Small businesses playing catch-up in innovation race

Time, finance and skill constraints are hampering small business innovation according to the latest Survey of Business Trends and Prospects.

Victorian Chamber of Commerce and Industry Chief Executive Mark Stone AM said while some small businesses possess an innovation edge by being flexible and responsive, many are finding it increasingly difficult to capture innovation opportunities.

Being innovative can range from relatively modest business process improvements, such as implementing a barcode tracking system or redesigning a company’s customer management system, to inventing an entirely new or unique product, such as driverless cars or hyper protective fabric for motorcycle clothes.

“Our survey shows large businesses are overtaking smaller ones when it comes to innovation. They have more resources and employees to devote to innovation and often have legal teams to protect ideas,” Mr Stone said.

While many small businesses know that innovation is a critical factor in capturing new customers and driving business growth, they are facing many barriers to being innovative.

The survey shows these barriers include:

  • Being too busy with day-to-day operation
  • Lacking appropriately skilled staff
  • A lack of cash flow and access to competitively priced finance
  • Perceived poor returns from investing in innovation.

“Our survey shows that respondents in the wholesale and retail sectors are not embracing innovation as much as other sectors. This is concerning because it puts them at risk of losing customers to competitors that have taken on digital technologies that foster closer relationships with customers,” Mr Stone said.

“While the Victorian government has focused on growing and supporting our state’s important startup sector, established small businesses cannot be left behind.”

“Stronger government support for small business innovation is critical to helping them embrace new business opportunities at home and abroad. The Victorian Chamber’s State Budget Submission contains a number of recommendations to raise small business competitiveness.”

The latest survey of 378 Victorian businesses, conducted by the Victorian Chamber of Commerce and Industry monitors business performance and identifies key factors influencing business trends and prospects for the final quarter of 2016 and the outlook for 2017.