could help move the business forward through developing new products and services, new customers and new markets. Educate yourself on the various finance options available– what worked or was available last year may not be the same for the year ahead. Look beyond the traditional finance options to more readily available alternative funding solutions which can provide additional benefits to traditional financing – Invoice finance for example, guarantees SMEs working business to business and billing in arrears a flexible and on-going supply of working capital
• Explore potential for exporting – Irish exports remain the backbone of our economy and increasing numbers of our SMEs are reaping the rewards of their export activity. Yet entering overseas markets is still a minefield for many businesses. Variances in legal practices, lacking on the ground assistance, language barriers, foreign currency management and fluctuating exchange rates are key difficulties that Irish businesses face when considering exporting abroad. However, comprehensive credit management facilities with multi-lingual and culture experienced credit control teams can help SMEs overcome these issues and allow them to export with confidence that their cash flow requirements will be met and customer payments chased and collected on their behalf.
• Take control – Get a detailed view of the debtor days in the last year – is late payment an issue for the entire ledger or is there a number of repeat offenders who are causing problems? Every customer is vital to an SME, but some late payers could be causing more problems than they are worth – it is vital the business separate the wheat from the chaff, both for the current term and for the long term. Work with your CPA accountant to develop watertight debtor management systems, including their issuing regular statements and reminder invoices and calling customers if payment is late.
• Harness people power – Assess staffing levels for the coming year and ensure staff holidays or peak season demand is accounted for – will extra staff be needed for these periods? How much over time from current staff will be required? At what cost? Or perhaps skills gaps within your workforce are holding them back?
• Manage the cash – No matter how well inspired, prepared and organised, good cash flow is the lifeblood of any business. Make sure you take a pro-active approach to managing cash flow and aren’t waiting until it is too late to deal with problems. There are support mechanisms out there ready and willing to help and their doors are wide open for business.
Tel: +353 (1) 2974925 | Fax: +353 (1) 436 4598
Email: JMackey@bibbyfinancialservices.com | Web: http://www.bibbyfinancialservices.ie
Address: 4th Floor, Heather House, Heather Road, Sandyford, Dublin 18, Ireland
Thanks for reading !
Cormac Fitzgerald FCPA is Managing Partner of Fitzgerald & Partners Accountancy Firm and Vice President of CPA Ireland .